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    CommentaryStrange bedfellows in African airline industry

    Strange bedfellows in African airline industry

    Date:

    Ethiopian Airlines is a truly indigenous and purely home-grown African Airline which is fully owned and managed by Africans. African airlines and African governments should believe and have confidence in African expertise and adopted technology in their pursuit to develop their aviation sectors, writes Abraham Solomon.

    One of the major breaking news that hit the headlines of major African media outlets last week was the plan by four African airlines to launch an aviation alliance. If we go by the news released by The East African, Air Mauritius, South African Airways, RwandAir and Kenya Airways are planning to launch a new alliance to break the stranglehold of Ethiopian Airlines on the continent and boost their fortunes through innovative ways.

    The newspaper reported that the four airlines hope to use the alliance to achieve the “much needed economies of scale” which would accord them improved efficiency and collaborations. This would have been a blessed idea. However, there is an ill motive behind the formation of the new alliance. The newspaper in its first paragraph hinted that the purpose of the alliance is to break the stranglehold of Ethiopian Airlines.

    Both Ethiopian Airlines and South African Airways are members of the Star Alliance Group while Kenya Airways is a member of another alliance, SkyTeam. In addition, Ethiopian has a technical cooperation agreement with RwandAir. Ethiopian Airlines provides the latter aircraft maintenance services and trains its pilots. In fact, Ethiopian and RwandAir signed a Memorandum of Understanding (MoU) for strategic partnership in 2016 but did not materialize because of a decision made by the Government of Rwanda. RwandAir will launch direct flights between Kigali and Addis Ababa in April 2019. The fact that the four airlines are conspiring against their partner airline makes their engagement very strange.

    Formation of an alliance by African airlines is a commendable initiative but why do the airlines want to alienate Ethiopian Airlines, a home grown African airline, and wage an unhealthy competition? While African skies are dominated by non-African airlines why is that the four sister African airlines want to target Ethiopian Airlines? Is Ethiopian Airlines a threat or a strategic partner for African sister airlines? I think we need to do some research and look at the facts unfolding in the African aviation industry.

    Africa’s aviation sector has been dogged by challenges, including high taxes, exorbitant price of fuel, poor airport infrastructure and intense competition from mega international carries mostly coming from the big three in the Gulf – Emirates, Etihad and Qatar Airways. The big three, which are highly financed and subsidized by the oil rich states, are flexing their muscles in Africa. Backed by petro dollars the mega carriers have dominated African skies.

    By offering dumping fares and capacity, the Gulf carriers are driving many African airlines out of the market. These deep pocketed airlines offer low fares on certain African routes and would revise their prices upward after they kick out their African competitors.

    These airlines have posed a threat not only to struggling African airlines but also to the well-established American and European carriers. According to a study undertaken by leading US airlines (Delta, American Airlines and United Airlines), since 2004, the governments of Qatar and the UAE have provided USD 52 billion in subsidies and other unfair benefits to Qatar Airways, Etihad Airways and Emirates. This subsidized support includes interest-free government “loans” with no repayment obligation, government grants and capital injections, free land, airport fee exemptions and more.

    These highly subsidized Gulf carriers have stifled the under financed African airlines. Turkish Airlines, too, has dominated the African market. Today, Turkish operates to 40 destinations in Africa. With its Istanbul hub, Turkish transports a sizeable traffic between Africa and its vast global network.

    Consequently, the market share of African airlines has been dwindling in the past decades. According to the African Airlines Association (AFRAA), the majority of the market share of African airlines is being taken away by non-African airlines. The market share of indigenous African airlines on the intercontinental traffic (traffic between Africa and the rest of the world) has nose-dived from around 60 percent in the early 1990s to 20 percent today. Foreign carriers have managed to control a whopping 80 percent of the market share.

    This is a worrisome development unfolding in the African airline industry. Unless African airlines wake up and collaborate, there will be no home grown African carriers left after a decade. African carriers should stop besieging their compatriot airlines and outline a well thought out plan to withstand the stiff competition coming from afar. While non-African airlines are eating the bigger portion of the pie blaming and targeting an indigenous African airline is not a justifiable act. Instead of collaborating to defend African skies, plotting a trap a sister African airline is an ill-advised plan.

    In the past years, many African airlines have been liquidated. Air Afrique, a pan-African airline established by 11 west and central African countries, Nigeria Airways, Ghana Airways, Ghana International Airlines (GIA), Zambia Airways and East African Airways have gone in the dust bin of history. 

    In addition to the intense competition from non-African carriers, mismanagement, lack of strong leadership, lack of long-term strategy, political interferences, lack of comprehensive national aviation strategy and policy have contributed to the demise of African airlines.

    On the other hand, Ethiopian Airlines is an indigenous African airline established, owned and operated by Africans. Ethiopian, one of the oldest airlines in Africa and has repeatedly proven to be a true pan-African airline. Ethiopian Airlines, which was incorporated in 1945, played an indispensable role in connecting African nations by air transport. When most African countries were fighting for independence, freedom fighters used Ethiopian Airlines to travel in and out of Africa. In his acclaimed book titled “Long Walk to Freedom”, the late freedom fighter and former president of South Africa, Nelson Mandela, expressed his amusement and pride when he first boarded Ethiopian Airlines airplane commanded by black pilots. Mandela who was trained to be a guerilla fighter in Ethiopia was flown to Addis Ababa by Ethiopian Airlines.

    Ethiopian Airlines has served and will continue to serve Africans in good and challenging times. It demonstrated its African solidarity by serving countries during civil wars in Angola, Namibia, Mozambique, Mali, etc.

    During the decolonization process in 1960s, Ethiopian Airlines served most of the young African nations who had no national airline at that time. Ethiopian Airlines brought our pan-African leaders together to Addis Ababa for the establishment of the Organization of the African Unity (OAU).

    In 1961 the pan-African airline inaugurated a new east-west service linking Addis Ababa with Monrovia in Liberia, via Khartoum and Accra. This was the first direct air link between East and West Africa operated by any airline. Ethiopian Airlines has been working very hard to diversify African international trade from one direction with Europe to the East particularly to China and India since the 1970s.

    As a true pan-African airline, Ethiopian Airlines has always helped sister African airlines in terms of training and technical services. The airline assisted airlines like Angola Airlines in the 1990s, Zambian Airways in the 1980s, Air Tanzania, Uganda Airways, etc. Similar support is continuing, and it is now helping countries like Togo, Guinea, Chad, Malawi, Mozambique, Zambia, Ghana, and Equatorial Guinea. Ethiopian Airlines does not see these airlines as potential competitors rather as partners working together for the development of African aviation. Today one can find many senior airline executives, pilots and technicians in various African countries who were trained at Ethiopian Aviation Academy.

    Ethiopian used its own resources to establish AFRAA in 1968 in Accra, Ghana. Headquartered in Nairobi, Kenya, today AFRAA is a trade association of 29 member airlines serving as the voice of African carriers. The association is coordinating various cooperation including training and joint procurement initiatives among African airlines.

    Ethiopian has always been at the forefront when it comes to the development of the African open skies policy. The Ethiopian Civil Aviation Authority has revealed that the Ethiopian airspace has always been open for African airlines. Ethiopia has always led the agenda of the liberalization of the African skies. It was among the first signatories of the Yamoussoukro Decision, the initiative to open African skies for African airlines, in the past and history repeated itself when Ethiopia also became among the first countries to sign and ratify the Single African Air Transport Market (SAATM) which was launched in January 2018 at the headquarters of the African Union (AU) in Addis Ababa. In fact SAATM was initiated jointly by Ethiopian Airlines, Kenya Airways (KQ), South African Airways (SAA) and Air Mauritius in 2015.

    Ethiopia has been welcoming any African indigenous African airlines. Kenya Airways flies between Addis Ababa and Djibouti with full fifth freedom traffic right but the Kenyan Civil Aviation Authority prevented Ethiopian Airlines from flying between Nairobi and Entebbe to protect the traffic for Kenya Airways. This being the fact, it is shocking to read the statement of the CEO of Kenya Airways, Sebastian Mikosz, who stated that Ethiopia pursues protectionist air market policy. At the recent annual general assembly of AFRAA Mikosz, a Polish national, stated that Africa is not ready for open skies. As an European executive, who came to Africa in 2017, he may not have good knowledge of the history of African aviation. The European Union has liberalized the European air transport market in the 1990s. It is not clear why Mikoszis trying to undermine the relentless efforts of the AU to liberalize African skies.

    The way forward should be strengthening AFRAA. African airlines should cooperate and form partnership through AFRAA. It is a continental organization representing, leading and serving all African Airlines. AFRAA should also cooperate and align its objectives with the African Civil Aviation Commission (AFCAC) and the AU to develop African aviation and change the lopsided market share of African airlines.

    Ethiopian Airlines is a truly indigenous and purely home-grown African Airline which is fully owned and managed by Africans. African airlines and African governments should believe and have confidence in African expertise and adopted technology in their pursuit to develop their aviation sectors.

    Today, the market share of all African carriers put together is only 20 percent. African carriers are all small when compared with their competitor mega international airlines coming from outside the continent. African airlines should redirect their competition towards non-African carriers which are eating their lunches and stop besieging each other. All African carriers should focus on regaining the 80 percent market share that they lost to non-African carriers. They should cooperate among themselves and consolidate their internal force to compete against the foreign carriers.

    Ed.’s Note: Abraham Solomon is an aviation commentator. The views expressed in this article do not necessarily reflect the views of The Reporter. He can be reached at [email protected][email protected]

    Contributed by Abraham Solomon

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