Vanilla team and the flavour of things to come
Air Austral, Air Madagascar, Air Mauritius and Air Seychelles joined forces in 2015 to create the Vanilla Alliance, which is currently headed by Air Austral CEO Marie-Joseph Malé. A year on, as Victoria Moores reports, the alliance is finding its feet.
When you decide to form an alliance of four Indian Ocean airlines, it helps when one of your CEOs used to head up SkyTeam.
“I have a little bit of experience of multi-lateral cooperation,” explained Air Austral CEO Marie-Joseph Malé. “At the end of the day, all of the CEOs are qualified.”
Former Air France executive Malé became the first managing director of SkyTeam in 2009 and his first task was to finalise its organisational structure. “Perhaps this is what my experience brought to the Vanilla Alliance,” he said. “Everyone wants to go immediately to joint fuel purchasing, but first you need to establish how you will make decisions, otherwise you will be lost in the middle of nowhere.”
Another thing Malé learned from his SkyTeam days was the need for simplicity, although he jokes that keeping things simple is not simple. “You can’t expect too much time and investment from small airlines, so we decided to have a very light structure and to work on small projects that will bring quick wins for the airlines. The first topics that spring to mind [to work on] aren’t as easy as you’d think.”
This push for simplicity is also woven into the alliance’s internal structure. It has just two staff – a secretary general and a director to coordinate the working groups – who work about five days per month on a consultancy basis. These are former Air Mauritius chairman and board member, Nirina Andriamanerasoa, and former Air France alliances director and SkyTeam member, integration project leader, Pascale Delforn.
Soon after the alliance was formed, three of the airlines – Air Madagascar, Air Mauritius and Air Seychelles – went through leadership transitions, so the first challenge Malé had to tackle was actually having four CEOs to assemble around a table.
“In June 2016, we had our first Vanilla Alliance board meeting [held in Réunion]. The heads of Air Madagascar, Air Mauritius and myself were there, and Air Seychelles sent a representative. First we had to make everyone aware of our objectives, our mission and what’s been done, but we also had to get to know one another, to get a really good level of understanding between the CEOs.”
Vanilla Alliance’s initial activities are limited to four areas: optimising flight schedules, creating a flight pass that covers all four airlines, leasing aircraft from one another in the event of disruption and – most recently – a joint fuel purchasing project.
On the network side, the alliance is aiming to establish daily frequencies between the capitals of the Indian Ocean Commission (IOC) Vanilla Islands of Comoros, Réunion, Madagascar, Mauritius and Seychelles. “We are a long way off that,” Malé said. “We made some improvements between summer 2015 and summer 2016, but we will not stop at that.”
This schedule work is the underlying reason why the Vanilla Alliance was created. The IOC started pushing connectivity in 2012 and held a conference on regional air services in May 2013. This gave birth to the ‘wings of the Indian Ocean’ strategy, which was published in January 2014, calling for stronger inter-island links. In July 2014, two committees were created to pursue the project, one for the airlines and one for their civil aviation authorities (CAAs). The airline group, chaired by Malé, formally established the Vanilla Alliance on September 21 2015 in Antananarivo, Madagascar.
“The primary motivation was to promote connectivity inside the Indian Ocean and allow people to travel more easily between the islands,” Malé said. This has led to the planned creation of the vanilla pass, which will give passengers access to cheaper flights between the islands. A few years back, three of the airlines had a similar cooperation, although the pass could only be used in conjunction with long-haul flights from Europe. The alliance is now working to revive that pass across its four member airlines and extend it to local residents as well.
The CEOs will also try to reach a simple agreement on short-term aircraft leases and they will hear from the newly created fuel purchasing group, which will have met for the first time by then.
The African Airlines Association (AFRAA) already has a fuel-purchasing group in place. Even though Air Madagascar, Air Mauritius and Air Seychelles are all AFRAA members, Malé said he would like to get the Vanilla Alliance initiative under way before reaching out to other potential partners.
One obvious airline addition to the Vanilla Alliance would be Comoros carrier Int’Air Iles, which currently has observer status. “When the alliance was created, Comoros didn’t have an airline, but since then they have designated Int’Air Iles,” Malé said. Once it has secured its International Air Transport Association (IATA) safety certification and completed a year’s operations, it should become a full Vanilla Alliance member. In the meantime, the CEO of Int’Air Iles has been invited to attend the board meetings as a guest.
When asked whether more airlines could join, Malé reiterated the need for simplicity. “We have to get ourselves organised before we can work with anyone else. It is a ‘wrong good idea’ to think that larger volumes lead to gains beyond a certain level.”
So, if more members – aside from Int’Air Iles – are unlikely in the short term, is there scope for closer cooperation through equity stakes, or expansion into more complex areas such as common aircraft purchasing?
For the time being, Malé thinks both are unlikely, especially as most of the airlines are state-owned. “Perhaps it is wishful thinking on my side to think that we could do a small equity exchange to symbolise [our partnership]. Why not? We can talk it over, but in the short foreseeable future I don’t see potential for larger equity stakes.”
And, while the idea of joint aircraft purchasing has been explored by the global alliances, it has proven tricky to implement. “Everyone had this idea initially because it seems to be pretty obvious, but each airline has their own practical requirements, which make it very, very difficult. What’s true of global alliances isn’t necessarily true for smaller groups, which can be easier. First we need to get to know one another better. Maybe we will think about it in one to two years, when things are a bit more comfortable. It’s very interesting.”
In future, the Vanilla Alliance is also likely to benefit from the second group created by the IOC, the civil aviation group. This is a “regulatory mirror” to the Vanilla Alliance, bringing together the CAAs of the Vanilla Islands, chaired by the head of Madagascan CAA.
“For the pass, we will have to do some lobbying with the local authorities. We have some tax issues that we will have to tackle if we want to make our tariffs attractive for residents.”
This is simplified by having a single point of contact, in addition to strong relations between the local airlines and their own CAAs.
When the June 2017 board meeting comes around, Malé will hand over his Vanilla Alliance chairmanship to one of the other CEOs. When asked about what the Vanilla Alliance will look like in five years, Malé replied: “In the airline business, three to four years is a long foreseeable future. Today, we are a long way off meeting all the challenges we want to meet in the alliance, such as cultural fit and operational efficiencies. Three years is the minimum we need to get synergies. It would be easy for me to say that we will expand in a second stage, but that would mean nothing. For now, we want the four or five airlines to work together to improve connectivity and their results. Today, that is my only priority.”