44th AFRAA AGA

Leaders from the African Airlines industry concluded their 44th Annual General Assembly and conference in Johannesburg, South Africa today with a call for airlines cooperation, market liberalization and creating of a level playing field to facilitate competition and sustainable growth. The three-day conference was held under the theme “Business together in the era of growing opportunities” and brought together over 392 high profile delegates from Africa and across the world.

Opening the Assembly, the Minister for Public Enterprises of South Africa, Hon. Malusi Gigaba, challenged African airlines to be more aggressive and innovative in the business and work together to better serve the continent air transport needs. He called for the implementation of the key recommendations and resolutions that will emerge out of the conference. He further called upon industry stakeholders in Africa to work together and seek partnerships to broaden their network and compete with operators from other regions.

Welcoming delegates to the meeting, the President of AFRAA and Chairperson of South African Airways, Vuyisile Kona, noted that air transport liberalisation is good for the continent although it can pose serious survival challenges to local airlines that are ill-prepared to compete in a liberalized market. He said South African Airways was ready and willing to support other African airlines in areas where it has expertise. He commended the large turnout at the AGA and reiterated the need for airlines to commit to working together through commercial cooperation and joint initiatives to derive economies of scale. In his words, “this is the only way we can be competitive and profitable”.

The Secretary General of AFRAA, Dr. Elijah Chingosho deplored the excessive airport taxes, charges and fees being levied on airlines and passengers and said, “... this in addition to the generally high cost of operations, is making African airlines less competitive compared to their foreign counterparts.” Dr. Chingosho called upon African States to take their safety oversight responsibility seriously and together with the African Union engage the EU on the putting of many African states and airlines on the EU banned list. The Secretary General bluntly stated that the EU list of banned airlines was a ploy to switch traffic from African operators to their European competitors. Dr. Chingosho queried how one can explain why the EU claims some African destinations are unsafe and yet the EU carriers continue to operate and conduct brisk business out of those unsafe markets.

Address by the Vice President of IATA, Mr. Tom Windmuller: There is a long history of cooperation between IATA and AFRAA but it has never being so close thanks to AFRAA secretary-general Elijah Chingosho.  He stated that aviation’s contribution to gross domestic product in Africa would increase by 5% a year over the next 20 years, which would add 66,000 jobs. For this development to be sustainable the aviation sector makes money but the IATA forecast is that there will be no profitability for African airlines this year.  Business travel to Middle East from Africa increased by 21%.

His address focused on safety, security, environment, taxes and fuel and on the new distribution capability. On the issue of safety, he referred to the challenge African airlines face of improving its image and safety standards after the European Commission in April banned operations of more than 100 African airlines, citing safety concerns. He stressed that   EU must work close with the affected states. As far as the postponement of the EU ETS he said that EU decision created some space for negotiation, the challenge is to remain united since no solution can satisfy all airlines.

The problems facing the continent's airlines were safety, security, infrastructure and the regulatory and fiscal environment.
Passenger numbers are expected to grow significantly between now and 2030.

IATA’s forecast last month estimated that collectively African airlines will make no profit this year.

On the role of government in the development of air transport in Africa, the AFRAA Assembly called upon governments to demonstrate commitment towards liberalizing the air transport industry and creating a conducive environment for airline operations. This will stimulate regional and domestic traffic growth and create a bigger home-base market for our intercontinental airlines. Governments should remove barriers to cooperation between carriers and put in place policy and regulatory framework that facilitate beneficial cooperation.

A former Chairman of EgyptAir Group and AFRAA, Eng. Hussein Massoud, was recognized at the AGA for his distinguished contribution to AFRAA and the African aviation industry. Eng. Massoud, who is also the immediate former Minister of Aviation of Egypt, received the plaque of recognition from the Minister of Public Enterprises of South Africa, Hon. Malusi Gigaba.

Growing Opportunities

Dwelling on the theme of the conference, “Business together in the era of growing opportunities”, speakers lauded the enormous growth opportunities in Africa and why African airlines should position themselves to benefit. It emerged that airlines can do more to support each other. The big African carriers offered to support the smaller ones, and asked the smaller carrier to seek help whenever they require it. Issues of liberalization, market access, elimination of non-tariff barriers and improving safety and security as well as investment in infrastructure dominated discussions.

African Airlines Performance in 2011

In a detailed annual report on the performance of African airlines presented by the Secretary General of AFRAA, Dr. Elijah Chingosho, during the just concluded AGA, he noted that passenger traffic in 2011 declined by 8.2% to 56 million, due to the Euro zone financial crisis and the political instability in parts of Africa, especially North Africa. The report noted that 42% of all passengers into and out of Africa travelled on intercontinental routes, 26% travelled within Africa (intra-Africa) while 32% were domestic passengers.

Europe remains the biggest air transport market for African airlines accounting for 156 billion RPKs in 2011. Looking ahead, Europe is forecast to have the lowest growth potential at just 4.5% per year over the next 20 years. The market to watch according to the 2011 AFRAA annual report is Asia Pacific. In 2011 Asia Pacific accounted for 6.2 billion RPKs, but with a forecast growth of 8.2% per year over the next 20 years, and little competition from the Asian carriers (at least for now), the region may well be the market to target for future passenger and freight growth according to AFRAA.

On freight, the report noted that African airlines still lack the capacity and are not properly structured to take advantage of this business segment currently dominated by non-African airlines. According to AFRAA, airlines continue to lose freight business on intra-Africa and domestic routes to road, water and rail transport systems. Of the 705,000 tonnes of freight carried in 2011, 68% was to/from intercontinental destinations, 23% to intra-Africa routes and 9% on domestic networks.

The continent recorded 68.2% average load factor in 2011, up 1.2% from 2010, compared with the industry average of 75.0%. AFRAA attributed the low load factor to a miss-match of capacity and demand, lack of cooperation among airlines and over-capacity on some routes.

On fleet, the report noted that, Africa fleet is only 4% of the total global commercial aircraft in operation and is made up of 64% single-aisle, 29% twin-aisle, 6% regional jets and 1% large jets. The average age of the fleet improved significantly to 14 years in 2011 due to the replacement of some overages aircraft and the acquisition of new ones by some airlines. AFRAA predicts that over the next 20 years, the continent will need to acquire 800 aircraft worth US$100 billion to replace some existing fleet and meet traffic growth needs.

On safety, the report noted that significant improvements have been made over the years with 38 African airlines currently registered on the IOSA registry. Of the total of 39 fatal accidents recorded globally in 2011, Africa accounted for 13% or 5 accidents. AFRAA urged States to take their safety oversight responsibility seriously and called on countries with challenges in meeting their safety obligations to seek assistance through the AFCAC/ICAO initiated AFI Plan for Safety programme. In a resolution adopted on safety, African airlines condemned the EU list of banned airlines and called upon the European Union to adopt pragmatic and constructive approaches to dealing with safety in the industry. The resolution further acknowledged ICAO as the only neutral body with a mandate to oversee to the global regulation of aviation and urged the EU to avoid unilateral regulation of the aviation industry which will serve no good but only ignite retaliation. The AFRAA 44th AGA called upon ICAO to speed up work on coming up with a globally acceptable formula for dealing with carbon emissions by airlines, now that the EU have put the Emission Trading Scheme on a one year temporary hold.

Appointment of Officers

The AGA elected Dr. Pimentel, the Chairman and CEO of TAAG Angola Airlines as Chairman of the Executive Committee while Mr. Inati Ntshanga, CEO of South African Express and Mr. Sergio Rosa CEO of Air Burkina were re-elected First and Second Vice Chairmen respectively of the Executive Committee. The AFRAA Executive Committee has oversight responsibility for the Association and crafts policy as well as oversees implementation of projects and programmes by the Secretariat.

The Assembly also elected new members to replace those whose term of office on the Executive Committee expired at the close of the 44th AGA. Mrs. Fatima Beyina-Moussa, CEO of EcAir (West/Central Region); Eng. Enhemed Elwani, Chairman and Ag. CEO Afriqiyah Airways (Northern Region) and Mr. John Mirenge, CEO of RwandAir (Eastern Region) were elected for a term of 3 years each.


CEOs on Panel
Focus Areas: How can African airlines work together to remain competitive?

Moderator, Mr. Girma Wake, Advisor to the Ministry of Transport & Board, Chairman of RwandAir, said that African airlines  left a lot of space in the african market and now there is a  need to feel these gaps. Africa is not served enough. African airlines have got to make the effort and the best way to achieve it is to trust each other.

Mr. Vuyisile Kona, Chairman of the Board & Ag. and CEO of South African Airways, said that his airline wants to operate more at night times but infrastructure in Africa is not adequate. The political instability in the continent makes things and more difficult and investments highly risky and thus unlikely. There is also in Africa lack of expert aviation skills but the cost of training is high.There are ways that African airlines can cooperate together in an  industry that is not static but dynamic. In his words, cooperation “is the only way we can be competitive and profitable”.


Dr. Titus Naikuni, Managing Director & CEO, Kenya Airways, stressed the importance of liberalisation saying « Our skies are not open. We have capacity but we can’t access the market. We just give the rights away to non-African airlines». He continued by saying that in the current environment size does matter and African airlines and governments should reconsider the prevailing attitude of supporting the flag carrier.



Mr. Tewolde G.Mariam, CEO Ethiopian Airlines, on his part claimed that there is a lack of adequate integration in the continent. Given the regional regulatory framework the airspace is more open to non-African airlines. In his words “the regulatory framework is not balanced, everything is done on a bilateral basis. That is why 80% of the market is with non African airlines.” He stressed that African airlines should cooperate in various areas, adding that African nations should open their skies to African carriers. African Union must be a block the same way EU is a block. He added that although air transport is critical in Africa and for its economic growth, it is very taxed. Infrastructure is poor and governments are not investing.



Mrs. Fatima Beyina-Moussa, CEO ECAir, referred to the lack of expertise in cargo and the urgent need for African airlines to emphasize on training and to align the schedules of the african airlines.


Mr. Alphonse Kioko, CEO of Precision Air, said that it was the cooperation with Kenya Airways opened the doors for Precision Air. He went on to say that there are a lot of gains from synergies and as a result the costs went down.




Panel Discussion
Theme: How to be and remain a successful airline through innovation, efficiency and cost management


The moderator, Dr. Kostas Iatrou, Managing Director, Air Transport News, in his opening remarks said that the current environment operates under the influence of an economic crisis and that since the air transport industry is dynamic and not static airlines must adapt to new realities. He added that LCC carriers have appeared in the African market and the African air traffic is dominated by non-African carriers.



Mr. Inati Ntshanga, CEO South African Express, stated that people are the most important asset of the business. Airlines need to innovate around people via training etc. He added that business models need to be reviewed so as to focus on revenue enhancement, measurement. He pointed to the importance of joint activities and «why not an African alliance». He continued by saying that if a business doesn’t innovate it will die but innovation must not be complicated. He closed by saying that yields will continue to decline for the airlines therefore, airlines must employ the right product. 


Mr. Chris Zweigenthal, CEO AASA, stressed that airlines must identify the market needs, to choose from the available innovations and decide whether they can afford the cost. Airlines and governments must create in Africa an environment that can attract business and facilitate the «do business» process. He stressed that  there will be no success if african airlines fight against each other. He added that iInnovation is needed on  a strategic level, that is  find certain synergies in order to create regional alliance. There is also the need to strike the balance between what the market requires and what the states require.


Mr. Maher Koubaa, VP Middle East and Africa, Sabre Airlines Solutions, stressed that there is new category of airlines the innovative airlines and that innovation strong driver for profitability since it what make the differentiation from competition. Another key factor he mentioned is the understanding of the specific market. He referred to the virtual alliance based on the agreement that was signed with AFRAA and which will enable African airlines to coordinate their schedules and achieve in total 100 million USD of extra revenue. 



Mrs. Sandrine de Saint Sauveur, President and CEO, APG, said that while airlines in Africa concentrate on home markets, airline profitability can be achieved when considering the other markets, and the big market is out of Africa. She also said that  only 36 African airlines are member of BSP. She concluded that there is a cost to be part of an alliance despite all the benefits.



Mr. Will Owen-Hughes, Snr. Director, Supplier Services, Travelport, claimed that the consumer is the king and that airlines are not selling seats anymore but airline brand.

Mr. Bruno Boucher, Associate Partner, Lufthansa Consulting, on his part referred to the aviation industry as  a jungle of regulation and  added that everyone in this industry making money apart from the airlines. Airlines need to have the right tools and support. The important is how airlines want to do it and this becomes an art when managing an airline. He also supported that innovation is the strategy for survival and therefore airlines must provoke innovation.

Source:airtransportnews