Are we entering a New Dawn in the Aviation Market in Africa, or is it a False Dawn? That is the question Aidan Mooney, vice president consulting at ASM, the world route development consultants highlighted when he spoke to The HUB just days ahead of travelling out to Victoria Falls, Zimbabwe for this year’s Routes Africa forum.
Is the Africa region entering a new era of aviation? Well, the latest IATA passenger traffic statistics show that the growth in Revenue Passenger Kilometres (RPKs) in the Africa region grew 3.9% during April and only 1% in the year to date for 2014, not a good indication that the strong growth in 2013 is continuing. In 2013, Africa experienced a growth rate of 5.2%, comparable with the fastest growing regions of LATAM (6.3%), Asia Pacific (7.1%), and to some extent the Middle East (11.4%).
So, should we still have renewed optimism for the Africa Aviation market? “I believe so,” says Mooney, “but it is not only the governments and airlines that need to step up, the airports and tourism authorities also have an important role to make it happen.”
There are a number of signs that there is a new era in the African aviation market, but it is definitely not emerging as rapidly as it has done in Asia and, to some extent, Latin America, notes the consultant.
The slow-down in the South African economy by 0.6% is one of the reasons why passenger traffic has only grown at 1% for the Africa region, according to Mooney, but there are no signs that the wider Africa region is slowing with the International Monetary Fund (IMF) stating the sub-sahara African economies will grow 5.4% for 2014, higher than 2012 and 2013 where the growth was 4.9%.
The low-cost business model is finally taking a hold in Africa too accounting for around 11% of seat capacity, according to ASM analysis. In April 2014, Kenya Airways launched its first Jambojet services between Nairobi and Mombasa and Eldoret, with plans to operate into international markets inthe future, including Addis Ababa, Entebbe, Kigali, Kilimanjaro and Zanzibar.
Meanwhile, low cost carrier Fastjet is trying to establish itself as a pan-African carrier and is focusing its attention on Tanzania and South Africa; it suspended operations in Ghana and Angola, but is trying to establish a new affiliate in Zambia and is set to announce further international routes in the coming weeks. There are also a number of new emerging low-cost carriers such as Discovery Air (Nigeria) and FlyAfrica (Zimbabwe), which announced its launch plans for next month just ahead of Routes Africa.
There remains a strong role for legacy operators, notes Mooney, especially those that have developed major hub operations, notably Kenya Airways and Ethiopian Airlines, which have now established their East African hubs as major hubs in Africa. “These airports are well located to take advantage of the growth in traffic between Africa and China, as well as competing against the challenge from the Middle East carriers,” explains Mooney. Both African carriers are utilising modern generation airliners on their Chinese networks with Boeing 787 Dreamliners deployed on flights by both carriers.
There is also a revival in North Africa, according to Mooney. “In parts of North Africa there is greater interest in liberalisation,” he says. Morocco is a good example as after developing open skies with Europe there has been a growth in capacity and passenger traffic. Morocco airports achieved a 9.9% growth in passengers (up to April 2014) which was driven largely by Ryanair, ASM analysis shows. “Whilst Tunisia, aiming to emulate Morocco, is holding its third round of open skies negotiations with the EU by the end of June which will raise interest from the LCCs in Europe. Egypt on the other hand has seen a reduction of seats into its main hub Cairo as its national carrier is reducing its capacity across its network by 10% to help reduce its losses (expected to be $350 million for 2013/14),” says Mooney.
So there are plenty of good news stories developing in Africa and the key drivers of passenger traffic such as economic growth, population growth, a ‘relatively’ stable political environment and the emergence of a low-cost sector provide reasons to be upbeat,” says the consultant. “But, to ensure a new dawn for the African aviation market the aviation community and its stakeholders need to continue to address the issues we all know exist: strong protectionism with a reluctance to liberalise, high taxation, old infrastructure and poor regulation,” he warns.
According to Mooney, Governments need to take the lead on these issues, but involve their stakeholders - airports, tourism authorities and airlines - to develop clear aviation strategies which are right for each country market. “For some countries this may be to develop a major regional hub, for some it may be to develop a spoke strategy to ensure it is connected to the global hubs, whilst others may have an inbound leisure focus, or an aggressive low-cost strategy. Whatever strategy is taken it must be based upon strong analytical evidence and must be implemented with precision,” he adds. With clearer aviation strategies the African aviation market will be sure to enter a new dawn.
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