Collaborate to recover intercontinental market share

Collaborate to recover intercontinental market share

The 48th African Airlines Association Annual General Assembly (AFRAA-AGA) will take place at Victoria Falls, Africa’s tourism capital from 20 to 22 November. This major event takes place at a time when African aviation is growing at above average rates but is yet to meet its full potential. In an interview to Logistics Update Africa, Captain Ripton Muzenda, president of African Airlines Association, speaks to Reji John about the changing dynamics of African aviation industry and how the continent’s aviation industry is bracing up to deal with the increasing domination of overseas carriers in the intercontinental operations to and from Africa. Muzenda, a pilot for over 25 years, was appointed the new chief executive officer of Air Zimbabwe in August this year. Air Zimbabwe is the host airline for the AFRAA AGA this year.

As a host airline for the 48th African Airlines Association (AFRAA) Annual General Assembly (AGA) and ready to welcome delegates, what are your thoughts on the African aviation industry and what are some of your expectation from the AGA this year? The African aviation industry is undergoing various challenges which include relentless competition from well-resourced mega carriers from outside the continent, largely from the Middle East and Europe, and increasingly from Asia. The industry is saddled with high costs due to excessive taxes, charges and fees on fuel and passengers as well as monopoly service providers. There are also opportunities arising from growing intra-African trade, tourism and growing middle class with a propensity to travel by air which the industry is ready to exploit. The theme of this year’s AFRAA AGA is “Managing the Survival and Market Recovery of African Airlines”. This sums up my expectations of this AGA where, as the leaders of the airline industry we need to reflect together on how we can collaborate to surmount the various challenges staked against us to ensure our survival and recover intercontinental market share which currently is heavily dominated by non-African carriers.

AFRAA was set up in 1968 with a mission to be the leader and catalyst for the growth of a globally competitive and integrated African airline industry. As an airline chief executive what is your current assessment of this mission statement? AFRAA mission statement is “to save African airlines, promote and protect their common interests”. I am very satisfied that over the years AFRAA has represented African airlines at various forums and ensuring that the voice and needs of the industry are protected. AFRAA has spearheaded the enhancement of a safety culture mainly through capacity building. The association has urged and facilitated airlines to adopt industry best practices in operations and commercial activities to ensure the growth and development of a viable African airline industry. In about five decades AFRAA has been instrumental in facilitating the development of air transport policies and articulating the views and positions of African airlines on various issues. Through its cooperative and joint activities, the association has contributed significantly to the growth and development of aviation.

The current vision of AFRAA is “to be the leader and catalyst for the growth of a globally competitive and integrated African airlines industry”. In this regard AFRAA is spearheading the lobbying for full liberalization of African skies. This should unleash the potential of the industry to connect Africa together and with the rest of the world safely and securely. This will also facilitate industry consolidation, which should result in carriers having critical mass, i.e. large and well-resourced enough to face fierce competition from carriers outside the continent head on.

In your welcome message to AFRAA delegates, you say that the AGA is taking place at a time when African aviation is growing at above average rates but is yet to meet its full potential. What according to you will be desirable pace of growth to accelerate the effort to achieve the full potential? Africa is a huge continent. It has a growing middle class arising from the growth of African economies at above global average rates over the past few years. There is also growing tourism with most tourists using air transport to some unique and iconic sites like the Victoria Falls, Kruger National Park or Maasai Mara in Kenya. There is also growing inter-African trade which is facilitated by air transport. There is however need for the high industry costs arising from high taxes, fees and charges to be reduced to global standards so as to realize the huge potential of African aviation.

The pace of growth should be one which facilitates connectivity between African cities with adequate frequency of services. The growth should provide equal opportunities that allow large and small carriers to play a part. The pace of growth we need is one which makes air transport affordable to the majority of the people. This will reinforce the growth of business and tourism, including employment generation and economic growth.

What is your realistic outlook for 2017 by when the African aviation industry has another chance to unlock its value with the liberalisation of skies expected through the implementation of the Yamoussoukro Decision towards the establishment of a single African air transport market? My expectation is that the liberalisation process will continue through 2017. I expect more States to make solemn commitment to the full implementation of the Yamoussoukro Decision towards a single African air transport market. I expect more and more States to facilitate the movement of people and goods into their States through easing visa restrictions and efficient customs clearance process.

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What according to you are some of the biggest challenges for African aviation stakeholders to achieve the continent’s full civil aviation potential? Some of the biggest challenges have been highlighted above which include high industry costs which are well above world average, prevalence in monopoly service providers in fuel supply, ground handling and catering services.

The industry is highly fragmented with many small airlines which do not benefit from economies of scale. There is need for consolidation of the industry which will be facilitated by having a single African air transport market. There is also need for affordable financing for airlines to restructure and acquire modern fuel efficient and reliable fleets. There is need to deal with the issue of lack of adequately qualified people at all levels of aviation due to poaching of highly qualified and experienced personnel by entities from outside Africa, mainly from the Gulf region. There is also need for adequate infrastructure at several airports in Africa especially for handling transit passengers. Fortunately in Zimbabwe, the government has invested in excellent infrastructure at the international airports which is facilitating airline operations.

What are some of the specific strategies you, as a newly appointed chief executive of Air Zimbabwe, are rolling out to make Air Zimbabwe to the path of profitability? Without really going into specifics, the broad strategy is to adopt cost reduction measures, explore all avenues for revenue growth and match the capacity to demand. Key to success will be the ability to be a customer centric airline, best positioned to meet the demands and expectations of our targeted customers. The airline will have to be nimble and agile to adapt to change in the operating environment. Removing any perceived limits in scope of strategies to adopt for the airline will allow fresh thinking to enable the airline to take the next leap forward into new territory.

How do you steer an airline operation in one of the toughest markets where regulators continue to play hardball leaving very little for the aviation industry stakeholders? The operators and regulators have a stake in ensuring that the industry is viable and thriving. In other words we share a common purpose. A growing aviation industry results in increased employment opportunities, economic development and benefits several stakeholder groups in the value chain, including hotels, restaurants, tourist resorts, transporters, etc. Hence it is important for operators and regulators to engage, collaboratively discuss and resolve issues concerning the industry whilst respecting each other’s separate roles and responsibilities.

What is your assessment of the current domination of African skies by Middle Eastern and European carriers? How healthy is the current trend? Over the years we have seen the intercontinental operations to and from Africa being increasingly dominated by non-African carriers. My own airline used to fly inter-continental operations to various European, Middle East and Asian capitals including London, Frankfurt, Paris, Beijing, Singapore, Larnaca and Dubai, amongst others. Air Malawi used to fly to London. Zambia Airways used to fly to Europe, US and Asia. Similar examples can be cited in other places in Africa. Now we have carriers like Turkish Airlines, Emirates, Qatar Airways, British Airways, Air France/KLM, Lufthansa, among others, dominating most inter-continental routes to and from Africa. These dominating European and Gulf carriers are increasing the stations they fly into Africa every year.

The European carriers have a long history, are well-resourced and when negotiating bi-lateral air services agreements with African governments, they do it from a position of enormous strength as they negotiate as a block (EU) while individual countries in Africa have to negotiate with the EU block. In the Middle East the governments appreciate the huge contribution of aviation to the economic development of their States and hence support them through low industry costs and subsidise them significantly, as recently revealed by the investigations by three major US carriers namely American, Delta and United. Well resourced individuals and fund management firms in the Middle East also provide another source of finance to the Middle Eastern carriers. The proliferation of airlines in Africa translates into higher tourist arrivals as well as more travel options and choices for customers, which is positive. However, there is a very uneven playing field when these well-resourced carriers are pitted against under-resourced African carriers which put African airlines at a huge competitive disadvantage. African airlines, with few exceptions, often do not have any hope to thrive. We therefore appeal to African governments to appreciate the plight of our carriers and support them for the benefit of the African peoples and economies.

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