Africa


ASM DESTINATIONS Africa’s airlines in a state of turmoil


Three of Africa’s hub carriers are dealing with a number of problems, thanks to a combination of terrorism and market conditions:


EgyptAir


Five years of political turmoil in Egypt mean its flag carrier has lost $1 billion since 2011 during periods when a large part of its fleet was grounded. The government’s target was to turn a profit in 2016-17, under a plan drawn up by Sabre Airline Consulting, but this was pushed back even before the loss of MS804 in May. EgyptAir’s recovery is also hampered by doubts about security at the country’s airports following the bombing of the Russian Metrojet flight over the Sinai Peninsula in October 2015. The airline’s expansion plan was to have increased the fleet


from around 70 to 127 aircraft by 2025 (including 15-20 widebody aircraft), financed by the recovery, but this is in doubt, as is a government plan to upgrade Egypt’s airports. Until Egypt can convince the world that the country and its airline are a safe proposition, it will be seen as a risk.


Kenya Airways


Kenya Airways is another African network carrier suffering heavy losses due to the threat of terrorism. A 2014-15 deficit of £271 million was blamed on a collapse in the country’s tourism industry and the Gulf carriers and Ethiopian Airlines have taken advantage of Kenya’s predicament in the last few years. Kenya Airways’ situation was not helped by a fleet renewal plan


[the arrival of] new airport CEOs and more analysis of the figures to show governments that open skies can bring more traffic to the continent.” Tounsi argues African countries with


large commercially viable airlines such as South Africa, Ethiopia, Egypt and Morocco have seen the benefits of large- scale aviation and are happy to move towards freer skies. Instead, he believes the problems are


caused by countries with small national carriers that lobby their governments hard not to open their skies, so protecting them from the wider market. In the meantime, Tounsi says the failure


to address the situation has left much of the African market open to European and Middle Eastern carriers who have been only too happy to take advantage of the continental rift. He adds: “In fact it is mainly the Middle


East carriers. When they come they come with a project, not only a company. “They have a central agreement, a


government-to-government agreement to develop not only the routes but all of those businesses, such as cargo, too.” While it may provide growth, Tounsi


is firmly of the belief that the African carriers have their own role to play in making the continent’s aviation market a true success. £


that coincided with the downturn, plus a fuel-hedging programme that last year bought at prices above falling market rates. The airline’s Boeing 777-300ERs, the first of which was delivered in 2013, were removed from the fleet in November 2015 and the smaller Boeing 787-8 is now the airline’s flagship. Expansion plans are also on hold and 2012’s announcement of Project Clouds, which included the addition of 24 destinations by 2021 and Chinese growth, are replaced by a programme of debt restructuring.


The carrier is not as guided by its government as others in the continent, as the Kenyan government retains less than a 30% stake, with SkyTeam partner KLM having a 27% investment. SkyTeam will be keen to see Kenya Airways succeed, as


Africa’s three other network carriers are all Star Alliance members.


South African Airways South Africa’s state-owned airline is currently on its seventh CEO in three years as it struggles with debts and a weak rand. The carrier has lost $300 million since 2012 with long-haul


operations draining its finances. South Africa’s position on the globe does not help when it comes to building a long-haul network. Some notable routes have been axed, including London-Cape


Town, plus Beijing and Mumbai. A deal with Etihad Airways to serve Abu Dhabi is now in place with onward flights to India from there and the Johannesburg-Beijing route is now a codeshare with Air China. Late last year, SAA struck a deal to receive five


more Airbus A330-300s instead of 10 short-haul aircraft. The A330s will replace more of its four- engine Airbus A340s, which will make long-haul flights more profitable. Meanwhile, low fuel prices and cheaper leases for the A340s should give it breathing space. It aims to return to profit in 2017 but losses of around £24 million are expected in 2016-17.


routesonline.com ROUTES NEWS 2016 ISSUE 4 25


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