Low cost carrier set to grow in Africa may reduce cost of flying

By Editor

New image maker for Kenya AirwaysAt one time, Kenya Airways (KQ) ruled the East African skies. While neighbouring governments scampered to desperately shore up their loss-making national airlines, KQ could basically charge what it wanted.

KQ also had the advantage of being partly owned by KLM. The Dutch airline provided management advice and technical support. All of which stood KQ well in the early years of its development as neighbouring carriers went into extinction.

Much has changed since then. But the recent entry of low cost carriers (LCC) will probably rank as the most significant. Flying is still relatively expensive in the region. Yet easy transport is central to encouraging business and attracting new investment.

On a postive note, investors see East Africa as a good bet. Fastjet Tanzania (in which easyjet founder businessman Sir Stelios Haji-Ioannou has an interest), is slowly making inroads out of its hub at the Julius Nyerere International Airport. However the biggest prize would be to get landing slots at Jomo Kenyatta International Airport to make it fully regional.

The reason is obvious is that while fastjet has started to achieve in recent months respectable load factors and average fares, Tanzania’s domestic market is not large enough to support an LCC. The carrier currently has 41 weekly return flights in the domestic market, including 21 on Dar es Salaam-Mwanza, 14 on Dar es Salaam-Kilimanjaro and six on Kilimanjaro-Zanzibar. As a result its three A319s have been utilised on average less than five hours per day.

KQ itself, is about to unleash the regional schedule of its LCC, Jambojet. All this should be exciting news for customers, because it usually means lower fares. Going for low-fare airlines can help people save as much as 50% to 80%, especially when booking early. These airline companies usually serve a few routes only and can provide clients with more competitive prices.

Africa has only recently seen the setting up of LCC. But the regional airline association has highlighted the negative impacts of high taxes and fees on the possibility of growth in African aviation. If airport handling services remain prohibitively expensive, the chances of seeing more Africans take to the skies will also stay diminished.

Ensuring that aviation’s growth potential is fulfilled will require policymakers to overcome a number of challenges. Infrastructure investment is not as pressing as in other regions, although some of the region’s larger airports do appear to be suffering from capacity constraints.

According to Geneva based Air Transport Action Group, aviation provides the only rapid worldwide transportation network, which makes it essential for global business and tourism. It plays a vital role in facilitating economic growth, particularly in developing countries.

Aviation is also indispensable for tourism, which is a major engine of economic growth, particularly in developing economies. Globally, 52% of international tourists travel by air. We cannot be left out by pricing ourselves out to sea.

Secondly, the red tape has to go. Governments have to understand the need to liberalise air travel. Africa’s commercial air traffic is expected to grow 5.4 percent annually between 2011 and 2030, according to estimates by Embraer, an aircraft manufacturer, putting the continent ahead of the more mature markets of North America and Europe, which will see respective growth of 3.5 percent and 4.4 percent.

In the past several years, air travel has become more hectic and less appealing for some travelers. Tighter security regulations mean longer waits. Rising fuel prices can lead to more expensive tickets. Yet despite the inconveniences, air travel still holds a number of advantages over car, train and bus travel.

http://www.busiweek.com/index1.php?Ctp=2&pI=2562&pLv=3&srI=75&spI=116&cI=10

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