Aviation: 2016 year of big winners and losers in West Africa
West Africa has a population of over 300 million People within 15 countries having over 40 Airports with the largest Economies in Africa. Yet there is no strong Airline in West Africa and no Airport hub in West and Central Africa.
East Africa has 2 hubs in Nairobi and Addis Ababa while South Africa has the massive Oliver Thambo international Airport in Johannesburg. To establish a hub there is a need to first have an airport that has a good transfer desk and transit section with transit Visa or Visa on Arrival. You also need an airport with cheap Aviation Fuel. You will need an Airport with Maintenance Repair and Overhaul (MRO) facilities. You would also need an Airline to drive the hub. As at today no Airport in West Africa has all the needed ingredients to be a hub. Ghana has moved fast to claim the spot. First it offered Visa on Arrival to all Africans starting from July 1st. Secondly it reduces the cost of Aviation Fuel by 25%. But the MRO and Strong Airline is missing. Ghana is making up for the absence of a strong carrier by issuing 5th freedom rights to other Airlines to carry passengers from Accra. It has given 5th freedom rights to SAA to fly to Washington D.C. in the last one year. It has also given the same rights to Kenya Airways for Freetown, TAP Portugal to Sao Tome, Air Maroc, EgyptAir among others. Abidjan in Cote D’Ivoire is also striving to be the hub with an Airline Air Cote D’Ivoire and an improved Airport infrastructure it’s hope is supported by the French.
Lome is also giving Accra a good fight. It has a strong Airline ASKY and cheap fuel but no Visa on Arrival and no MRO yet though Asky has announced plans of building an MRO along with an Aviation academy to be ready in 2 years. Lagos that naturally should be the hub is huddled with operational difficulties and other issues. It has a large pool of international Airlines, strong Domestic carriers but very expensive and not readily available Aviation Fuel. It lacks MRO capacity and does not have very easy immigration environment. So the options are open for the Airports in West Africa to connect all the dots.
With such a huge population and vibrant economy it is an irony that West African depend on others to move around.
Things haven’t always been like this. Nigeria Airways, Ghana Airways and Air Afrique were major players but with the era of IMF induced devaluations and age old mismanagement they all collapsed. Today 80% of all traffic in West Africa is carried by non African Carriers and about 15% by non West African carriers.
Only ASKY is really profitable having declared a $2million profit for the first time in 5 years of Operation. But Asky is partly owned and Operated by Ethiopian Airlines out of Lome Togo. The other Airline making a difference is Ghanaian Airline AWA but that is also partly owned by Chinese giants HNA. Air Cote D’Ivoire also have international interest.
The biggest Airline in West Africa is privately owned Nigerian Carrier Arik but it has issues with debts owed to Banks and Nigerian Agencies but its still the first choice of travellers in Nigeria because of its new aircraft and extensive network in the region.
Recently the Lucrative Accra Lagos route with about 10 daily flights collapsed leaving only AWA and Arik as survivors.
AWA had struggled on the Lagos route since it started flights to Lagos 3 years ago. Eventually it settled for 4 flights a week until recently with the collapse of 3 Nigerian competitors Dana, AERO and a scaled down flights by Medview, AWA increased flights to Lagos from 4 to 10 weekly flights stepping into the gap created.
Today an economy ticket from Lagos to Accra is between $200 and $300 on Arik depending on whose exchange rate you are using. The bottom has finally fallen out of the once lucrative Lagos Accra market. As Arik and Medview are now the only regular Nigerian Carriers on the route complemented by the dogged but surely growing Ghanaian carrier Africa World Airlines AWA.
The biggest winner on this route is turning out to be the Ghanaian carrier AWA. It had applied a right equipment an Embraer 45 and changed schedules many times to find the right spot and timing. It established a smart schedule integrity for its evening flight always leaving almost on time. Now with the Forex crisis in Nigeria and AWA price stability it’s only disadvantage which was the fact that most Nigerians don’t like small planes has turned into an advantage as Arik sometimes use a CRJ a small craft. Arik because of its multiple connections and network is also thriving
AWA would be the first Ghanaian Carrier to survive the Brutal competition on the Lagos Accra route. Other attempts by Antrak in the past failed woefully.
The over supply of Available seats on the route helped depress the market coupled with shrinking economic activity in Nigeria. Dana had started a daily evening flight to Accra with an MD 83 aircraft to join Medview that had a daily morning flight using a B737-400. Arik flies twice daily with a B737-700 next gen. and Aero twice daily with a B737-500. There were flights by ASKY from Lagos via Lome to Accra using a dash 8 and now a B737-800. There are daily flights from Abuja by Arik to Accra. Outside Lagos Abuja and Port Harcourt this was the sweet route for Nigeria Airlines. It was a bragging right for an Airline to initiate a flight to Accra. But with a supply of over 1500 seats daily the competition was intense.
Aero has proven to be the most Resilient of all Nigerian carriers despite being accused earlier in its operations of lacking courage. It is the oldest Airline still flying in Nigeria today. It was a competitor to Virgin Nigeria on the Accra route when it started in 2004. Arik joined later and had since prospered on the route. This was a Bellview Airline cash cow before it collapsed. It is also the graveyard of many airlines. Antrak and Chanchangi are good examples.
When a Nigerian Airlines thinks it has matured it heads to Accra and when they lose out on the route they eventually collapse. There is no Airline that lost on the route that eventually survived. It’s usually a sign of tough times for the Airline. But in this situation the problem is the near collapse of the Nigerian economy in the last one year. If foreign Airlines are pulling out of Nigeria because of the Forex crisis how many Nigerian Airline will be left standing by the end of this year.
The signs are there for all to see, the Passenger is now paying more than 3 times the cost of a 50 minutes flight. It might get worse as the market shrinks. The prices will go up unless there is an increased supply of seats by one of the other Airlines inspite of what AWA added.
West Africa still offers the most lucrative route for many carriers. The link to USA from West Africa is the New Cash cow. With the exit of United Airlines from Lagos on July 1st 3000 seats disappeared on the US route. Ethiopian Airlines quickly plugged in a flight from Lome to New York. It started with a 3 weekly fight but after just 10 days added another flight to New York. With about 90 passengers coming out of Lagos everyday on its Lome flights it might soon go daily. SAA started its Accra Washington route 4 times a week last year and it is rated as the most profitable route for SAA. Delta Airlines with daily flights to Lagos and Accra are the Masters of the game. SAA has 3 fights a week from Dakar to the states and the Cape Verdian Airline has 2 flights a week. The need for more seats will soon lead to a dog fight on that route. Arik is the only West African airline with 3 flights to New York.
African Open Skies will see many Non African Airline buying stakes within Africa to take advantage of the demand in West Africa.
The clamour for National Airlines is the New rave in Africa and West Africa is not left out. But a well informed Airline chief in Africa once said that there are 2 types of models for National carriers. The orphanage type with foster parents and the Sepulchre type common in West Africa.
The orphanage model is simple. A country enlists it’s Airline as an orphan and a successful Airline will foster it. ASKY and the new Malawian Airlines are ET babies. So far it is successful. There are failures like the Virgin Nigeria and Virgin Atlantic attempt in Nigeria.
The sepulchre version is the type where Ghana Airways was replaced by Ghana International Airline just a change of name. Recently West Africans go to the cemetry drag out a dead airline and dress it up with a new name. Air Senegal and Senegal Airlines, Air Ivoire and Air Cote D’Ivoire. Cameroon Airlines and Camair co Airlines, Nigerian Airways and Air Nigeria.
Even the Orphanage model has not worked well too. People can remember that Air Afrique was offered to Air France for $1. Any foster parent from Europe will not work as no European carrier will help any country raise a competitor. Etihad had already said no Airline in Africa has the scale worth looking into and Emirates is romancing both Angola and SAA at the same time.
West Africa has to get its act together to share in the global aviation Market.