Tuesday, 14 March 2017

African Roundup

22nd  January saw Kenya Airways celebrate 40 years as the nation’s flag carrier. It was formed in 1977, after the collapse of the once well respected East African Airways and used a hastily cobbled together fleet adding  well used Boeing 720B and 707s to those of the DC9 and F27 fleets which happened not to be on Tanzanian or Ugandan territory at the moment of EAA’s demise. London flights began shortly afterwards, spurred on by the fact that with Uganda and Tanzania in the way, flying to points south had become impossible thanks to these erstwhile partner countries banning all Kenyan aircraft from their airspace. Replacing the pioneering Wilson Airways, EAA had been owned by the governments of Kenya, Uganda and Tanzania which now included Zanzibar. It had originally grown carefully and organically, expanding from an initial extensive subsidized domestic network first to South (Durban) and Central Africa with DC3s. From mid 1957, the UK, India and Johannesburg were added thanks to the low cost addition to the fleet of four ex BOAC Canadair Argonauts. In September 1960, just ahead of SAA’s Boeing 707s, EAA became Africa’s first jet operator with its own two new Comet 4s. From 1964 these gave way to Super VC10s allowing the displaced Comets to reach across to West Africa, Unfortunately the different political philosophies and individual rivalries and aspirations in the three governments after independence lead to increasing friction and tensions over mounting debts. These were largely caused by over enthusiastic expansion to Tokyo via Hong Kong, New York via Zurich and too many points in Europe. The East African Community itself collapsed and the multinational airline was doomed. The echoes of the breakdown still continue. Memories of distrust and hostility towards Kenya in Tanzania and Uganda die hard. As result East Africa, though much improved, still isn’t an open skies zone and undertones of suspicion and protectionism dog the relations between the three countries. Tanzania and Uganda have never liked Kenya’s domination of regional and long haul services or Nairobi as an initial entry point for overseas tourists and business people. Financial difficulties have seldom been far away. Colonial finances were always kept on a tight leash by the UK so there was little money to be thrown at non essentials and what there was tended to go to Kenya which was an actual colony with a big and then growing settler population. Once a German colony Tanganyika, later Tanzania, was a UN Trust territory from the end of World War 1 and Uganda always a Protectorate. A simple minute in an early EAAC meeting that “ No air transport undertaking in East Africa can expect to be remunerative” although talking about the need to subsidise the inter territorial puddle hopping DC3 and later F27 network because of the distances and lack of direct all weather roads was remarkably prescient. However without the albatross of the former largely Tanganyikan domestic services around its neck the newly privatized Kenya Airways, freed from government micro-interventions showed that money could be made. It just wasn’t going to be easy

The really promising and consistently profitable years after privatization in 1996 were under Chairman Philip Ndegwa, who kept the government at bay , so  enabling his contract four man management team from Speedwing Consultancy to do what they needed to do.- including some high level redundancies. Growth and fleet modernization were steady, B 767-300s replacing A310s and these later giving way to four B777-200ERs . That allowed the smaller 767s to continue to grow the long haul network in the classic hub development manner, each new spoke adding to the strength of the others. Simultaneously the B737 fleet grew to do the same for the regionals including trans Africa. The selection of eight B787-8s to replace the similar sized 767-300s was also a good one but then came a step too far,- the investment in three new 400 seat B777-300ERs. Even EAA had steered clear of oversized aircraft. Security fears and general economics then awkwardly meant some flattening in key markets. At the same time direct flights by Chinese carriers chasing the China/Africa labour market arrived. So did ever increasing competition from the high quality, high frequency Gulf airlines flying to more and more African destinations via their highly organized user friendly hubs.  Meanwhile Nairobi’s Jomo Kenyatta International just didn’t keep up. That was before arrivals building burned down. Lastly the choice of Embraer 170/190 series regional jets for much of the shorter haul networks, while economical in capital and operating costs, did nothing for the cargo carrying capacity. They simply they don’t offer the hold volume needed at the hub and that doesn’t help the smooth flow of transfer business through it. Nairobi had once been notorious for cargo backlogs and that’s never good for business.

All this has left Kenya Airways, unusually for Africa, only 23% government owned, with serious  problems. Inevitably hyperactive politicians who have never liked the privatization, especially the foreign KLM’s seemingly rather passive 27% stake, would like to regain effective control and this may happen via government loans, bailouts, guarantees. If it does, the airline management’s problems are likely to increase rather than decrease. Bringing in top quality foreign management assistance will also be difficult. Who would volunteer for it if they saw their freedom of action,- and maybe their longevity in office,- as rather limited? We have noted it before but the best option would be a contract team of at least four people from a major successful carrier, with a successful track record ideally in the Gulf or Far East and a carte blanche to do whatever is necessary to restore the airline’s fortunes. Nairobi is the geographical pivot of aviation on the eastern side of Africa. Its major airport and until recently profitable substantially privatized airline should be great success stories for Kenya.

  Another, though very different January birthday, this time just years, recalled the 2015 AU Summit Meeting in Addis Ababa when 11 of the 53 member nations, including Kenya and S Africa, gave a  “solemn commitment to the implementation of the Yamoussoukro Decision by 2017”.  Almost 30 years have passed since the original Declaration of 1988 with the then dream of total African air transport liberalisation. Implementation has been patchy across the continent: West African governments have achieved more than the East or South, to the benefit of carriers involved.  ASky of Togo operates a successful regional operation based almost entirely on ‘YD freedoms’.  Conversion of Kenya and South Africa would be a significant achievement.

Away from birthdays, Fastjet, seeking yet more cash to maintain operations, has successfully raised a further US$29m via a new share issue. More significantly, Solenta Aviation of South Africa becomes a 28% shareholder, including 2 board positions, in a deal valued at US$ 19.2m. In return Solenta will provide 3 wet-leased aircraft plus other services to Fastjet during a 5 year agreement.  Fastjet is changing shape rapidly. It’s now based in Johannesburg so with Solenta as a new partner it can now be seen as a South African, not East African, company. An increasing focus on their new local market seems likely but where away from the Comair-Kulula/SAA-Mango dominated Johannsburg-Capetown- Durban- Johannesburg triangle could that take them?  The original pan-Africa low-cost vision has perhaps now completely faded along with the vision of 30+ aircraft in the reasonably short term. It has struggled to get beyond being a small business with just 3 aircraft and big debts which even given the fairest of winds will take a long time to recover. Rather than comparing Fastjet’s performance to, say, Kenya Airways’  JamboJet perhaps now it would be better viewed against SA Airlink, its Johannesburg neighbour.  Since 1978 SA Airlink has developed a 36 point regional network and a fleet of 43, mainly jet, aircraft shortly to be upgraded with Emb170/190s.  SA Airlink is a mature and effective business and sets a high bar for Fastjet.

The view from afar …. Economist 28 January, 2017 ……  Nigeria’s No-fly Zone. Government is to close Abuja’s runway for 6 weeks for resurfacing and is hoping international carriers will instead use Kaduna, 140 miles away. The runway at Abuja is dangerously pot-holed; it has failed, says the Minister of Aviation. The current shortages of hard currency, aviation fuel and government’s unwillingness to let foreign firms repatriate sales revenue, has already led airlines to cut routes or pull out of Nigeria completely. Delays and cancellations are legion on domestic airlines. The chaos- inducing tactic used to be to buy tickets and check in for several flights heading for your destination, take the first flight to board and in the quaue to the gate sell the unused boarding passes to touts to re-sell to other bidders. As result no passenger list remotely resembled a correct tally of names and numbers. With enhanced (?) security checks this may be a thing of the past but nevertheless Arik Air has asked passengers to stop attacking its staff. Some things can’t be going well. BA has declined to go along with all this and has simply withdrawn its Abuja schedule for six weeks.


AB Aviation (Comoros) has suspended operations due to a lack of cash.

Air Tanzania The government has paid a US$10m ‘commitment fee’ to Boeing for a B787-8 for delivery in June this year. Meanwhile Dodoma-Kigoma is a new Q400 domestic sector. 

 Ethiopian Airlines started to Victoria Falls, Conakry and Antananarivo in February while adding  Chengdu as a 5th Chinese destination.  It also plans five a week Addis-Stockholm-Oslo, B788s from March.

Fastjet PLC has raised US$29m after placing new shares. Solenta Aviation of Johannesburg becomes a 28% - and the largest – shareholder, with rights to 2 board members. Solenta is to provide and operate 3 aircraft, initially Embraer ERJ145s. 
Jubba Airways (Somalia, but registered in Nairobi) launched Mogadishu – Dubai ops on 26 Dec ember with an A321.  In Sep 2015 Jubba merged with Daallo Airllines of Djibouti.
Sudan Airways Government is continuing its search for those responsible for the sale of the Heathrow landing slot some 5 years, or so, ago.  The cash is also missing. International arrest warrants have been issued.

 The State President has announced tat the airline will receive 14 new aircraft in 2017, benefitting from a Chinese loan. Saudi Arabia involvement is also mentioned with debt restructuring and provision of the aircraft, both longhaul and regional types. Current fleet is 2 A320 and a leased B737-300.  The Sudan’s presence on the ‘EU black list’ continues.

EC Air (Congo Brazzaville) is in talks with Ethiopian Airlines on possible technical and strategic support including a minority shareholding. The airline ceased operations in October 2016 due to unpaid debts owing to ASECNA the provider of Air Navigation Services. PrivatAir, the Swiss provider of the fleet and flight crews plus technical support, has withdrawn. Membership of the IATA Clearing House has ceased.

Lakestar Express (Malawi) has applied for an Air Service Licence enabling domestic and regional operations to start with Beech 1900Ds and perhaps ERJ135/145s. 

Malawian Airlines returns to Nairobi in March with four weekly B737-700s, and a return to Harare once a week with a Q400. This is similar to the Air Malawi Nairobi frequencies in the 1970s and much less than the up to twice daily (Viscount and One-Eleven) to Harare in the same era, forty years ago. The Dar es Salaam route is to be extended to Zanzibar.
Rainbow Airlines (Zimbabwe) launched domestic flights on 25th January starting with Harare-Victoria Falls, with a leased CRJ100 with another to follow. Discussions continue on securing regulatory approvals for Johannesburg and Cape Town.
SAA has taken delivery of the first of 5 A330-300s leased from Airbus.
SA Airlink is starting to replace the 12 strong BAe RJ85 fleet with 13 Embraer 170/190. Delivery of the first 5 aircraft is imminent. 
SA Express plans to stabilise on a 20 aircraft fleet of 90-seat leased jets over the next 5 years.  CRJ900 and E190 were competing and. An order for three CRJ 900s has been placed already.

Air Côte d’Ivoire is planning the  imminent launch of services to Bangui and Kigali.
Arik Air strike action by staff stopped all flying for several days in mid Dec. Agreement was eventually reached to pay all outstanding salaries by end December but rumbling continues.
Camair-Co in mid-December all 5 aircraft were unserviceable. The 767 and 737s had maintenance payment issues and the MA-60 crews were in China for recurrent training. 

 It was decided in January to purchase the 2 B737-700s currently on lease to remove problematic monthly lease payments.  Government is to fund the purchase.  This is the first and perhaps unsurprising step in the 5 year Boeing Consulting ‘stimulus package’ to return the carrier to profitability.

Imo Air (Nigeria) Owerri-based carrier started domestic services on 24 Jan with a Dana Air MD-80 carrying Imo Air decals. Imo Air holds no licences or approvals.  Details of the agreement between Imo State Government and Dana Air are unknown.

Med-View Airline (Nigeria) inaugurated Lagos - Harbel, Liberia on 20th December. Future plans are to add services to Monrovia and Freetown via Accra. 


Air Arabia Maroc plans to launch Casablanca – Catania services in March.

Royal Air Maroc also has plans for March. It aims to inaugurate  routes from Casablanca to Bilbao, Naples and Manchester.


Air Francewill start Paris – Marrakech with the March summer schedules.

Azores Airlines (Portugal) aims to add Barcelona – Cape Verde to the network in June. The airline is the rebranded SATA International, a name which meant little to anyone outside its home area and who didn’t know it. Azores has much more impact.  The network includes European and North America points including Boston and Montreal.  The fleet of 7 is a mix of Airbus types with a single new A330-200 delivered this year. It hopes to be profitable by 2020.

Emirates its belief in very large aircraft seemingly unshaken despite some intense price and frequency competition in the Gulf area is putting the A380 on its Casablanca route in March A380.
 It also hopes to up Dubai-Nairobi frequencies to thrice daily in June but there is some Kenyan Government opposition to this.

Qatar Airways has named Libreville and Douala for launches in 2017-8.

Turkish Airlines has been into Zanzibar from 14th December with a routing via Kilimanjaro. That’s thrice weekly with a 737-900. Ouagadougo va Conakry was due to follow on 30th January. The airline is under pressure and slightly reducing its long term fleet growth due to marketplace impediments and traffic shortfalls. Security concerns have badly dented its inbound tourism market and the Istanbul airport attack has deterred some of its vital high volume transfer business.

IAG’s Vueling (Spain) is reaching across across the Med into northern Africa. It plans an April launch of flights between Valencia and Oran.


Ghana Ten parties responded to the June 2016 expression of interest invitation for the creation of a new joint venture airline. A government committee will now deliberate. That’s always ominous.

Malawi’s Government has said that the pledged 31% private shareholding in Malawian Airlines will be activated only when the airline achieves profitability. Nobody will hold their breath.  Government currently holds 51% and Ethiopian Airlines 49%. The joint venture Malawian Airlines started flying in January 2014 amidst hopes that it would develop a useful and profitable regional network. Despite Ethiopian’s involvement progress has not so far been impressive and it doesn’t look very different from its predecessor, Air Malawi.

Nigeria US Dollar availability problems continue. Foreign carrier local sales remittances are blocked. Aircraft insurance premium payments are being missed. Domestic carriers are defaulting on handling company payments. Jet fuel shortages continue. Blocked funds are estimated as: US$200m

-John Williams-

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