in Air Transport / People

Aviation conference told regional can work

Posted 10 May 2015 · Add Comment

How can regional airlines grow in Africa? That is a question that was put to panelists at the first Aviation Africa conference and exhibition in Dubai today.

Fastjet CEO Ed WinterAnd according to Brazilian manufacturer Embraer, the aircraft to do the job already exist – whether Embraer’s jets, or there are other options such as jets from Bombardier, and turboprops from both Bombardier and ATR.

Stephan Hannemann, senior airline analyst at Embraer, told the audience: “The average load factor in Africa is low because there is a mismatch between demand and supply. Most flights have less than 100 passengers on board.
“For a feeder network you need smaller aircraft, somewhere between 50 and 70-80 seats. But many carriers focus on long-haul flights.”
Without focusing on how to fill them from a wider area, when rail and road links are poor in most countries.
“A 100-seater [might be OK] for routes with more demand, which probably doesn’t come as much of a surprise coming from me,” said Hannemann – although that is at the upper range of Embraer’s range and touching on the Sukhoi Superjet or Bombardier Cseries.
“The ideal aircraft for Africa is one you can grow in the morning and shrink in the afternoon!” joked Marian Pistik, CEO of Aerotask.
Moderator Victoria Moores, who writes for "Air Transport World" and "African Aerospace" magazines, pointed to April’s AFRAA figures: Africa-EU market share for African airlines was down, as was the Africa-Middle East market share.
The Africa-North American market increased to 64%, while Africa-Asia went from 81% to 84%.
“But what surprised me somewhat,” said Moores, “is that in the intra-Africa their market share went down slightly, to 92%. So that market is now being eroded by non-African airlines as well.”
Asked about the granting of fifth-freedom rights, Fastjet CEO Ed Winter (pictured) said: “A lot of countries seem to be happier to give fifth freedom rights to non-African airlines.”
It was suggested to the panel that it was “a chicken and egg problem”.
Hannemann agreed, saying: “One of the reasons that there is no trade is because there are no air services.”
But he suggested that, “Airlines need to start re-evaluating their strategies and starting with short-haul and feeder markets [rather than going straight for longer haul].”
Moores pointed to a book about cycling, ‘The Theory of Marginal Gains’ about the accumulative effect of small gains.
Ultimately, it revolutionised British cycling. The point was to ask panelists what small improvements could be made to become better overall.
According to Pistik, “low-cost airlines are exactly the innovation that Africa needs.”
But Moores asked why there are only eight low-cost airlines.
“There are very true low-cost airlines and it’s less than eight,” said Winter. “There may be more ‘low-fare’ airlines.”
Skywise co-chair, Tabz Qadir said that they spent three years planning the airline, but faced lots of negativity about the chances of making money in the airline industry, especially in South Africa.
She said you have to fight – and believe in your business case: in their case, she said, “there had to be a huge market, a continent of 1 billion people and only [perhaps] eight low-cost airlines”.
In the first three months she said that they had received support from the regulator and the transport ministry. It just needed “the right approach.”
Moores noted how the way to change people’s perception was “by actually doing it.”
Winter said that low-cost airlines hadn’t happened before in Africa due to income levels.
“In Tanzania we’ve been given a free rein since we started two years ago because the existing airline wasn’t satisfying the demand.”
He said 30% of its passengers are first-time flyers, so unlike state airlines they don’t charge high fares and “disenfranchise huge swathes of potential travelers.”
But is there a safety image problem for African airlines?
Winter admitted the historic record was appalling, but added: “We’ve established a reputation for huge reliability.
“When we started passengers half-expected there to be a broken aircraft waiting when they arrived. So they’d only pay in cash – and now they’ll pay months ahead – with lower fares which is stimulating the mass market.
“The vision of Fasjet is to start a low-cost airline across the whole of Africa,” said Winter.
“But Africa is like Europe was in the 80s and early 90s…so we are creating a series of airlines – Fasjet Tanzania, Fastjet Zambia and Fastjet Zimbabwe, each with their own AOC.
“But we are trying to create synergies – for example one big maintenance contract. We are making it a very reliable, very safe airline.
“We’re very very close now to gaining AOCs in both Zambia and Zimbabwe. We are also going to create Fastjet Kenya and Fastjet South Africa as well, and then we’ll go to other places.”
A question from the audience asked about 5th freedom rights, is it a good thing or a bad thing to allow them?
Winter said that in a lot of cases there wouldn’t be any connectivity if they weren’t awarded.
“But if it exists on top of a local airline that is trying to recover, that’s not a good thing for aviation.”
Another point was made from the audience, Anna Anatolitou, partner at law firm Ince & Co, said there are examples where countries are not creating the right legal environment.
A number of African countries haven’t even signed up for the Montreal Convention, and are still on Warsaw – this can have unlimited liability to passengers, which can have a very detrimental effect on e.g. insurance.
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