Thursday 21 October 2010

African Alliance and Pincer Movement/

John Williams has flagged up a recent news item from Africa.

Egyptair, Ethiopian and South African are discussing a range of possible cooperative moves including a regional low cost joint venture in Central Africa, which we take to mean primarily Zimbabwe, Zambia and Malawi although their definition may go a country or two outside that. Lufthansa, who currently have no services to East or Central Africa are also said to be interested in possible financial support.

As he observes, all are or will be Star members.Ethiopian has an investment in Lome, Togo based ASKY and itself operates extensively across the the east-west Africa axis as well as from its Addis Ababa hub to points south, central and east, notably Nairobi,Entebbe,Dar es Salaam,Kilimanjaro,Bujumbura,Kigale ,Lilongwe,Lubumbashi, Lusaka,Kinshasa,Libreville,Luanda,and Harare, mirroring much of rival Kenya Airways' Nairobi based network.Egyptair has reasonable reach into East Africa's Nairobi, Dar es Salaam and South Africa's Johannesburg but has never served the general Central Africa region. SAA on the other hand reaches expensively north into many of the same cities.

All three airlines serve each others home bases though SAA's presence in Cairo is only via an Egyptair operated codeshare and overlap at numerous points. in the middle sits part KLM owned (27%)Kenya Airways who will not be keen to see more incursions into what it sees as its own natural hunting ground.

Assuming that the "Central Africa" they are referring to is indeed Zimbabwe, Zambia and Malawi, only Zimbabwe has in normal times,-ie not now,-a strong national carrier. The Zambian Government sensibly stood aside long ago and let the original Zambia Airways go under when their losses became unsustainable, while Malawi almost inexplicable in terms of the drain on its Treasury and foreign exchnage continues to hold the non commercially viable Air Malawi above water. For all three countries the sensible solution would be a revival of a joint airline along the lines of Central African Airways, but as anything labelled as federal carries an unacceptable post-colonial stigma, that is very unlikely to happen.

City pair linkages and frequencies throughout Central Africa, while improved on a decade ago, are relatively infrequent and haphazard and do not encourage travel.If you miss your flight there may not be another along soon, or today,or tomorrow........In the 1970s during Rhodesian UDI and deep in the South African apartheid era there was a unique hubbing operation at Blantyre every Monday and Saturday when SAA,Air Rhodesia, Air Malawi, Zambia Airways, East African and latterly DETA of Mozambique met to exchange passengers,many holding two passports,travelling between places which forbade direct contact. Later, in the early 1990s, Brian Pocock of Air Botswana implimented with BAe 146s his dream of a multi-stopping spinal service knitting together the main southern, central and eastern Africa with a Johannesburg-Gaberone-Harare-Lusaka or Lilongwe-Nairobi-Entebbe route. Neither of these ventures have survived so there is a gap in air service provision right across the three countries and the adjacent territories, particularly within central Africa itself.

Potentially the rewards are good. With high yields and Dash 8/ATR/Embraer 170/190 series aircraft there is business to be had and generated by a well run, well financed and safety driven airline. Already (new)Lonrho owned Fly540 have seen this and begun cross border services from Kenya and started a subsidiary in Angola. Central Africa lies conveniently between the two. Substantially Kenya Airways owned Precisionair of Tanzania also has the ability to grow into a pan East and Central Africa low cost carrier. Provision of capacity via frequency is essential to success. A twice weekly operation from anywhere to anywhere is doomed as it doesn't give flexibilty. Again, one missed connection and a whole business itinerary is blown out.

The question for SAA,Egyptair and Ethiopian is whether they have the stomach, money and people for this kind of an operation when it comes to putting the resources on the table. Undercapitalisation is the bugbear of any new startup anywhere and even for a modern three turboprop operation a good £25 million is needed to support the first three years of buildup. It's not petty cash.

This proposal apart,a lot is happening in Africa right now. More of that shortly.