AFRAA boss considers the big questions
Victoria Moores caught up with African Airlines Association (AFRAA) secretary general, Elijah Chingosho, ahead of this year's annual general assembly (AGA), which will be held on November 20-22 in Victoria Falls, Zimbabwe. Here's how the conversation went:
What can we expect from this year’s AGA?
The theme is ‘managing the survival and market recovery of African airlines’ and we are expecting over 400 delegates from more than 50 countries. African airline leaders are expected to highlight the need to work closely to make travel across the continent seamless and affordable and they will be calling for unrestrained intra-Africa market access, regulatory alignment among African states and an even playing field that encourages fair competition.
What else will be discussed?
African airlines are expected to deplore the blocking of funds in some states, which is negatively affecting cash flow and operations. They will also reaffirm the need to be more aggressive and innovative in service delivery, while managing their costs.
The high cost of operations makes African airlines less competitive. We are concerned about high passenger taxes, charges and fees, above average fuel prices and poor infrastructure at several airports, especially for transit passengers.
Although safety is improving significantly, the assembly is expected to reaffirm the need to redouble efforts to bring safety standards to global levels.
We will also elect the AFRAA executive committee, which has oversight responsibility for the association and the president.
The host of the 2017 AFRAA AGA will also be announced.
Can you give some more details on the blocked funds issue?
Among the reasons for the blocked funds is the lack of availability of foreign currency, especially in countries that depend on oil revenues that have been negatively affected by the continued low global oil prices.
These states, which include Angola, Egypt, Nigeria and Sudan, have more than $1.4 billion of blocked airline funds as of June 2016.
In the case of Sudan, the situation is compounded by sanctions. The inaccessibility of these funds is creating cash-flow problems, affecting mainly African carriers. The lack of foreign currency is also causing the local currency to depreciate rapidly, eroding the value of sales in the affected states.
Some service providers, such as fuel suppliers, ground-handling and catering companies, are demanding that payment be made in hard currency.
What has changed since the 2015 AFRAA AGA in Brazzaville?
The west African countries of Guinea, Sierra Leone and Liberia, which had been battling Ebola since its outbreak in Guinea in December 2013, brought the epidemic to an end. Airlines that had stopped operating to the regions were able to resume operations, helping the affected countries start their economic recovery.
Since Brazzaville, we were also able to look at the safety statistics for 2015. There were 19 fatal airline accidents worldwide in 2015 with 580 fatalities. Two of these were in Africa, with 53 fatalities, which is the lowest rate for a long time. This is down from 24 fatal airline accidents in 2014, with 991 fatalities, of which seven were in Africa with 125 fatalities. This shows that the various efforts to enhance the safety culture are yielding positive results.
How are things progressing towards liberalisation?
Three more states – Ghana, Namibia and Sierra Leone – have been added to the original 11 that declared their commitment to immediately and unconditionally fully implement the Yamoussoukro Decision. The 14 states are Benin, Cape Verde, Egypt, Ethiopia, Ghana, Ivory Coast, Kenya, Namibia, Nigeria, Republic of Congo, Rwanda, Sierra Leone, South Africa and Zimbabwe.
It is expected that, by the end of 2016, more than 20 states constituting over 90% of all air traffic in the African continent, will have declared their commitment to full liberalisation of African skies.
These developments have been complemented by more states removing non-physical barriers, such as visa requirements.
Currently, 13 states, including Ghana, Mauritania, Seychelles and Rwanda, are allowing citizens from all African countries who need a visa to obtain it at the port of entry. Other countries, like Mauritius and Zimbabwe, with more in the pipeline, have significantly increased the number of countries for which visa requirements are relaxed.
How are Africa’s airlines doing?
Some African airlines continue to make major strides in modernising their fleets, helping to connect Africa together and with the rest of the world.
Ethiopian Airlines took delivery of the first of 14 Airbus A350XWBs on June 28, making it Africa’s first operator of the type.
Another significant development is Royal Air Maroc launching services between Nairobi and Casablanca, which is the first service linking east and southern Africa with the Maghreb region of north and west Africa.
And how are things looking financially?
The situation in Africa is in stark contrast to global trends. According to the International Air Transport Association (IATA), African airlines made a record loss of $700 million in 2015, which is expected to be followed by another significant loss of $500 million in 2016.
IATA forecasts capacity growth of 5.3%, which is greater than the demand growth of 4.5%. The reasons for this poor performance include intense competition on long-haul routes with European, Middle East and Asian carriers, the lack of full liberalisation of African skies for African operators, blocked funds, high costs due to some governments viewing air transport as a preserve for the rich, and inadequate infrastructure in several states.
What major projects are AFRAA currently working on?
The AFRAA secretariat embarked on a project to attain ISO 9001:2008 certification in late 2014 and it was granted in early 2016. AFRAA has called upon all airlines in the continent to obtain IATA operational safety audit (IOSA) registration, so it makes sense for the association to have its equivalent of IOSA. AFRAA is the only airline association with this prestigious award. We are now working towards the ISO9001: 2015 certification.
Projects that AFRAA is currently implementing for its members include: a fuel-purchasing project, ground-handling cooperation, network coordination and harmonisation, training initiatives, as well as our cargo task force.
Can you give more information on the fuel project?
The AFRAA fuel-purchasing project was launched in 2011. The objective is to reduce fuel purchase costs through joint bidding and joint negotiations with fuel suppliers to get savings through economies of scale. In turn, the fuel suppliers benefit from greater volumes. The group facilitates the fuel purchases by direct negotiations at stations where the market is monopolistic.
Fuel prices in Africa are well above global standards due to high taxes, fees and charges that are imposed at several stations in Africa, often in a non-transparent manner and not following International Civil Aviation Organization (ICAO) stipulations.
AFRAA, complementing the work of the fuel project, also campaigns against high fuel taxes and charges at specified stations. We join forces with our colleagues in IATA, as well as airline associations in the area, whose members may or may not be AFRAA members.
The AFRAA project was launched in 2014 to facilitate ground-handling cooperation among airlines and come up with cost-effective common solutions to address some of the challenges that they face. The project’s activities include joint procurement of ground-handling services at selected airports through a joint tender process, lobbying efforts to open up markets in monopolistic stations and reduce high charges, training and capacity building, implementation of IATA ground operational manual (IGOM) to achieve standardisation, consistency and best recommended practices, and encouragement of ground-handling companies to implement the IATA safety audit for ground operations (ISAGO).
What work are your members doing on network cooperation?
AFRAA launched the network coordination project in 2014 to strengthen the competitive position of member airlines through network coordination, harmonisation and optimisation. The route network coordination committee studies airlines’ route networks in Africa to facilitate connectivity and help align schedules. It identifies routes with growth potential that are inadequately served, rationalises airline networks to stimulate additional traffic and improves flight connectivity to minimise or eliminate long transit times. This project facilitates airlines’ commercial cooperation.
Why is AFRAA involved in training?
AFRAA has a training unit that provides high-quality and cost-effective training to African aviation entities. AFRAA recognises that training and human resource development are critical to ensure that the African airline industry adheres to industry best practices in safety, security, operations, aircraft maintenance activities, as well as effective commercial and managerial/leadership skills.
To this effect, the AFRAA training unit is spearheading this by carrying out critical common and cooperative human development activities.
Training cooperation ensures that there is provision of high-quality and affordable training in all areas of airline operations. AFRAA holds seminars and workshops to update stakeholders on the latest developments in areas ranging from safety management systems, aero-political developments and information communication technology. Highly qualified and experienced instructors conduct the training.
Is your activity in cargo a new development?
The airfreight sector of airline business often does not receive the attention it deserves and, thus, most African airlines are missing significant opportunities to enhance their revenues. To help alleviate this challenge, a cargo taskforce was established this year to identify common projects for the freight business.
AFRAA has one dedicated cargo airline member, namely Astral Aviation, which is based in Nairobi, Kenya. Because of its specialised expertise, Astral Aviation is championing this project and, by next year, we should be able to identify a joint project for airlines to reduce costs and/or to increase revenues.