In the end of 2011 Rubicon Diversified Investment along with easyGroup has revealed the plans to launch a new low-cost airline, which would serve regional hubs in Africa. With an average forecasted annual passenger growth of over 6%, Africa shows great aviation development potential. Unfortunately, many local start-ups in the industry are still short-lived.
According to the African Airlines Association (AFRAA), in 2010 the intra-African and domestic routes saw an approx. 15% and 10% annual growth respectively, corresponding to over 33.5 million of passengers carried within the region. But even though the perspectives for the local aviation to develop successfully along with the region’s economic growth are highly promising, many African airlines still face the low-efficiency issue.
‘The reason why the efficiency of many local airlines is relatively low might be the fact that the business goals of the majority of start-ups are quite vague. Whilst de jure being established for market-orientated goals, de facto air companies in many African countries are focused on the services to the state officials. On the one hand, working with governments provides those carriers with some obvious benefits, on the other hand – they are being left with fewer opportunities to offer average passengers more convenient and cheaper flights,’ commented the CEO of Locatory.com Zilvinas Sadauskas.
The reason why the efficiency of many local airlines is relatively low might be the fact that the business goals of the majority of start-ups are quite vague
With almost no space for business manoeuvring, the state-orientated airlines are naturally losing the passengers to the well-established operators from South Africa, Kenya or the Northern Africa. But should a new carrier appear on market with solely business goals, the start-up is still likely to face many serious issues, more serious than a mere miss-orientation.
Many African countries lack adequately qualified managers, left alone those who have relevant expertise in aviation. A lot of start-ups, unfortunately, tend to skip the initial step – forming the team of experienced managers that almost always involve employing foreign specialists. The lack of experienced management usually leads to forming an ill-advised fleet and route map strategy, focused on short-term revenues only. Combined with the limited funds, local airline start-ups are forced to acquire old aircraft which do not only require more technical support, but also trigger the formation of a highly diversified regional aircraft market. The absence of a homogenous fleet in the region affects the whole aftermarket: form the MRO sector to spare parts supply.
‘Today no airline can solely afford to think and play locally. Whether it is a well-established large airline or a small new one, many African carriers are burdened not only by high fuel prices, but also by the disintegrated regional spare parts market. Local air companies are in need of an access to the global market. And I am talking not only about the prices, but also about the OEMs, PMAs and surplus sales for any types of aircraft,’ concluded Zilvinas Sadauskas.
