Ill-prepared, African airlines could be caught offside come the World Cup

AFRICAN carriers will have to work harder to benefit from the 2010 World Cup bonanza in South Africa.

While some of the continents’ better performing airlines— Ethiopian Airlines, Egypt Air, Kenya Airways and South African Airways (SAA) — will make a killing, most African pilots and their bosses could be watch the games live on TV from the comfort of their homes and airport lounges come next year.

With less than a year to go before Africa’s single largest soccer tourism invasion, few African carriers seem to be making proper strategies to position themselves ahead of the games.

Such strategies include securing landing rights in South Africa, fleet modernisation, brand building, putting up state-of-the-art websites, facilitating online bookings, linking their websites to the various World Cup news sites and establishing world-class marketing and public relations departments.

Most of the passengers for next year’s games are expected to fly in from Europe, Asia and the Americas. Long haul carriers that fly direct from Asia, Australia, America and Europe to South Africa will have the benefit of ferrying in the soccer tourists.

South African Airlines courted

SAA, as the host airline with automatic multiple landing rights in its own country, stands to benefit most from the games. Not surprisingly, global carriers have been courting SAA ever since the 2010 games venue was announced, seeking code share agreements, landing rights in South African airports, adding new long haul fleets and joining the Star Alliance.

SAA, Africa’s largest carrier joined the Star Alliance global airline network in 2006. Since then, SAA has been spearheading the Star Alliances’ strategy in Africa.

The Star Alliance is already ahead of the other global airline groupings and is now in a position to charge a premium over market fares on the routes to South Africa.

In 2008, EgyptAir, the continent’s second biggest carrier, joined the alliance. The Star group has been courting Ethiopian Airlines, whose management is yet to announce their decision. The Star Alliance network was established in 1997 as the first truly global airline alliance to offer customers worldwide reach and a smooth travel experience.

Its members are Air Canada, Air China, Air New Zealand, ANA, Asiana Airlines, Austrian, BMI, EgyptAir, LOT Polish Airlines, Lufthansa, Scandinavian Airlines, Shanghai Airlines, Singapore Airlines, South African Airways, Spanair, Swiss, TAP Portugal, Turkish Airlines, THAI, United and US Airways.

The Stars Alliance advantage is that most of its members are already flying direct to Johannesburg. And to maximize their exploitation of the African market, the carriers plan to drop excess passengers on medium haul flights all over Sub-Sahara airports (such as Nairobi, Accra, Douala and Lagos), from where SAA is expected to forward them to the games.

Further, Oliver Tambo Airport in Johannesburg can now handle the new Airbus A380, 500-passenger carriers, clearing the way for the aircrafts’ operators, such as Singapore Airlines and Emirates, to deploy the huge machines. The inaugural Airbus A380 flight landed at the airport in November 2006, to the applause of thousands of aviation enthusiasts.

The rival British Airways-led One World Alliance, while endowed with large, long haul fleets, does not have a member in Africa. One World will have to rely on its long-range reach and its few African code-share partners to enjoy a slice of the pie.

However, the third group, the Sky Team (led by Delta Airlines, Air France and KLM), has Kenya Airways as its only member in Africa, making Nairobi its favoured hub in Africa. The Kenyan carrier has operated flights to Johannesburg and Cape Town for years, but plans to use Air Botswana as a partner to access Jo’burg remain in abeyance following suspicious objections in Gaborone. (Behind every smoke, there is a fire.)

Outside the airline groups, individual multinational carriers from Europe and Asia are already positioning themselves to reap huge profits from the World Cup. These mega carriers have booked landing slots not only in Johannesburg— already Africa’s largest and busiest Airport— but also in smaller airports like Durban, Cape Town and Port Elizabeth. Others have increased frequencies and opened new routes in West, Central and Southern African cities in an indirect approach to South Africa.

Added to this is the gusto of Middle East giants Emirates, Qatar Airways and Eithad into the region, connecting passengers faster and with additional conveniences to the Middle East, Central Europe, and Australia to the Far East. Also interested are Far East titans China Southern, Cathay Pacific and Singapore Airlines.

But instead of holding tightly to their landing slots in European airports, some African carriers are either surrendering or suspending such rights, discovering too late that they ought to have built domestic and regional traffic in the first place. Others have been banned from flying to Europe by the European Union altogether.

Whatever the reason, this does not augur well for the African aviation market. In January 2009 for instance, Nigeria’s national flag carrier, Virgin Nigeria, suspended flights to London’s Gatwick Airport, and Johannesburg. Reason? To review its long haul operations including product offerings on the routes while consolidating and continuing to expand its profitable domestic and regional flight operations.

Analysts in Lagos said the decision was due to the airline’s rising indebtedness to United Bank of Africa (UBA), one of Nigeria’s foremost financial institutions which holds a minority six per cent stake in the airline, owned 49 per cent by Virgin Atlantic and 51 per cent by Nigerian institutional investors. Virgin Nigeria has suffered poor operating results, rising costs and increasing debts.

Virgin Nigeria has recently started taking delivery of part of its order of 10 Brazil-manufactured Embraer jets, which are more suited to domestic and regional flights, perhaps in an attempt to consolidate its domestic and regional flights. Analysts said that with just one frequency to London and another one to Johannesburg daily, it simply was not worth Virgin Nigeria’s while.

Dwindling bookings

Under pressure from rising fuel costs and competition from SAA and European carriers, Air Namibia has also cut its London route and scaled down on its domestic flights, citing shrinking margins as passenger bookings dwindle.

Already heavily subsidised by the government, Air Namibia had instituted fire-fighting measures to remain afloat. The last flight on the London-Gatwick route was on June 3, 2009. The airline has also scaled down its second major route in the region, the Victoria Falls (Zimbabwe) route from five to four flights a week. The Windhoek/Johannesburg route has been reduced by one frequency with flights being reduced from two to one on Wednesdays.

The perennial loss-making national flag carrier now pins its hopes on increasing frequency on its Windhoek-Frankfurt (five flights a week) and Windhoek-Luanda routes. Stuck with non-performing traditional markets, the carrier is now spreading its wings wide, seeking new markets in West Africa and Asia to boost its revenue base and plug yawning gaps left by the plunge in European bookings.

The woes of African carriers do not stop there. Planes belonging to Zambian, Benin, the Democratic Re public of Congo (DRC), Equatorial Guinea, Liberian, Sierra Leonean and Swazi companies, have been banned from flying in Europe, according to a recent statement from the European Union (EU).

Flying ban partially lifted

Also affected are Gabonese planes and some private operators in Sudan (Air West) and Rwanda (Silverblack cargo freighters), although some of them could fly there under certain conditions which the July 2009 communiqué did not elaborate.

However, the EU has partially lifted the ban it slammed earlier on Angolan airlines TAAG, now allowing it to operate 10 weekly flights to Portugal. Still, the TAAG remains banned from flying to other EU countries. Such developments undermine the public image of African aviation which has a bad reputation globally. The aviation image of Africa is that of a place where airlines rarely operate on time, cancelled flights and higher- than-global-average civil aviation accident rates.

Many national carriers have collapsed in the last decade mainly due to inefficiency, corruption, mismanagement and interference by the very governments that owned the carriers. Frequent changes in the boards of directors and in top management of these carriers have not helped.

For instance, the state-owned Zambia Airways collapsed in 1999, while Ugandan Airlines followed suit a year later. A new, private carrier formed a few years ago to replace the Zambian national carrier, also named ominously as Zambia Airways, stopped flying in January this year to contain mounting financial losses. The Zambian government has understandably been reluctant to bail out the airline, which owes various institutions $29 million.

The most memorable collapse was that of Air Afrique in February 2002. Though ailing for years, and owned by more than 10 countries in West Africa, the carrier had operated in West Africa for decades, connecting the region to Europe and to the rest of Africa, only to collapse in the aftermath of the September 11, 2001 terrorist strike on the US.

Nigeria Airways, the national carrier of Nigeria, collapsed in 2003, and was followed by Ghana Airways, which went belly up in 2004.
Closer home, unless the Government of Tanzania revives Air Tanzania (ATCL), the East African carrier might become another sorry statistic. And the clock is ticking.

Granted, a horde of private and national carriers are very active in Africa. Egypt Air, Royal Air Maroc, Afriqiya, Air Senegal International, SAA, Kenya Airways, Air Mauritius, Air Algiere and Ethiopian are good examples. But these carriers are too few and operate smaller fleets compared to their foreign competitors, and international passenger market shares are being lost here.

Overall, African airlines are expected to post losses of $500 million (Sh40 billion) in 2009, out of the $9 billion (Sh1,520 billion) global aviation losses, because of the worldwide economic crisis, the world’s airlines body said in June.

The International Air Transport Association (IATA) Director-General, Giovanni Bisignani, recently told airline executives and regulators meeting that the global economic crisis was taking a huge toll on the air transport industry.

Still, the African airspace is the theatre of a growing industry battle with mega carriers from Europe, the Middle East and lately the Americas and Chinese mainly due to the growing number of new oil discoveries in many African countries. For example, America’s Delta Airlines has opened up routes from Atlanta to Cairo, Dakar, Lagos Abuja and Johannesburg.

The carrier is also keen to operate Nairobi flights, but was embarrassed by a US government’s late night advice to cancel a June 3, 2009 inaugural flight to Kenya because of unexplained security fears at Nairobi’s Jomo Kenyatta International Airport. The cancellation also embarrassed the Government of Kenya, whose Transport minister Ali Mwakere was already in the US, waiting to board the launch flight home.

Africa Insight is an initiative of the Nation Media Group’s Africa Media Network Project