African Airlines to face Powerful Competition with Incomers

Africa is tipped to be one of aviation’s hot spots over the next 10-20 years. Growth rates are already strong, as increasing numbers of countries on the continent expand economically and develop a middle class.

But commercial aviation in Africa is still constrained by a combination of poor infrastructure, restrictive visa regimes and protectionism. Which makes it difficult territory in which local airlines can grow.

Although the size of the continent means that flying is the obvious way to get around, there has traditionally been a lack of intra-African services.

For many years, this has meant that getting from, say, one capital in Central Africa to another in West Africa has meant travelling – incredibly – via Paris. (France was the colonial ruler of large swathes of western Africa and many countries retain French as an official language.)
There are relatively few large carriers based in Africa – South African Airways, Kenya Airways and Ethiopian are some of the majors – that have sizeable regional networks.

But, just as the growing African economy should be giving those carriers a boost, they find that outsiders are eating their lunch.

Perhaps unsurprisingly, it is the Persian Gulf’s ‘Big Three’ – Emirates Airline, Etihad Airways and Qatar Airways – that are fast becoming major players in Africa, deploying their ever-growing capacity to soak up passengers. Increasingly, those passengers are being sucked into the seemingly insatiable maws of the hubs in Dubai, Abu Dhabi and Doha. Just this year, the three Gulf carriers have launched, or will launch, services to Algiers, Bamako, Entebbe, Dar-Es-Salaam, Durban, Zanzibar, Accra and Mogadishu. They are also increasing frequencies or up-gauging aircraft on several African routes.

While this undoubtedly increases choice for African passengers, there are signs that it is starting to stress local carriers. In July, Kenya Airways cited competition from the Gulf carriers as one reason behind an annual net loss that spiralled from around $33 million in 2013-14 to $275 million for 2014-15.

And perennially loss-making South African Airways has been trying for some months to strengthen its relationship with Emirates, on the basis that ‘If you can’t beat them, join them.’ It also has a codeshare with Etihad.

Gulf airlines are also stepping up their cargo services into the continent. Again, West Africa is a particular target, but in early August Qatar Airways launched a specialized freighter service into Djibouti. The tiny northeast African nation has big ambitions to become the main logistics hub for that part of the continent and is the latest destination for Qatar Airways’ fast-expanding cargo arm, which already has regular dedicated freighter flights to six other points in Africa.

And as well as the Gulf carriers, indigenous African airlines may also be facing a new threat from China. China Southern has inaugurated a Guangzhou-Nairobi service, while earlier this year Air China announced plans to start routes from Beijing to Addis Ababa and Johannesburg. And the huge HNA Group, parent to Hainan Airlines, has a controlling stake in Ghana’s Africa World Airlines. The Chinese government is believed to be keen also to have domestic airlines initiate services to Africa. China, of course, has been pouring investment into Africa for some years, mainly to buy up minerals and other raw materials to feed its booming economy, so the Asian nation’s desire to add direct air services to the source of many of its business interests is understandable.

But it creates yet another problem for those African carriers seeking to carry their nation’s name further afield.

-Airways News