Introduction
Aviation Industry & the Economy State of African Aviation Africa’s Air Transport Industry Navigation/Communication Systems African Aviation Support Services Application of IT infrastructure in African Aviation Sector Conclusion/Way Forward.
AVIATION INDUSTRY & THE ECONOMY
The aviation industry has become an indispensable part of our lives and businesses. We fly on commercial airlines for personal, leisure/relaxation, & business purposes, etc. without consciously thinking of the role Air Transport and Airlines play in these seamless trips.
Airlines contribute immensely to the shaping of our today and tomorrow.
This presentation attempts to demonstrate the significant of the aviation industry in African as a whole, and how the continent continues to miss out on the huge benefits available in the sector – and thanks to God how the continent in recent times re-awakening to the benefits.
Globally Airlines transport about 3.6billion passengers annually. There were about 32.8 million Scheduled commercial flights worldwide (in 2015, there were 34.8 million flights).
If you include non-scheduled and business operation flights, there were 38 million aircraft movements in 2014 – 16.
Aviation provides 62.7million jobs worldwide and $2.7trillion of global GDP.
According To ATAG, “1,397 airlines operate a fleet of 25,000 aircraft serving 3,864 airports through a route network of several million kms managed by 173 air navigation service providers (NSPs).”
Air Transport & high-value:
According to IATA, “While air transport carries around 0.5% of the global trade shipments, it is over 35% by value – meaning that goods shipped by air are of very high value, often times perishable or time-sensitive
commodities.
AVIATION INDUSTRY & THE ECONOMY
According to IATA last year, airlines safely carried 3.6 billion passengers—the equivalent of 48% of the Earth’s population – and transported 52.2 million tonnes of cargo worth around $6 trillion. In doing so, airlines supported some $2.7 trillion in economic activities and sustained 63 million jobs.
3.6 Billion Passengers transported in 2015
Figures to Note
1,402
Commercial airlines
173
Air navigation
service providers
3,883
Airports with scheduled commercial flights
(there are 41,788 airfields in the world, including military and general aviation)
50.4 MILLION
Tonnes of freight handled by air in 2014 (in 2015, it was 51.2 million tonnes)
35%
Air transport carries around 35% of world trade by value and less than 1% by volume
Air Transport is also arguably the most preferred means of transportation. “Globally, the average occupancy of aircraft is around 80%, greater than other forms of transport.”
Globally, Aviation is a huge sustainable industry. If aviation were a country, it would rank 21st in size by GDP (similar in size to Sweden or Switzerland) – Air Transport Action Group (ATAG).
Figures from (ATAG) reveals that;
54% of international tourists travel by air
$6.4 TRILLION
Value of cargo handled by air in 2014
STATE OF AFRICAN AVIATION INDUSTRY
Africa is set to be one of the fastest-growing aviation regions over the next 20 years, with annual expansion averaging nearly 5%. This opens up incredible economic opportunities for the continent’s 54 nations. By transporting some 70 million passengers annually, aviation already supports some 6.9 million jobs and $80 billion of economic activity on the African continent.
Most importantly, this presentation will dwell on how to achieve sustainable Airline operations in Africa which is at the heart of the Air Transport and Aviation Industry.
Many failed Airlines litter our airports in Africa, both privately & government owned. For example where is: Ghana Airways,
- Air Gabon,
- Seria National Airline,
- Air Afrique,
- Nigerian Airways (WT),
- Cameroon Airlines,
- Chanchagi,
- ADC Airlines,
- Bellview Airlines
- Air Zimbabwe – The list is endless.
A Report of survey carried out in May, 2016 says over the past 12 years nearly 37 airlines were launched in Africa, and almost all of them had failed – 25 of which are from Nigeria.
Today only about 12 Africa Airlines have inter-continental operations
The more we realize that Airlines are not a luxury but a necessity in our remote villages and hub cities, the more we can change our thinking and make sustained efforts to ensure that airlines are supported and developed for the accelerated development of our economies and improvement of our livelihoods.
The potentials of Aviation in Africa are under-utilized. This means that there are huge opportunities for the sustainable Airlines to thrive. Therefore for the continent to realize its full economic potential, aviation – particularly, commercial air transport – must be prioritized.
Overview
Airlines are the nucleus of the air transport industry. Essentially, Airlines are the main basis for the existence of all other players in the industry including airports, air navigation service providers (ANSPs), civil aviation authorities (CAAs) and support service providers such as caterers, spares suppliers, cleaners, security service providers, Aircraft manufacturers, & AMOs, and ATOs etc.
The economic benefits of airlines are enormous and increasing, because airlines are not just part of the economy but a key economic catalyst recognized as vital to the growth and achievement of National, Regional and Global economic goals.
Today, air transport is recognized as an important element in the achievement of the United Nation’s Vision 2030 Sustainable Development Goals which seeks to improve individual livelihoods in all corners of the globe.
Air transport is also vital to achieving the African Union’s (AU) Agenda 2063 which seeks to transform Africa’s economy from its current largely underdeveloped state to hugely develop economies.
Africa has the potential to be a significant force in aviation on the back of robust economic growth forecasts, with Africa having among the fastest growing economies worldwide. North African economies are also rebounding after disruptions arising from revolutions in 2011.
For example
- African Airlines carries l.3% of global Air cargo
- These small proportions contributed by Africa to
global Air Cargo indicate that Africa has a huge
potential to grow.
African Air Transport Growth Prospects
The performance of the African aviation industry is lagging behind those of the rest of the world at less than 3% of global RPKs.
The growth is heavily constrained by the high industry costs, inadequate infrastructure at several airports, slow implementation of the Yamoussoukro Decision, lack of a single traffic rights negotiating body with respect to third parties like the EU.
Nonetheless, demand for air transport has increased steadily over the past years with passenger numbers and freight traffic growing significantly.
Over the period 2010-2015, Africa will be one of the fastest growing regions in the world in terms of international traffic with an average growth rate of 6.1% compared to the global average of 5.8%. However, African aviation needs to grow at double digit rates to be a significant player in the global industry.
Middle East and Asia Pacific will however surpass Africa’s growth at 7.9% and 6.9% respectively Europe, Latin America and North America are projected to record lower international passenger growth of 5.0%, 5.8% and 4.9%, respectively. On the other hand for Africa, the positive growth trend is expected to continue in the coming years due to political stability, robust economic growth, demographic boom, increasing urbanization, and emergence of the middle class.
TOURISM
According to UNWTO, international tourism arrivals reached 1.035 billion in 2012; 39 million more than in 2011. Global tourism contributed 9.1% to world GDP, 5.9% of worldwide exports and 4.5% of global investment in 2012.
- The breakdown of international tourism traffic is shown on the figure with Europe accounting for more than half, followed by Asia Pacific with 22% international tourist arrivals in 2012 and Africa representing only 5%.
- Airlines drive businesses providing the safest and fastest means of connecting urban and rural locations in all parts of Africa
- Airlines drive tourism: tourism contributes between 1-9% of GDPs in various countries in Africa, and Airlines carry over 90% of international tourists.
- There are concerted global efforts to combat illegal wildlife trade among other efforts to enhance tourism sector as a source of socio-economic development to support air traffic which would benefit African airlines
- The AU is also striving to provide friendly environment to achieve air transport development and its benefits to the economy – with strong focus now on Liberalization of African Skies for African Airlines starting from 2017.
Global Traffic Performance
System-wide, the Asia Pacific region was the world’s biggest air transport market by RPKs performed (31.4%) in 2012, followed by Europe and North America at 26.3% and 24.6% respectively. Africa remains the smallest market, accounting for about 2.8% of global RPKs.
African Airlines Performance
Passengers Carried
Passenger numbers has grown consistently year on year since 2004 except in 2011 where the numbers dipped as a result of the Arab Spring and political instability in parts of North Africa. From less than 40 million passengers carried in 2004 by African airlines, passenger numbers have increased to 62.9 million in 2012; a cumulative growth of 61.5% (average annual growth 7.8%), up from the 2011 figure of 56.4 million.
Domestic and Intra-Africa Passengers
Domestic passenger numbers increased by over 8% to 19.4 million due an increase in access to air travel, lower fares and new routes launched in 2012. The growing competition in many domestic markets and the resultant improvement in service quality and lower fares continue to stimulate demand. Low Costs Airlines, particularly in South Africa, Kenya, Egypt, Kingdom of Morocco and lately Tanzania continue to aggressively promote and attract more passengers, some of whom had never flown by air before.
With a population of over 1.07 billion, spread across the vast continent of 54 countries, there is huge potential for growth in intra-Africa air travel. The major constraint to the growth of intra-Africa growth is the slow pace of liberalisation and the over-dependence on Bilateral Air Services Agreements (BASAs) by many States as well as the High taxes, Fees and charges on passengers, Fuel and other services.
Intercontinental Passengers
Intercontinental passenger numbers in 2012 increased by 12.9% over 2011. African airlines share of this was 5.1% in the year under review, bringing total passengers carried on intercontinental routes to 26.7 million. Non-African airlines carried 7.8% more passengers. The continued economic slowdown in the Eurozone reduced the traffic flow from that market, especially leisure traffic. The political crisis in some countries in North Africa also shied away tourists to the region in the year under review.
Passenger Distribution
Intercontinental passenger market segment remains the biggest with 42% of all passengers travelling between Africa and other regions of the world. The domestic market segment represents 31% while the intra-Africa market is 27%.
Africa’s Fleet
Worldwide, aircraft deliveries in 2014 increased to 1,627 new aircraft and the number of in-service fleet increased from 25,187 in 2013 to 26,051 aircraft in 2014 according to IATA. Overall, the number of seats available in the fleet rose to 3.5 million, adding 5% capacity to the market globally.
Africa has 690 aircraft which makes up (3.2%) of the total global fleet. AFRAA airlines in 2014 operated a total of 593 aircraft or 85.9% of total African commercial fleet. – AFRAA
430 (62.32%) aircraft in operation in Africa are made up of single aisle type. The other aircraft sizes are represented by: regional jets (15.94%), small wide body (11.59%), medium wide body (8.7%) and large wide-body (1.45%). The top 5 airlines with the largest fleet size in 2014 are Egypt Air, Ethiopian Airlines, South African Airways, Royal Air Maroc and Kenya Airways.
Other elements supporting African Aviation includes:
Ground Handling Services
MH Aviation, Swissport Universal, Nahco Aviance, SAHCOL, Menzies Aviation, SIGINON Group
This is sometimes seen as the “ugly step-child” of the aviation industry. In the days where most handling companies belonged to an airline, GSE was not the highest of priorities. “Things with wings” enjoyed the main focus of attention and naturally when budget cuts were called for, GSE was in front of the firing line.
Africa, in general, is considered a developing continent when compared to Europe, North America and Middle East. While this is true of some African countries, there are others which do provide world-class ground services.
JET FUEL COST
According to IATA, in 2012 on average, fuel accounted for 33% of total airline operating costs, although higher in some regions. In Africa for instance, fuel accounted for between 45-55% of operating costs, placing sustained pressure on the airline industry profit margin.
IATA is urging African governments to tackle the excessive surcharges on fuel, which can make fuel purchases on the continent up to 20% more expensive than the global average. Airlines operating to Ethiopia, Gabon, Ghana and Kenya are particularly affected by above market fuel costs. These surcharges increase airlines’ cost burden when they are already operating in a challenging environment. They also hinder growth in an industry that delivers extensive socio-economic benefits.
Air Cargo is The Future
With concerted effort to bolster economies and expected political support to improve the economies in Africa especially under the AU Agenda 2063 the cycles of economic rebounds in various African States would produce vibrant economies with strong demand for air cargo.
This is evident in Southern Africa already where cooperation within the SADC region gives hope to airlines.
CEO of Air Botswana, a fast-rising regional carrier is looking to adding cargo services as the airline anticipates increased cargo demand in the region.
AU Passport
The AU common passport and trend of dismantling of travel barriers exemplified by Rwanda, Ghana, etc. would open the floodgates of economic activities intra-Africa, hence driving air travels in the continent.
STATE OF AFRICAN AIRPORTS
Airports in Africa is going through a period of transition and even as a commercial and or privatize entity, African Airport is going to be well positioned to play a significant role in supporting the aviation sector as a whole to develop new & improved facilities for passengers and airlines experience.
PERIMETER FENCES:
Many of the Secondary African Airport has either only operational or perimeter fences.
POWER SUPPLIES:
Inadequate dedicated power supplies leading to epileptic power outage is a major challenge facing the airport.
Therefore it has become imperative that the government tackles the challenge and also ensure that airports built do not compromise on civil Aviation Standards.
STATE OF AFRICAN AIRPORTS – INFRASTRUCTURE
African Airports has evolved overtime from the use of old archaic state of infrastructure to a much more modern state of the art buildings & structures.
African Airports should extend its portfolio by building an Airport Services Business (ASB) that will operate across several airports in the region.
New Automated System can also be developed E.G Self service KIOSK should be available to passengers travelling.
A management information system (MIS) to monitor passenger queues at the airport security check points which will convey waiting time information to FIDS.
STATE OF AFRICAN AIRPORTS
Safe gates that read boarding passes and control passenger access to secure area should be set up. They replace manual check-in boarding passes as passengers move from check-in areas to the departure lounge.
Automated Boarder Control (ABC) departure smart gates using facial recognition should be installed. It captures image of departing passengers and matched them to their Biometric e-passport. The system is already functioning in developed countries airport. 
SUSTAINABILITY OF AIRLINES
– What makes airlines sustainable?
– What guarantees the need for Airlines in Africa?
– What should give African Airlines confidence to continue
investing in their operation?
Many Airlines have failed or are barely surviving in Africa due to many Factors
These Factors can be largely grouped into 2, namely Internal and External Factors.
Internal
-Management Business Plan
-Safety Regulation
-Economic Regulation
-Low cost Airlines
-Multi-Hub Strategy
-Service Excellence Etc.
External
-Cost of operating environment
-Economic Diversification
-Political Environment
-Improved airport infrastructure
-Airports supports
-Improved Air navigation infrastructure
-Unfair competition
SUSTAINABILITY OF AIRLINES – Internal
Management and Business Plan –
A good business plan is crucial for all airlines.
However, delivering the Business Plan is the difference between successful and failed airlines big or small
Airlines management must be professional and must discern trends in the operating environment to adjust operation according to the dictates of the industry and operating environment, and not losing sight of the Business Plan
Safety performance
Safety in Africa is the top priority. Governments have committed to achieving world-class safety levels in the Abuja Declaration. While safety has improved, Africa had the highest accident rate among regions in 2015, at 7.88 accidents per million sectors.
- IATA’s Operating Safety Audit (IOSA) has shown the power of global standards underpinning safety operations. The 32 sub-Saharan airlines on the IOSA registry are performing 3.5 times better than non-IOSA operators in terms of accidents.
- IATA calls on African governments to improve safety oversight and adopt IOSA together with ICAO’s safety-related standards and recommended practices (SARPs). As of the end of January 2016, only 21 African countries had at least 60% SARPs implementation.
- Airlines must strive to utilize industry certifications such as the International Air Transport Association (IATA) Operational Safety Audit (IOSA) which conforms to ICAO Standard and Recommended Practices (SARPs) to sustain their safety performance
Flight Training Institutions
Many of the flight training institution across Africa has grown from being colonial training institution to state owned National Airline managed institution and lately evolved to become privately & public owned enterprises. Many of them have produced great pilots who have contributed to the growth of African Aviation.
There are over 62 Flight Training institution in Africa, out of which over 50% are based in South-Africa. Some of the others are:
-Ethiopian Aviation Academy
-Kenyan Aviation Training school
-Nigeria College of Aviation Training School
-Egypt Aviation Academy
-Safe Flight Training-Tunisa
-Zambia Air Services Training
-Uganda Aviation Academy
Economic Performance
- Good internal performance makes airlines attractive to potential partners
- Membership of helpful Airline Organizations like IATA and AFRAA which enables Airlines gain the benefits offered to airlines like AFRAA’s Joint fuel purchase scheme, joint ground-handling scheme, etc. of AFRAA. And IATA’s training schemes, operational efficiency schemes, etc.
- Adapting Successful Airline Strategies – (some of the strategies below are adopted by Singapore Airlines, one of the leading Airlines in the world which has successful low-cost and regional and cargo and maintenance subsidiaries and operates in the emerging South East Asian region. These strategies work for many successful Airlines globally).
SUSTAINABILITY OF AIRLINES – Internal
Low-Cost Airlines
- Low-cost carriers spread fast because people want to pay less. The case of FastJet in East Africa is notable. The low-cost carrier is setting up in various countries in the region and with plans to spread on the continent.
- Other examples of low-cost carriers emerging in Africa include South African Airways subsidiary, Mango Air, Fly540, Kulula.com, Kenya Airways subsidiary – JamboJet. Royal Air Maroc and Egypt Air have also evolved low-cost subsidiaries. What is crucial is however to sustain these carriers using strategies that have worked for other Airlines in Europe, South East Asia, etc.
Adopt Robust Strategy
-Service Excellence, Excellent Product, Network. All three give you an edge in the market competition. Airlines without them hardly compete well or last long in competitive markets like Dubai, etc.
-Network Development is crucial. Build your home as a hub with diversified network. Optimize flight connectivity. No over-reliance on any route for revenue, it protects against regional downturns; This is enhanced through partnerships with other airlines.
-AFRAA airlines in 2014 continued with their aggressive route expansion on both intra-Africa and intercontinental routes. In 2014, 37 new routes were launched by 13 AFRAA member airlines to domestic, intra-Africa and intercontinental destinations. Of these, 15 destinations were intercontinental with the remaining 22 new routes within the continent, according to AFRAA.
Steady Capacity Growth
-Airline business is a cyclical business subject to external challenges. For Airline groups, group capacity growth generally is important; constantly track the growth of members of the group or growth rate. This is also essential for small airlines.
-Realize in which market segment you play in, whether new or mature airline and drive your strategies accordingly.
Product Leadership
-Invest in both good and bad times; only ensure your investment can be properly managed in the bad times like recession, etc.
-Product Differentiation is very vital. E.g. if you have different airlines in a group, make sure the airlines are independently operated, separately managed. Main airline Singapore Airlines doesn’t interfere in the running of other airlines in the SAL Group.
Service Excellence
-Highest quality staff from cabin crew to ground staff; proper cabin crew training, if you must train them longer do that. Singapore Airlines train cabin crew for 15 weeks the longest in the world. The average is 7 weeks.
-The Skills Gap – Are we doing enough to be prepared for this challenge? Airlines must train and train and train staff; and strive to retain them.
-Adopt brands that optimize your service and icon that show the quality you stand for and offer
-Develop Industry leading CEM – Customer Experience Management. Partner with the right service providers to drive the CEM, because you cannot afford not to listen to and respond to or satisfy your customers. E.g. 40 cakes a day surprise gift to passengers for Valentine to Maldives from Singapore, (or Malabo, Kilimanjaro, Johannesburg, from Lagos, etc.
SUSTAINABILITY OF AIRLINES – Internal
Multi-Hub Strategy
*This has helped several Airlines improve network and avoid regulation and policy barriers. In Africa this strategy is already in place. And more examples would emerge with the Liberalization of African Skies starting in 2017.
*E.g. Ethiopian has hubs in Addis Ababa and Lome. SAA has hub in Johannesburg and Dakar. Singapore Airlines has base of operation in Delhi helping it tap into the Indian market; it has a stake in an airline in India, Vistara. So it also has in Thailand through Nok Airline, among other examples.
SUSTAINABILITY OF AIRLINES – External
Costs in Operating Environment
Cost of operation in the operating environment is among the greatest challenges to African Airlines. Taxes, charges, fees
Economic Diversification
Diversification of local economies to create economic empowerment for locals, and economic attraction for foreign business people and traders flying in for business, etc. Governments should ensure this is achieved to support African Airlines. Creating understanding through proper education of ministries of interior, trade and investment, to stimulate real sector to drive production to feed cargo airlines.
Political Will to drive economy
Political will to support airlines in times of need e.g. bailouts, waivers – ensuring that waivers are implemented and not only on paper. Till today in Nigeria airlines have to lobby and call high powers to free their engines and aircraft spares from the 10% duties and tax slammed on these imports. i.e. 5% duty and 5% vat. Governments should not see Airlines as cash cows, but rather as vital economic catalysts to be supported to drive the larger economy.
Improved Airport infrastructure
Population and geography only do not give you a hub, if not Nigeria, Ghana & Senegal would have been mega hubs. your facilities and operating environment including economy, policies etc. give you a hub.
Consider Hong Kong, Singapore, Dubai, Abu Dhabi, etc. without large populations, but with air traffic many times more than their entire populations. Singapore has 5.6 million population but Changi Airport processed 50million passengers in 2015
SMARTER REGULATION
* Political will to support airlines in times of need e.g. bailouts, waivers –ensuring that waivers are implemented and not only on paper. Till today in Nigeria airlines have to lobby and call high powers to free their engines and parts from the 10% duties and tax slammed on these imports. i.e. 5% duty and 5% vat.
* Regulation of the Airlines industry in Africa must be African Airlines-friendly and align with ICAO Standards.
* While AFRAA, IATA and Airlines groups continue to call for improved regulations, African Civil Aviation Authorities (CAAs) must attune their regulation not to stifle African Airlines growth and Sustainability
* Creating clearer understanding through continual education of ministries of interior, trade and investment, to improve aviation policies, stimulate real sector to drive production to feed cargo airlines, etc. is crucial.
UNFAIR COMPETITION
* Competition and liberalization are excellent but airlines must be equipped to compete. With adverse economy, low currency, charges, taxes and fees airlines in Africa already lose a lot and disadvantaged before they go into competition. That is why even with the best aircraft among African airlines’ fleets, they can hardly complete but pull out of lucrative routes as Arik Air out of Dubai, or not venture into lucrative routes.
* Despite dozens of BASAs signed by African States their airlines can hardly exploit these BASA routes so the States depend on controversial royalties levied on foreign airlines who fly unrequited without reciprocity.
ARE THERE SUCCESSFUL AIRLINES?
Perhaps, success stories of fellow African Airlines would drive our inspiration to strive to achieve sustainable Airlines for existing and intending Airlines.
Some Positives in Africa:
• ASKY reports 4 million US $ net profit for 2015
• Royal Air Maroc wins ‘European Award for Best Practices 2016′
• Air Mauritius readies for expansion with new air-crafts and hubs
• Air Madagascar removed from EU blacklist
• Camair-Co implements SITA’s new passenger management system
• Air Namibia signs up to Travelport’s industry airline merchandising solution
CONCLUSION
Africa Aviation has come of Age:
The phenomenal growth of Air Transport Industry, which includes the development of modern Airports facilities, upgrade of navigation services, fleets upgrade/renewal amongst African airlines, Globally certified aircraft maintenance facility and training institutions and a robust legislation that supports civil aviation have all joined to stimulate and enhance the growth of civil Aviation in Africa.
