Shifts towards new market policies, airline behavior, operation models, and governance are clearly pointing towards a consolidated African aviation sector.  Accelerated by the pandemic, what were once loose discussions around the formation of mutual pan-African airline ties are now taking shape.

While conversation centered on establishing an African airline or airline group has been taking place for some time, it’s only now that action is being seen and new partnerships are leading the way. The Yamoussoukro Decision, a document dating back to November 1999, set in motion to liberalize African air services, which have operated under multilateral agreements set on a country-by-country basis. 

Limitation

This has limited the free movement of trade goods and air services across the continent. The implementation of policies such as the Single African Air Transport Market (SAATM) and the African Continental Free Trade Area (AfCFTA) pick up where former efforts left off. This liberalization has alleviated restrictions on the airspace, lessened tariffs, and red tape, and potentially lead to an increase in passenger volumes. 

This much came to the fore on Thursday as Kenya Airways Chief Executive Officer, Allan Kilavuka disclosed that the African airline industry needs a period of consolidation if the continent is to overcome its connectivity challenges.  Speaking at the CAPA Aviation Leader Summit in Manchester, England, Kilavuka said that the fragmented nature of the sector is due to protectionist measures, stressing that it is stifling economic growth in the region.

Kenya deepens ties with South African Airways

Kenya Airways is currently in the process of deepening its ties with South African Airways (SAA), while at the same time looking to add a new partner in West Africa. The partnership between the East African carrier and its Southern African counterpart seeks to leverage their respective Nairobi and Johannesburg hubs. The airlines also hope to strike an agreement with a West African carrier to create a three-hub strategy, allowing them to offer a more comprehensive route network.

 “The continent is very fragmented from an airline perspective,” Kilavuka said. “We have so many airlines and my personal view is that we need consolidation. That’s therefore what we’re working on. We’ve started discussions with all the major airlines in Africa, particularly our neighbors.”

Kenya Airways and SAA announced their planned partnership in September 2021 and finalized the agreement in November 2021.

The idea is to see how you can use assets from each airline to increase productivity and have a two or three hub strategy that will encourage this large continent to connect to each other,” Kilavuka said. “It will increase options for our customers and reduce operating costs.” He added that the “future of aviation in Africa lies in consolidation,” saying that better connectivity across the continent would act as a catalyst for economic growth.

Airline chiefs back partnership

Today, industry and airline executives agree that airline partnerships and mutual cooperation are prerequisites for emerging from the pandemic downturn with a stronger and better-connected African market that competes on an international level.

The African sector has responded with an increased urgency to augment infrastructure and personnel training. This includes expanding the continent’s regional connectivity by adapting and modernizing its fleets to allow passengers wider access to more destinations through regional airports.  A key motivator in this focus on regional operations is the projected population growth rate on the continent.

Over the past 30 years, the African population has doubled, reaching 1.3 billion in 2018 compared to 550 million in 1985.  By 2050, the population is expected to double again on the back of a growing middle class and projections of 26 African countries doubling their current population.  Improved regulations are expected to enable greater air service efficiencies for the continent’s short to medium-haul fleets, which include regional aircraft types. 

Regional partnerships take form

At the 51st IATA Annual General Assembly, which was held in Boston in late October 2021, airline executives pushed forward the idea of combining resources and capacities as a solution to combat the sector’s fragmentation, stagnant regulations, and excessive fuel costs. Alongside fragmented airspace, other agitators of the continent’s fuel costs include minimal aviation fuel production on the continent, and an inadequate road network and road infrastructure.

This poses a challenge to the efficiency of fuel deliveries, which are operated by trucks that utilize regional road networks.  Price competition on the continent is also a concern as airlines group to unionize the sector. However, the sector’s leaders suggest that the benefits would far outweigh the risks.

The Chief Executive Officer of South African Airways, Thomas Kgokolo, believes that airline subsidies may hold more benefits over capital injections, as the sector addresses low connectivity on the continent.  Resource pooling could, therefore, help to stimulate the market, but of course, one has to be careful of competition boundaries,” stated Kgokolo during a panel discussion at the AGA.  In the industry, there is an emphasis on reforming African carriers’ approaches in order to stimulate recovery in the market and step away from working in isolated bubbles.

Synergy with international players

Sector dynamics in Central Africa are interesting to explore. While we’ve seen a number of collaborations between South and Central African airlines, there are some African carriers who are joining forces with international players. The realization of partnerships between African and international airlines is also gaining momentum as the sector consolidates.

These African carriers are set to gain access to expertise, resources, and an understanding of how to better position their business by tapping into the global networks and traffic of international players.  In return, African carriers can offer greater connectivity options for global airlines looking to broaden operations on the continent. The RwandAir and Qatar Airways partnership is a prime example of a mutually beneficial alliance between an African and international airline. Over the past two years, Qatar Airways has been focused on an expansion plan that involves broadening its footprint on the African continent.  In December 2019, Middle Eastern Airlines secured a 60% stake in Bugesera International Airport, a new airport under construction in Rwanda’s capital Kigali. In February 2020, Qatar also confirmed its partnership with Kigali-based RwandAir after acquiring a 49% stake in the airline. Together, the airlines boast a network that covers more than 160 destinations, which are served through their main hubs in Doha and Kigali. After signing a codeshare agreement in October 2021, passengers on both airlines can connect to more than 65 destinations across Africa and globally.

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