Monday, April 29, 2013

● CONGO (BRAZZAVILLE): AFRAA sees strong short term growth in African air travel market as doomsayers remain pessimistic about the long term.

The African air travel market growth is set to remain strong with an increase of 5.2% projected for this coming year, Elijah Chingosho, the Secretary General of the African Airlines Association (AFRAA) has said in Brazzaville. Doom-sayers in the industry, however, remain very pessimistic about the long term future of the continent's airlines given their inability and/or disinterest in merging.

Speaking in Brazzaville, Mr Chingosho added that while Europe is still the continent's primary destination at 56%, dialogue with the European Union should be opened apropos the EU No-Fly List; a List that even IATA honcho Tony Tyler has gone on record as saying "lacked transparency" while claiming "it did nothing to improve safety as a whole."
Mr Chingosho
"The huge growth potential of the African continent stimulates the development of air transport and the average growth, which stood at 4.5 percent in 2011, reached 5.1 per cent in 2012 and could be 5.2 per cent in 2013,'' Mr. Chingosho told journalists.
Source [Panapress]

However, while short to medium term growth is expected to remain strong, other industry professionals have expressed their grave concerns regarding the future of many of the continent's airlines, with some foreseeing a mass-extinction of all African carriers by 2050 as a result of their inability to merge and expand their market shares.

During the recent Nigeria Aviation Summit organised by Sabre, Nigeria, the convener of the event, Sabre Chief Executive Officer,  Mr Gabriel Olowo, in his speech “A dozen world airlines by 2050,” emphasised that Nigerian and African airlines face serious trouble if they do not embrace merger and consolidation.

He added that all efforts to ensure merger and consolidation among the continent’s carrier had failed in the past, but stated that merger or consolidation could not be achieved by government coercion.
Nigerian airlines are at the bottom level of success. The six airlines we have in operations are in the lowest rung of the ladder in terms of revenue, service delivery and good business model. Business climate is shifting from the West to Africa and when that shift comes, the continent’s carrier may be caught napping,” he said.
Source [The Tribune]

Mr Olowo explained that revenues of the three biggest airlines in the continent, Kenyan Airways, Ethiopian and South African Airways, which he put at over USD3billion or just 35% of the annual revenue of Emirates (EK). 

Last year in December, Ethiopian Airlines (ET) rejected outright, a proposal by Kenya Airways' (KQ) outgoing CEO Titus Naikuni regarding a possible mega-merger between Ethiopian, Kenya Airways and South African Airways, as being "impractical."

During the 44th Annual General Assembly of the African Airlines Association (AFRAA) held in Johannesburg in late November, Naikuni went on record proposing the creation of a large African airline capable fighting back against large foreign carriers - Emirates, KLM/Air France, British Airways - which currently dominate Africa's international market.