FROM MAGAZINE: New opportunity for Africa’s air cargo development

The 50th annual general assembly of African Airlines Association, held in Rabat, Morocco, called for strengthening African aviation in a liberalised environment and look for new opportunities for Africa's air cargo development, Roy Ezze reports.

The 50th African Airlines Association (AFRAA) Annual General Assembly (AGA) in Rabat, Morocco, late November 2018 afforded African airlines CEOs the platform to discuss for the first time the prospects of African airlines especially under the unfolding Single African Air Transport Market (SAATM) which was launched by the African Union (AU) in January 2018 in Addis Ababa. “Strengthening African aviation in a liberalised environment”, as the theme of this 50th AGA, presupposed that the SAATM has opportunities for operators, especially African airlines, to exploit.

Abdelhamid Addou, Group CEO of Royal Air Maroc, the immediate-past AFRAA president and chairman of the AFRAA AGA in Rabat, also said: “This 50th edition of the AGM AFRAA is taking place at a time when the African air transport sector is at the cusp of a great revolution, which will undoubtedly signal an important turning point in the history of air transport in our continent.”

The poor state of air cargo services in Africa today, more than anything else, makes the call by Abderahmane Berthe, AFRAA Secretary General, that cargo should not be left behind, a fundamental pillar to guide all efforts aimed at improving air cargo in Africa. Berthe spoke strongly on the need to expand the reaches of air cargo in Africa during the AGA in Rabat.

He said: “I wish also to mention the high potential of cargo business which should not be left behind in the process of market access liberalisation in Africa.”

Africa’s share of global air cargo is less than two percent today, while Africa’s passenger share is less than three percent of global passengers. However, Africa’s growing young population, fast-growing economies that could produce sizeable air cargo to feed airlines, and expected strong traffic growth on the continent over the next two decades, offer opportunities for air cargo in Africa. African airlines must therefore not only recognize these air cargo opportunities, but understand and actually exploit them.

African airlines leaders agree to the need to work harder to benefit from the opportunities available. Perhaps, more encouraging are the words of Addou: “We African companies do not have to be ashamed of our performance and the evolution of our industry. Future growth will be African first, so let's be there right now.”

“We, African airlines leaders, should work together to promote opportunities for cooperation and mutual partnerships, to develop intra-African connectivity, to strive for lower operating costs on flights to African airports and improve the quality of African airport infrastructure,” Addou added.

The challenging operating environment creates avoidable huge costs for African airlines, and this situation is compounded by the weak local currencies which make dollar-based transactions very expensive for African airlines. Working together would offer the best solution for African airlines in the face of challenge of inadequate skilled professionals and training facilities, as well as the difficult operating environment characterised by high taxes, charges and fees which have kept African airlines mostly in the red or barely surviving.

SAATM brings hope
Africa’s 1.3 billion population, predominant young population and expected doubling of traffic over the next two decades all provide opportunities and hope for the air cargo industry in Africa. With these trends, the Single African Air Transport Market (SAATM) will provide the enabling environment for African cargo airlines and the cargo value-chain thrive in Africa, as African cargo airlines can reach further into new markets and create new city-pairs.

SAATM is one of the pillars of air transport development in Africa, and many believe it is structured to support African airlines. Launched in January 2018 by the African Union in Addis Ababa, the SAATM will drive the implementation of the Yamoussoukro Decision (YD) and the liberalisation of air transport market in Africa for the benefit of African airlines. Today, 27 African states have signed for the SAATM out of 55 states, and two Regional Economic Communities (RECs) have signed a Memorandum of Cooperation with the AFCAC to push the expeditious implementation of SAATM in their various regions. Despite the hesitation of the remaining African states to sign up for the SAATM, there is overwhelming enthusiasm and expectation on the implementation and benefits of SAATM.

While Tewolde GebreMariam, CEO of Ethiopian, explained that lack of proper information is part of the reasons for African government’s poor response to issues like SAATM, African CEOs at the AGA in Rabat agreed that airlines should encourage their governments to embrace SAATM to enable African airlines explore new markets and support the economy.

Addou of Royal Air Maroc said there is strong effort to boost cargo activities in Morocco, as he stated also that SAATM is important to enable African airlines fly without restriction to African destinations. As part of immediate efforts to operationalise the SAATM, Tefera Mekonen, who was elected the Secretary General of AFCAC in Zambia early December 2018, had urged African airlines to initiate flight services to African destinations and report and challenge restrictions to AFCAC.

Moving forward
Improving African cargo industry substantially will depend to a large extent on cooperation among operators and industry partners. Working together was a key part of the message from Vladimir Zubkov, Secretary General of The International Air Cargo Association (TIACA), who said: “Cooperation between the regulators and the industry has been solidifying over the recent years.” TIACA is also making efforts to enhance cargo industry development with efforts to improve customer experience.

The Director General and CEO of the International Air Transport Association (IATA), Alexandre de Juniac, spoke strongly on improving safety, cost-efficient infrastructure and competitiveness among African airlines. He took out time in Rabat to interact with African female directors, as he advocated for empowerment and elevation of females to technical and leadership positions in the industry.

Moreover, the African Development Bank (AfDB) has set out new interventions for the airline and aviation industry in Africa to ease aircraft acquisition for African airlines, among others. According to Romain Ekoto, Chief Aviation Officer of the AfDB, part of AfDB’s focus “will be on facilitating African airlines’ access to finance and leasing options, to carry out their fleet expansion and renewal plans through the acquisition of new aircraft.”

To this end, he said, three different activities will be supported including finance for aircraft purchase operations, catalysing efforts for the establishment of a robust leasing company or platform based in Africa, aiming to foster leasing opportunities in particular for small African carriers and; technical assistance to airlines for restructuring their business and increase the private sector’s participation.

Val Tongo, Chief Executive Officer of Allied Air, said technology such as apps have helped save revenue leakages in his cargo operations, emphasising the need to apply technology to enhance cargo airlines’ performance in Africa. Besides, he said the IATA Operational Safety Audit (IOSA) has helped Allied Air, which is based in Lagos, Nigeria, to maintain high level of safety as a cargo-only airline in Africa. To boost safety among African airlines, AFRAA has made IOSA compulsory for full its membership.

Moreover, the future of African airlines would be enhanced by the technological support from aircraft manufacturers who have committed to improving aircraft efficiency to enhance efficiency and support airline profitability. Safety and security are paramount for cargo airlines, according to Sanjeev Ghadia, CEO of Astral Aviation, a cargo airline based in Nairobi. In 2017, the African region recorded zero jet hull losses and zero fatal accidents involving jets or turboprops for the second consecutive year, said Berthe.

Now there are renewed efforts to sensitise and educate governments and other development partners on the benefits of SAATM and need to open up African markets to African airlines, it becomes even more imperative to improve African economies as production sources for increased volumes of perishable cargo and manufactured high-value goods.

Going into the future, African airlines would be strengthened by the joint user schemes developed by AFRAA for its members. According to AFRAA Secretary General, Berthe, the Joint projects being run by AFRAA cover fuel purchase, route and network cooperation, ground handling procurement, training and cargo.

With 40 member-airlines representing more than 85 percent of the African traffic, AFRAA has now adopted a slogan, “Better Skies for Africa”, which is essential for African airlines to thrive in a liberalised air transport market. Overall, stronger efforts are needed to improve air cargo development in Africa.