Homing in on Africa

Adding more routes to Africa will help Chinese carriers circumvent competition at home

Economic globalization has helped Africa become the fastest-growing aviation market in the world, with more carriers now looking to shore up their operations on the continent.

The strong growth seen in China and other BRICS economies has given new impetus to the African aviation market. The rapid growth of the African aviation market and the competition at home has prompted many Chinese carriers to seek new growth avenues in Africa.

China has increased its aviation investments in Africa as part of its efforts to promote economic prosperity and to cater to the demand from growing bilateral trade ties and rising passenger numbers.

Hainan Airlines is planning to start a tri-weekly Beijing-Mumbai-Nairobi flight from August, while China Eastern Airlines and Kenya Airways have launched code-sharing arrangements on the Shanghai Pudong-Bangkok-Nairobi route. The move has helped China Eastern expand its international route network and also further enhance its close cooperation with an African carrier. The two carriers are planning code-share arrangements on the Shanghai Pudong-Kunming-Dubai-Nairobi routes sometime next year.

The development of civil aviation in Africa, and the steady influx of aviation talent and logistics investments in the sub-Saharan region have created strong growth platforms for the Chinese aviation industry.

The Ethiopian government has invested $2.6 billion to update aircraft as part of its efforts to make Addis Ababa an international shipping hub connecting Asia, Africa and Latin America. Kenya Airways plans to invest $3.6 billion over the next five years to double the current number of aircraft, with an eye on being the regional aviation hub of East Africa.

Currently, both the countries have non-stop flights to major cities in China on a weekly basis. Other African carriers are also expanding their horizons. Rwanda recently established aviation links with Turkey, while Botswana started flights from Maun to Cape Town, South Africa, last year.

However, due to the lack of large airlines in Africa such as British Airways, United Airlines and Air China, most of the carriers lack the economic capacity to operate on intercontinental routes.

With most of the slots in other continents already occupied by big global operators, many carriers from Asia, Europe and the United States are focusing on Africa. Currently, there are 17 non-African carriers that have got the Five Freedoms of the Air in Africa - a set of commercial aviation rights which permit carriers to land and take off in each other's airspace. However, only 11 African operators have got this right.

Being late bloomers, African carriers cannot stop the influx of foreign carriers in the African market, but can look to gain a foothold in other markets through mutual exchanges.

Though the African economy is in a stage of rapid development, the degree of interoperability is still low between various regions of Africa, even among major cities in the region. Recognizing this urgent need may be a breakthrough for African and Chinese carriers, especially as there are very few foreign competitors on domestic routes.

The Ghana-based Africa World Airlines is an ideal example to illustrate how foreign operators are pursing new growth opportunities in Africa. In March 2013, Hainan Airlines, China-Africa Development Fund, Strategic African Securities and Ghana's Social Security and National Insurance Trust established a joint venture to strengthen the connections between AWA's African regional routes. Currently the AWA network extends to all the major routes in Ghana and to all major international flights in the West African region. When its network is complete, AWA plans to use large aircraft on African routes and even on routes to China.

What this means is that, African countries can use foreign capital to further promote economic, trade, cultural and tourist exchanges between regions.

Medium-sized African carriers can also try to achieve maximum benefit by expanding their aviation network, forming alliances and implementing cost saving measures to cope with challenges from other carriers.

Royal Moroccan Airlines and Senegal Airlines plan to broaden their cooperation by bringing more Western and Central African carriers under their wings. Ethiopian Airlines, South African Airways and Angolan Airlines have begun joint operations, while Kenya Airways, Air Mauritius and RwandAir have come together. Egypt Airlines, South African Airways, Royal Air Maroc and Tunisair have also become partners.

Efforts are also underway in Africa to strengthen the first pan-African low-cost airline, Fastjet Plc, which started operations in November 2012. The Tanzania-based carrier plans to extend operations to Kenya, Ghana and Angola.

It is also in takeover talks with South African budget airline ltime Airline (Pty) Ltd. Fastjet is also in talks with Emirates Airlines for partnership arrangements.

However, African carriers still face many challenges. Since most of their aircraft are old, regions like the EU have imposed flying restrictions on African carriers. Most of the carriers are also not that competitive in terms of service and prices.

According to the International Air Transport Association, the highest ticket prices in the global aviation market are in Africa, while the carriers are ranked the lowest in terms of service quality.

In addition, management of airports is relatively poor, while most of the aircraft are second-hand purchases from the US. Lack of timely maintenance and poor pilot training have also contributed to the poor quality of services.

To help African countries overcome this situation, China has signed a memorandum of understanding on cooperation in civil aviation with seven African nations. Hopefully this will open the doors for more Chinese investment in Africa.

The author is a professor at the College of Air Traffic Management under the Civil Aviation University of China in Tianjin.

(China Daily Africa Weekly 02/28/2014 page9)