A little belatedly we bring you.........
DECEMBER 2011 – JANUARY 2012
As always, much activity during these two months…………
2011 closed with commercial aviation on this vast continent edging its way further forward on the world aviation stage with some good developments particularly on the eastern side of its landmass. Kenya Airways and Ethiopian, each with large investment programmes, are now global businesses who happen to be based in Africa rather than Frankfurt or Singapore. Market volumes are growing and an increasing number of regional routes are seeing double or triple daily frequencies. The historic inhibitors of low demand and long sector distances resulting in once or twice weekly frequencies, are gradually being eroded and the Gulf carriers and Turkish in particular are increasingly offering one stop daily , or even more often, to almost anywhere in the world- a very strong proposition. International investment in new oil fields and other raw materials is attracting these non-African carriers to the continent. At the same time, new African airlines continue to be born. Some will thrive, others will falter, but competition will drive progress in efficiencies and product quality. 2011 was a valuable year of development.
2012 offers intriguing possibilities. Fleet renewals will be led by the Ethiopian's 787s with Kenya Airways' unhappily a little behind and possibly slipping further from late 2013 into early 2014. Modern fleets of Embraer E170/190 seies Boeing 777s, and ATR series 600s are entering service, while Ehtiopian have also added an A350 order. With these growing modern fleets MRO and training opportunities are opening. Ethiopian, for one, is investing in new hangars, new simulators and now has EASA 145 and 147 approvals. Significant third party revenues beckon.
Financial strength and sophistication is growing. Precision Air of Tanzania recently completed its IPO and is listing on the Dar es Salaam stock exchange. Kenya Airways is poised to launch a USD400mn rights issue to fund fleet and network expansion. It will have to pay attention to its cabin and ground service however if it is to maximise revenue from the investment.
Business models are maturing. Etihad is aquiring 40% of Air Seychelles and has signed a 5 year management contract. Such inward investment is rare on the continent and has a patchy history and in this case the strategic reason for it isn't clear. Potentially more dramatic is the grouping of Lonrho (Fly540) with Stelios Haji-Ionnanu of Easyjet. Stelios is quoted as ‘wanting to bring the LCC model to Africa’, though it isn't clear quite what he means by this. FastJet is the putative name for the new carrier whilst the project progresses through the feasibility study stage. Bases are envisaged in Kenya,central Africa and West Africa which is why Fly540 with its existing operations in Kenya,Angola and Ghana is seen as a good starting point. Its house colours are even orange so that should save some paint. Competition is thereby flagged for Kenya Airways’ stated intentions to launch low cost subsidiary Jambo in the East African regional market and a vigorous response can be expected.
Meanwhile vibrant carriers such as Rwandair, Air Uganda and Precision Air continue to expand. ASky of Togo (Ethiopian Airlines 40% shareholding) is now well established and seeking investment to expand into a multi-hub operation. Air France-KLM with its 40% holding will be anticipating a successful launch of the new Air Ivoire. Star members Ethiopian, Egyptair and SAA are again talking of launching a new Central African carrier though quite where isn't clear. SA Express too is growth-minded and talking of expanding into West Africa with a Ghana based hub. Deterred by the politics and hassle factor, nobody new is talking of doing anything in Nigeria, theoretically the continent's best opportunity but fraught with complications, trip wires and other disincentives. AFRAA too is aiming at reforming and revitalising itself under a new Secretary General. A joint fuel-buying initiative has been launched with further developments planned. Initially 9 carriers have joined. For the first time AFRAA can offer a hard-edged benefit to the membership.
In southern Central Africa, Air Zimbabwe is now under ‘judicial management’,- effectively administration. A High Court appointee has taken control and the old Board of Directors has been stripped of all powers. Liquidation is anticipated …. or perhaps not. Whatever happens the brand is likely to reappear in some form, possibly mortgaged to Chinese interests. Fly now, pay (a lot) later.
1. EAST AFRICA
Air Africa International (Tanzania) is seeking scheduled service licences (Dec2011)
Air Burundi ordered 2 MA60 from Avic, China. (Dec2011)
Air Tanzania re-granted an AOC after 6months without operations. (Dec2011)
Air Uganda has added Zanzibar to its network (Dec2011)
Ethiopian Airlines has taken delivery of the first of five new B737-800s. A Boeing owned B787-800 visited Addis on 11th December as part of its first African tour.Ethiopian's first delivery of 10 is due in the second quarter of 2012 (Dec 2011).
Ethiopian Airlines on became full member of Star Alliance on December 12th.(Dec 2011)
Ethiopian Airlines is seeking investors to enable ASKY to become a ‘multi-hub African system’. Fellow Star members SAA and Egyptair have been named as possibles. Ethiopian owns 40% and now has a 5year management contract (Dec 2011)
Ethiopian Airlines continues to talk of a possible new Central African airline alongside SAA and Egyptair. Detailed plans yet to appear. (Dec 2011)
Ethiopian Airlines is considering ordering an additional 5x787. Five A330s are a possible alternative. The company is also negotiating with Bombardier for five new DaSH 8 Q400s. (Dec2011)
Ethiopian Airlines has achieved EASA part 147 approval for maintenance training plus part 145 approval for MRO activity on all EU registered aircraft (Dec 2011)
Ethiopian Airlines launched a thrice weekly Addis– Muscat service on 27 Dec 2011 (Dec2011)
Ethiopian Airlines also plans to start flying to Toronto in Mar2012 while at the same time evaluating a stronger presence in Asian markets, naming Singapore,Kuala Lumpur, Seoul and ‘more destinations in China’ as candidates (Jan2012)
Ethiopian Airlines has accepted the bid submitted by the Aviation Industry Corporation of China (Avic) to construct USD100m maintenance hangar. 900 days of construction are to star in mid-2012 (Jan 2012)
Fly 540 Kenya has ordered 2 ATR72s to join the fleet in Jan 2012 (Dec 2011)
Kenya Airways USD400m rights issue due in 1H2012 for fleet/network expansion (Dec 2011)
Kenya Airways faced ban from Sudan airspace unless Kenya High Court reversed decision to recognize the ICC arrest warrant for President Al-Bashir. The threat was subsequently lifted. (Dec 2011)
Kenya Airways is planning boost services Middle East points. Nairobi-Dubai provides 12% of their total revenue thanks to African traders and connecting traffic to points east. Beirut is to be added and Dubai frequencies will increase to 14 per week matching Emirates who with their high quality product and easy-to-use and pleasant Dubai hub are highly successful in all the African cities they serve. The other Gulf carriers, Qatar, Etihad and Gulf Air do well too. (Dec 2011)
Kenya Airways is seeking government permission to hire up to 70 probably fixed term contract expatriate flight crew to meet fleet growth. Work permits will be needed. Traditionally difficult union (KALPA) reaction is anticipated and could be a show stopper or at least make foreign pilots hesitant to sign on as working amidst a hostile atmosphere is not a great experience. (Dec 2011)
Precision Air's IPO closed with a disappointing uptake of 43% of shares (USD7m of a planned USD16m). Market doubts on future dividend levels and the parallel IPO of East African Breweries whose markets are much more assured are mooted as reasons. (Dec 2011)
Precision Air, like Kenya Airways,is now to list on the Dar es Salaam Stock Exchange. The carrier also submitted a new financial plan to raise capital due to initial IPO under-subscription mentioned above. (Dec 2011)
Precision Air has ordered 4 ATR42-600s and a single ATR72-600 with first delivery late in 2012. Their current fleet is 5 ATR72-500 2 ATR42-500,and 2 ATR42-300 . They have become Africa's largest ATR operator (Dec 11)
Precision Air:- The 2006 maintenance partnership with ATR has delivered 12 qualified Tanzanian nationals plus 24 in mid-training on the 3 year course. (Dec 2011)
The calm and festivity of Rwandair's inaugural 3 December flight to Lagos and Abijan was rudely interrupted by troops on the Abijan VIP ramp demanding substantial amounts of US dollars for ‘fuel and handling’. Happily this unscripted intervention was settled peacefully.( Dec 2011).
Rwandair has sold 2 CRJ200s to be replaced by larger regional type, possibly CRJ900s.(Jan 2012)
Rwandair :Girma Wake, ex CEO Ethiopian Airlines, is the newly appointed Board Chairman. (Jan 2012)
Air Uganda's new CEO, Kyle Haywood, announced plans for fleet growth in 2012-3 to expand regional and domestic operations to feed the growing number of Entebbe foreign long-haul operators. (These now include SN Brussells, BA, Emirates, Gulf Air, Turkish, Egyptair, SAA as well as the well established nearby hub operators Kenya Airways and Ethiopian)(Dec 2011)
ZanAir (Zanzibar)is seeking a Tanzanian scheduled service licence. Plans are unclear but presumably will start with the 25 minute Zanzibar-Dar es Salaam hop.(Dec 2011)
3. SOUTH / CENTRAL AFRICA
Air Botswana CEO envisiges Gaborone as a hub and network growth to Dubai, Dar es Salaam and other points. Whether this is realistic against the nearby overwhelming presence of Johannesburg is debatable but if aspirations are kept to high frequency regional links there are some real opportunities. In the early 1990s the airline started a spinal service with BAe 146 aircraft running Johannesburg-Gaberone-Harare-Lusaka/Lilongwe-Nairobi-Entebbe and given time this could have worked well thanks to high sector fares and lack of competition but a change of managment saw it abandoned before it had time to really become established and profitable. Some good ideas require persistance and nerve and initially deep pockets.(Dec 2011).
Air Botswana announced improved operational stability during 2012 as part of a campaign to regain ‘customer credibility’ (Dec 2011)
Air Malawi chalked up a USD6.6m loss in 2010. Their total debt is now US$59.8m and the Malawi government continues to drip-feed support. Like various consultants previously, Ernst & Young is advising the government on restructuring. The solitary ATR42 is now flying again but the two 737s remain impounded by SA Technical in Johannesburg due unpaid debts. SAA is now the sole operator between Johannesburg, Blantyre and Lilongwe. (Dec 2011)
Air Namibia will in April 2012 launch a four times weekly Windoek-Harare service and three weekly between Windhoek and Gaberone with an ERJ135. (Dec 2011)
One of the two Air Zimbabwe Boeing 767-200s was temporarily impounded at London/Gatwick by American General Supplies demanding a USD1.2m debt settlement. A Boeing 737-500 was also temporarily held at Johannesburg. (Dec 2011)
Air Zimbabwe suspended all operations to London and Johannesburg from 1st Jan due ‘financial and capacity reasons’. Flights to China,the DRC and Zambia where writs for debts are seemingly less likely continue. (Jan 2012)
Air Zimbabwe paid a USD200 ‘incentive’ to maintenance staff to resolve a Boeing 737-500 engine fault. The other 737-500 remains grounded for a corrosion check. All 3 MA60 are grounded as was at least temporarily a 767-200s. The actual operational fleet became therefore a single 767 and a 737.(Jan 2012)
Air Zimbabwe: On 17 Jan an A320-200 arrived in Harare ostensibly for the airline but the Acting CEO asserted that he is ‘not at liberty to discuss–it is a shareholder (ie government) matter’ (Jan 2012)
Air Zimbabwe was then placed under ‘judicial management’, a High Court appointee assumed control and the existing Board of Directors stripped of all powers. Liquidation was then anticipated, but again as above, watch this space. (Jan 2012)
Blue Sky (Botswana) plans an early 2012 start-up with up to 4x737s flying regional and domestic services. Blue Sky is born of Flying Mission Services, an operator of medical and mission services on contract to Botswana Ministry of Health. It also exists in local forms elsewhere in Africa.T he Managing Director of both companies is Mark Spicer. It is unclear what licenses/AOC Blue Sky has. (Dec 2011)
Comair of South Africa's Board has ended the top level structure which gave it two joint CEOs which emanated from the original involvement of two families. ‘Tough trading conditions demand single leadership’ is given as the reason. Erik Ventner has become the sole CEO and Gidon Novick has resigned from the company. Comair's two main arms are the BA franchise operation and the separate but complementary bright, upbeat low cost carrier Kulula. Both are success stories in a highly competitive market.(Dec1 2011)
LAM of Mozambique is anticipating purchase of two ‘Embraer aircraft’ in 2012. (Dec2011). Presumably these will be 170 or 190 series aircraft which they currently operate as far afield as Nairobi.
Proflight, Zambia’s main domestic carrier is to growi ts Jetstream 41 fleet from 2 to 7 during 2012 (Dec 2011)
SAA is launching twice weekly A319s to Pointe Noire, three a week to Kigali/Bujumbura and a thrice weekly Airbus 340-600 nonstop to Beijing (Jan 2012)
SAA's new CEO Siza Mzimela reported improved 2010/11 net profits of USD101m. 2012 challenges include ‘increased competition and Johannesburg baggage pilferage’, the bugbear of any hub carrier. SAA's low cost subsidiary, the striking and appropriately coloured Mango, is profitable. (Jan 2012)
Santaco Airlines( SA Taxi Assoc) applied for operating licence in Nov 2011 but has yet to seek AOC. Full operational launch pledged ‘before Easter 2012’. (Jan 2012)
Santaco Airlines President, Jabulani Mthembu, has been suspended pending resolution of ‘nepotism and financial irregularities’ allegations.(Jan12)
Zambesi Airlines' AOC has been restored but resumption of operations are dependent on meeting ‘other safety and financial requirements’. A USD2mn debt is owing to local National Airports Corporation. (Jan 2012)
3. WEST AFRICA
Air Nigeria is to acquire 2 A330-200 and 2 B737NGs during 2012. Fleet growth to 15is planned as is the construction of a maintenance facility and establishment of an MRO. (Jan 2012)
Air Nigeria hopes to restart London and Johannesburg services in mid 2012. (Jan 2012)
Arik Air of Nigeria planned a 6th Dec 2011 launch of CRJ900 flights between Lagos and 3 new destinations: Cotonou, Ouagadougou and Bamako, all via Dakar. Also being launhed are two weekly services between Lagos and Luanda.(Dec 2011)
ASKY (Togo) 40% owned by Ethiopian is seeking investors for growth to a ‘multi-hub African system’.(Dec 2011)
ASKY plans 2 additional 737-700s plus one Q400 in 2012. Ethiopian is negotiating for them negotiating.(Dec 2011)
ASKY's President, Gervais Djondo, spoke of ‘market perception difficulties’ arising from Ethiopian Airlines 40% shareholding and Management Contract. ASKY is seen as "an appendix (appendage surely?) of Ethiopian "-for which they should be delighted commercially, and and some of its managment are perhaps finding this irksome? If so that is unfortunate and unwise as Ethiopian is a very professional and well run business and they have a lot to learn from it. He also mentioned slow progress in securing regional frequency increases eg Nigeria. That is not a new experience for any airline in the region.(Dec 2011)
Camair-Co of Cameroon has reduced Paris flights from 6 to 4 per week, and added 3 a week instead to Lyons. 737-700s are used. Kinshasa has also been added to the network.(Dec 2011)
National Airways (Cameroon) plans re-launch with order for 2 MA60 from China. Good luck to them. It is a domestic network operator based in Yaounde. Previously it ceased operations with 2x 737-200s in 2009. (Dec 2011)
Okapi Airlines (DRC) on 23rd Nov 2011 launched domestic services with awet-leased B734 from Tailwinds, Turkey. Kinshasa – Lubumbashi/Kisangani/Mbuji Mayi is the initial network.(Dec 2011)
4. NORTH AFRICA
Afriqiyah plans a resumption of operations initially with a single A319 to Istanbul, Alexandria and Tunis.(Dec 2011)
Afriqiyah and Libyan Airlines have signed a maintenance agreements with AFI KLM Engineering and Maintainence to return their aircraft to service. Afriqiyah is to restore A320s/A330s and Libyan Airlines to restore seven A320-200s, including three on order, and two ATR42-500s. Air France Consulting is also involved.(Jan 2012)
Afriqiyah and Libyan Airlines: A govern,ent decision on the proposal to merge is anticipated in March 2012 followed by a 12 month implimentation process.(Many would argue that big bang mergers are better than slow and gradual,- think in extremis of the excrutiating long BEA/BOAC version). Privatization may then follow says the interim Transport Minister although realistically buyers may be hard to find.(Jan 2012)
Royal Air Maroc joined AEA, the Assosciation of European Airlines (Dec 2011)
Royal Air Maroc launched twice weekly B 737-800s between Casablanca-Luanda via Libreville, adding a TAAG codeshare for marketing and to ease the regulatory path. When, one wonders, will the apparent general two frequencies a week per carrier limit be abandoned by Angola or will protectionism to force business onto TAAG go on into the future? Also being launched are 5 737-800 weekly flights Bissau via Banjul. Again some useful new sectors appearing on the African map and hopefully with local sector traffic rights thrown in. Blinded sectors have been literally a waste of space ever since colonial times when for example East African flew blinded (ie unable to pick up local sector passengers) Blantyre-Salisbury(Harare) and Central African from Dar es Salaam to Nairobi. The losers ? Anyone trying to plan a multi sector itinerary,-ie business and aviation in general.(Dec 2011 )
Royal Air Maroc are disposing mix of 6 B737-500s/B767-300s so as to re-equip with a standard fleet of 9 B737-800s in 2012-14 .(Dec 2011)
5. NON AFRICAN AIRLINES
Blue Panorama(Italy),who are rumoured likely to merge with Alitalia are seeking to fill the gap left by Air Seychelles withdrawal from long-haul operations by launching Seychelles–Milan/Rome services.(Dec 2011)
British Airways plans to resume operations London Heathrow to Tripoli from May 2012 (Jan 2012)
Brussels Airlines is increasing frequencies to Douala, Yaounde, Abidjan, Nairobi and Bujumbura from April 2012 and Kinshasa is to become nonstop. Accra is likely to be left to Lufthansa.(Dec 2011)
Brussels Airlines is discontinuing the DRC Korongo Airlines joint venture due ‘problems with DRC authorities’. Where have we seen this before? Similar frustrations to Virgin Nigeria in Nigeria ? The disposal of the fleet of Belgian registered 2 BAE146s and 1 B737-300 is unclear. (Dec 2011)
Emirates through IATA is working with 23 different ATC units across Africa to upgrade systems enabling introduction of ‘flexible tracks’ on their ultra long haul 15 hour plus Dubai-Sao Paulo sectors. Fuel savings of 2% or more are hoped for. (Jan2012)
As noted above, Etihad has taken a USD20mn 40% stake in Air Seychelles as that carrier restructures into a solely regional carrier. As part of the arrangment, Etihad has signed a 5 year manament contract and already terminated a number of previous office holders. This may or may not be popular locally. Cramer Ball, previouly Etihad's Regional General Manager Asia and Australasia,has been appointed CEO and a codeshare agreement signed and Abu Dhabi-Seychelles frequencies will be increased to at least daily. Qatar are already in Seychelles with a daily A319 and Emirates with 11 weekly A340-500s.(Jan 2012)
Gulf Air has delayed its launch of Juba services until June 2012 (Jan 2012)
KLM has delayed the launch of twice weekly A330-200 flights to Luanda from November 2011 to March 2012 (Dec 2011)
KLM is to launch thrice weekly A330-200 services to Lusaka from May 2012 (Dec 2011)
Malaysian Airlines is to discontinue its 3 times weekly Kuala Lumpur-Johannesburg and twice weekly Kuala Lumpur- Capetown-Buenos Aires services. This still leaves the city with a four times weekly SIA service to Singapore although that is uncompetitive to north Asian cities such as Hong Kong against Emirates twice daily offerings. Both these routes were part of former Prime Minister Mahathir's pressure for the Malaysian flag to be seen wordwide. Unfortunately for the airline the government never paid them a subsidy to oblige. Ideally these and other uneconomic flag waving operations would have been flown under government contract to shield the airline from the losses. (Dec 2011)
Royal Jordanian launched twice weekly A319 services to Nairobi on 16th Dec 2011. Algiers and Lagos/Accra are to follow on 31 March 2012 while flights to Accra via Addis are also being considered.(Dec 2011)
Turkish Airlines, along with the Gulf fraternity one of the world's fastest growing carriers, has received the first of 15 737-900ERs on order for new thin routes to Africa. Their fleet now numbers 178 and is due to grow to 200. Turkey is geographically well placed against Emirates/GulfAir/Qatar and Etihad for Europe-Middle East and Africa business as it requires less of a detour than flying via the Gulf. (Dec 2011)
Turkish Airlines new 2012 operations are to include Abuja, Kano, Abidjan, Kinshasa and, Mogadishu The latter has now started .See previous Airnthere news item.(Jan 2012)
AFRAA has announced that 9 airlines are signed up for phase 1 of a joint fuel buying agreement: Kenya Airways, Ethiopian Airlines, Air Malawi, Air Namibia, Air Seychelles, LAM Mozambique, Precision Air, Rwandair and TAAG Angola. There will be joint negotiation but individual contracts.(Jan 2012)
AFRAA's Secretry General has criticised the 1 Jan 2012 introduction of the European ETS ‘Carbon Tax’ claiming that third world countries were specifically exempted under the Kyoto Protocol (Jan 2012)
Fastjet A new, all-jet, low-cost carrier for Africa is proposed by Easyjet’s Stelios Haji-Ioannou with UK investment firm Rubicon with £14m launch funds. Fly 540 Group development is planned with the new (as opposed to Tiny Rowland's) Lonrho .Stelios seeks full control. East African Safari Express which ceased operations in December 2010 is also somewhere in the mix but there is a lot of fog about at the moment.(Jan 2012)
Kilimanjaro International Airport, which lies on the plains between Moshi and Arusha or Kilimanjaro and Meru for the mountaineers is to undergo US$28m rehabilitation starting 2013. It will be a 3 year programme partly funded by the Dutch Government. This will be the first upgrade since the opening in 1971. Much of its hoped for potential in attracting international long haul services full of tourists for Tanzania's northern safari circuit has not materialised although Ethiopian and KLM have consistently hung in there and persevered. BA tried it as an end sector doubling back from Dar es Salaam in the Tristar era but that didn't work,(a seven day crew slip can't have helped) whereas KLM do it on a triangular routing from Amsterdam continuing to Dar es salaam and returning nonstop to Holland. (Dec 2011)
Libya: Resumption of stalled work on Tripoli International Airport expansion is scheduled for ‘in next few months’. A new runway, 2 new terminals, and systems upgrades are planned. (Jan 2012)
Mauritania Nouakchott Airport is to be rebuilt over next 2 years. 2 runways are included (Dec 2011)
Nairobi's Jomo Kenyatta International( JKIA), the achilles heel of Kenya Airways network and frequency growth plans, is beginning to see physical building work on the new Kenya Airways Terminal or Unit 4, while within the existing two international units 1 and 2 refurbishment of floors and lighting is progressing along the very narrow concourse between the lines of identically provisioned duty free shops from what is the Kenya Airways end to the foreigners preferred gates. Currently it is just reaching KLM's preferred location but is two short of BA's. The latter appear to have been ousted from their former preference of boarding almost directly out of the only respectable airside catering facility, the Java House coffee shop.
Outside the airport itself the Kenya Airports Authority faces contempt of court action for the ‘barbaric’ demolition of ‘hundreds of homes’ on disputed land needed for planned airport development and for a security buffer between the airport and the outside world.The Airport Authority probably isn't too worried as the deed has been done along with a similar one around the boundary of the extremely busy movements) closer to town Wilson Airport. Both are hardly reversable.( March 2012)
The Federal Airports Authority of Nigeria is to upgrade 12 Nigerian airports in a USD120m project. New domestic terminals are underway at Abuja and Lagos. Ideally a modern domestic facility would have been built adjacent to the international terminal but this appears not to be the case and a messy off-airport transfer is likely to remain the link between the two. A useful model could be Australia's Sydney where the linking coaches operate between international and domestics within the airport fences rather than outside it giving a much more satisfactory product away from any hassles or road congestion in the outside world. (Dec 2011)
Tanzania: Swissport's handling monopoly has ended at Dar es Salaam airport following persistent pressure from regional carriers over charges being higher than the regional average.(Dec 2011)
Uganda's new Bugesera airport project has selected 11 bidders from 33 Expressions of Interest. That's a long shortlist. A 3 year construction is anticipated on a build, operate, transfer principle with a late 2012 start.(Jan 2012)
John Williams January 2012