Turkish Flavours

Turkish Airlines is something else. It's hard to define. They are huge. 320 aircraft and claim to serve more global points than any other carrier. Istanbul's Ataturk Airport is a sea of red tails and the elderly terminal is swamped by oceans of transferring people. There is no sense of order and yet somehow it all seems to work. Having said that, after a creeping delay our flight to Dushanbe was eventually cancelled. No reasons were offered but it may have simply been the hub philosophy which says that once a departure is too late to return in time for its connections or to operate its next schedule it's best to bin it to protect the rest of the day. The result was an unscheduled nightstop without baggage. Our return from Almaty was also cancelled resulting in an unwelcome 0600 departure for Istanbul. Following the shooting at Istanbul airport some 10 days earlier we did toy with the idea of returning with Aeroflot or Air Astana but eventually stick to Plan A. After all, life goes on.

Fortunately our baggage stayed with us. Waiting at the carousel in Heathrow's impressive new Terminal 2 every single bag seems to have been transferred at Istanbul. The A330-300ER was 90% full. The Captain was British and the cabin crew all Turkish. They were quietly and attentively efficient with genuine smiles.

-John Williams.

 African  Roundup.

Fastjet in the slow lane: Can the Low Cost model work if growth is too slow?

Back in 2012 the logic must have sounded faultless to those planning the launch of Fastjet.  In the UK, Easyjet had developed into a large and successful pan-European Low Cost Carrier; the business model could surely be exported successfully across Africa.  But, the just-released 2015 Financial Results show just how faulty the logic was.   he operating loss for 2015, the third year of operations, was US$37.9million.  Today’s operations are primarily based on the Tanzanian market, not Africa-wide, and load factors are falling.  The fleet of just 5 A319s is  underutilised on a network too thinly spread and there are just too many seats for market demand.  The recently introduced Zimbabwe-based operation is proving slow to develop and the nascent Zambia company is effectively shelved. The regulatory hurdles to opening Kenya-based operations have yet to be fully surmounted. And all the while cash is being burned. The loss for the first 4 months of 2016 amounts to US$15million. The Chairman tries to sound positive by highlighting on-going cost-cutting, frequency reductions and ‘unsatisfactory’ route-cutting but an energising vision of profitable growth is missing.  His tone is down-beat.  And yet, bullishly, less than 12 months ago, a 34 strong fleet was still being forecast serving a network of 40 points by 2018. Back in 2012 the logic must have sounded faultless ….

Meanwhile in contrast,  the impending July launch of Addis Ababa-Lome-New York flights by Ethiopian will fulfill a long-held strategy of building a successful West African regional carrier (Lome based Asky) plus launching transatlantic operations from western Africa.

With Ethiopian Airlines as 40% shareholder plus an Ethiopian management team Asky now serves 23 West African points with a fleet of 3 B737-700s and 4 Bombardier Q400s. Lome acts as an efficient hub operation; arguably the best in the region. With the cessation of United’s Lagos-Houston flights Nigeria’s  Arik will be the sole competition with direct flights to the USA.

Along with United’s withdrawal from Africa, Air China is withdrawing its Beijing-Addis route and Iberia is to pull out of the problematical and frequency restricted  Luanda. United and Iberia’s decisions are based largely on hard currency remittance problems but China Southern’s is less clear.  Launched just 7 months ago in Oct 2015 it may just be proving a traditional over-enthusiastic demand forecast or there may be a policy decision to cut African airlines some slack to avoid China’s ever increasing economic dominance becoming an overwhelming issue which hinders other deals. Aviation is much more visible than much more important mining rights.  British Airways , whose general enthusiasm for non transatlantic long haul operations and Africa in particular has seemed less than overwhelming lately,  is also reviewing its Nigeria operations  due to the problems of remitting earnings and selling in US dollars.  It’s not only African carriers who fall at the continent’s hurdles.

Down at the southern end of the continent SAA’s problems continue. The delayed 2015 financial results have yet to be filed with Government.  The External Auditor will not recognize the company as a ‘going concern’, something that doesn’t encourage potential lenders. The Finance Minister will not consider further life-saving financial guarantees until a new CEO and a new Board are appointed. The business is surviving on a diminishing U$97m, January 2015, government guarantee.

Former CFO and Acting MD Chris Smyth died in January. His former career had included Kenya Airways and Virgin Nigeria both as CFO but is understood to have retired since leaving SAA.

Then there is Kenya Airways, seemingly becalmed and in danger of falling in East Africa. Like Fastjet its business model of growing rapidly, in this case by regularly adding hub spokes and its fleet to increase self feeding hub synergies, has come to a halt. Unhelpfully The Kenya Government has stopped the construction of the Chinese financed new KQ and friends only midfield terminal, leaving the airline to carry on in its new unit at the end of the existing terminal semi-circle. Although a big improvement on KQ’s previous cramped and inadequate “Unit 2”  this is already constrained by gates and ramp space. Whereas the Gulf hubbers and Ethiopian and Turkish have or are building much increased new terminal capacity ot airports, Nairobi has gone into dead end siding and growth will be be choked off by the limitations of  Jomo Kenyatta Airport. Fleetwise no major expansion from its now much reduced widebody baseline seems to be planned. The danger is that, especially with more intervention by politicians and lack of large scale new investment, the previous ambitious plan will now unravel and its former state industry DNA will reassert itself. Old fashioned unions ,powerful amongst pilots, cabin crew and airport ground staff don’t help either.

But, to cheer us up a bit,  a recent copy of The Economist sees refreshing bright spots on the continent …. “Ambitiously, Morocco is working to build an aircraft industry, based on Royal Air Maroc’s Casablanca engine maintenance business.  On the factory floor of Matis Aerospace, women are hunched over high specification electrical cables for both Boeing and Airbus.  Nearby a French technology group is making carbon-fibre casings for jet engines. Bombardier is setting up shop to make parts for its airframes.  The Government is part-funding a vocational training school for the aeronautical industry. Moroccan factories can make components 30% more cheaply than European or US companies without loss of quality”. (The Economist, 14 May 2016)

EAST  AFRICA

Afra Airways (Burundi), a start-up, is planning an August/September launch with a mixed ERJ145 and CRJ 200 fleet deployed on a regional network. An Air Service Licence has been issued.

Air Tanzania has signed an unlikely MOU with Irkut, Russia, to “study the possibility of supply of the MS-21 to Tanzania”.  Since the first flight of the twin-engined, 150-212 seat aircraft is only planned for late this year one might have thought that there might have been more pressing things to do.

Current preoccupation is an attempt to reduce headcount by laying off all staff and then rehiring according to experience and need.

Blue Sky Airlines (Somalia) and Ocean Airlines (Somalia) have merged to form Blue Ocean Airlines , again with a mix of aircraft, in their case EMB120s and CRJ200s. 

Daallo Airlines (Djibouti with Head office in Dubai) is wet-leasing an A321-100.

Ethiopian Airlines  said goodbye to the last of  its 5 strong fleet of 5 B757-200s on 26^th April . The aircraft started to arrive in 1990 and were usefully operated on a mix and match basis with the company’s 767-200s.

Thrice weekly Addis-Lome-JFK flights start on July 3^rd with a B787-8 leased to Lome-based subsidiary Asky.

Meanwhile, with the first two A350- 900s now delivered, a possible addition of a further 10-15 B787-8 is being evaluated. Critics wonder whether the current rate of expansion can be maintained but it shows no sign of slowing. Kenya Airways’ and Nairobi Airport’s stalled state give some grounds for optimism but in the absence of pre- announced medium and long term plans it is difficult to tell how the story will develop. So far though the growth policy appears to have paid off and the airline is not beset by political and/or union and resultant staff attitude problems of rivals including SAA and Kenya Airways.

Fastjet PLC’s 12.6% shareholder Sir Stelios Haji-Ioannou is calling for the removal of Chairman Colin Child for failing to appoint a new CEO and to relocate the Head Office to Tanzania from Gatwick. Why it wasn’t put there or somewhere else on its planned African network  in the first place is not explained. Not being seen as an African airline has been one of its problems and made it an easy target for genuinely local competitors lobbying governments to deny rights to the newcomer or upstart as they would portray it. The overseas location , especially a European one, also hasn’t helped the airline to develop the necessary daily connections through almost daily formal and informal contacts with political and business leaders and so  to fight its corner in the inevitable rough and tumble. Suits visiting from overseas just can’t do it unless they have relationships built up over years, something foreign head offices now seldom have. Child was appointed in September 2015 so he’s had no chance to get to grips with the job and will still be on a steep learning curve. Previous CEO Ed Winter who had been with Fastjet since the beginning  departed in March.

 The overdue audited 2015 financial results won’t cheer anybody up. They show the continued consumption of money with a 12 month operating loss of US$37.9m (plus US$15.2m for the first 4 months of 2016).  Fastjet Tanzania’s load factor dropped 6.6 points to 66.7%.  Chairman Colin Childs cites a “weakening of the Tanzanian economy plus political uncertainty” for driving the results. Nothing is said about the possibility of a relatively limited and inelastic market once a certain level of carryings is reached.

Fastjet Tanzania. In what must be an unwelcome retreat, June saw a reduction in frequencies between Dar and Zanzibar and Nairobi from twice to once daily. That’s a real step backwards from a high frequency low cost model, and is probably dictated by the need to reduce the total Fastjet fleet from 6 to 5 aircraft to save outgoings. That’s another backward step especially when network growth the critical mass is so important.  

Jambojet (Kenya Airways’ Low Cost subsidiary launched in April 2012 ) will add a second B737-300 daily flight between Nairobi and Lamu in August. An operating profit is forecast for 2016 following the late-2015 introduction of 2 Q400s for thinner domestic routes.  2 B737-300s are leased from parent Kenya Airways and the company holds unused route rights to 9 regional points.

Kenya Airways: One bright spot in Kenya Airways otherwise rather depressed landscape is the July introduction of  a Nairobi-Livingstone-Cape Town E190 service. Is this the longest EMB 170/190 series route anywhere? From the passenger’s point of view it’s a long way to go in a sub 737 sized aircraft especially on night sectors. KQ previously opened a nonstop Nairobi- Capetown service in 2002 but it was relatively short lived, perhaps due to Nairobi being out-hubbed by Dubai for Asia bound business.

Things have been frisky on the industrial relations side, seldom happy territory in a Kenyan parastatal or ex parastatal. On 28^th April just hours after a court order prohibited strike action, KALPA (Kenya Airline Pilots Association) imposed a 24hr stoppage linked to the carrier’s plan to cut staff numbers by 600. There has been further unhelpful government intervention since then to slow the process.

On the finance side the  preliminary results of a forensic audit have helped the airline to identify weaknesses in its systems and internal processes following, amongst other things, signs of embezzlement though how that could have gone on for long invisibly  is difficult to understand. The company has said that it is taking remedial action, included disciplining some staff. More than a cozy chat, even without biscuits, one would hope. 

The wide bodied fleet has meanwhile continued to dwindle down to its new size. Three B777-300s are being leased to Turkish Airlines and the 2 B787-8s leased to Oman Airways have gone for 3 years.  Since January the fleet has been reduced from 44 to 34 aircraft. Thanks in large part to the reduced activity , the beginnings of hard fought staff reductions, and the lower exposure to leasing costs, a profit is being forecast by the end of next year.

Precision Air launched thrice weekly services on the 25 minute Zanzibar-Pemba sector in May. Not a game changer but every little helps. East African Airways flew the sector in the 1950s and 60s with DH Rapides and later Twin Otters. The former made small amounts of money. The latter with their higher capital costs did not.

SOUTH / CENTRAL AFRICA

Air Kasai (DRC), the Kinshasa-based carrier founded in 1983 but grounded since 2014, is planning to restart domestic flying  with the old favourite ,a leased B737-200.

Air Mauritius as part of its offshore hub from Africa vision the airline  plans to open a route to Guangzhou in July thus joining the ranks of those who southern China as a pot of gold.  Despite the numbers of Chinese workers in Africa the market could be more finite than some think.

To add spokes into Africa  a weekly Dar es Salaam – Nairobi triangle in began in May. Maputo was also inaugurated along with Lusaka and Harare. Gaborone and Manzini are to follow. 

Air Zimbabwe. Another reappearance of a 737-200 on a revived route! This time it was one of the airline’s two venerable B737-200s which on 4th June renewed its acquaintance with Dar es Salaam at the start of twice weekly services.

Fly Blue Crane (S Africa) planned to launch Johannesburg to Windhoek in May. It is also is seeking to add 2 further ERJ145 to bring that fleet up to four, while hoping to introduce a 90-seat type in 2017.

Kalahari Airlines (Botswana) start-up continues to plan its long-heralded launch of Cape Town-Gaborone-Gatwick services with 2 B747-400s wet-leased from Kabo Air, Nigeria.  Network expansion plans include New York, Los Angeles and possibly Hong Kong. Presumably they have deep resources of capital to see them through the early stages.

Maluti Sky (Lesotho) launched daily Maseru-Johannesburg flights with a CRJ200 wet-leased from SA Express on 5^th April . Future plans include Durban and Cape Town routes.  Privately-owned Maluti is a division of helicopter operator Matekane Group of Companies. State-owned Air Lesotho ceased flying in February 1999.

SAA On 4 May Finance Minister Gordhan declared that further financial support for the business would only become ‘possible’ after a new, long delayed, Executive Board is appointed.  There is deadlock over Gordhan’s choice for a new CEO and Zuma’s preference for the continuation of controversial current CEO Dudu Myeni.  Meanwhile the filing of its 2015 financial performance, due in Aug last year, remains outstanding.  The carrier is sustained by a Jan 2015 US$97m state guarantee.

 On 5^th May, CEO Dudu Myeni suspended the Head of Human Resources, Thuli Mpshe, and asserted that the business would be run successfully without further Government guarantees as ….”our aircraft are full” He didn’t mention at what yields.

SA Express on 1 May had its AOC temporarily withdrawn due to SACAA ‘audit concerns’.  Following ‘submission of correct and required paperwork’ operations resumed 42hours later.

TAAG (Angola) has received its 5^th and final B777-300ER.  Emirates has a 10 year Management Concession Agreement now in its first year.  

WEST AFRICA

Air Côte d’Ivoire has placed firm order for 2 A320neo and 2 A320s.  The current fleet includes 4 A319s and a single A320 together with 5 Q400s. 

Air Sahel (Mauritania) is a proposed start-up involving the governments of Mauritania, Chad, Niger, Burkina Faso and Mali.  A team of officials is to produce a feasibility study starting in June. 

Air Peace (Nigeria) has announced that it has been granted a ‘licence’ to operate to 5 international points including China, USA and UAE. Active fleet  is 7 B737s so it will need tro add to those.

Binter CV (Cabo Verde), a start-up subsidiary of Binter Canarias (Canary Islands) is planning to start  inter-island services with 2 ATR72s in June.

Dana Air (Nigeria) had a pilots strike over pay in May.

Senegal Airlines AOC was revoked at the end of March. Services were maintained by a wet-leased ERJ145 and Emb120.The 4 leased A320s were returned in 2014/5 and debt now stands at US$100m. The government is now talking creating a new carrier with strategic partners.  

NORTH AFRICA

Air Algerie is continuing to focus on the development of Algeria as a hub for both passengers and cargo, notably with increased connections south into Africa.  Libreville, Khartoum and Addis Ababa are under evaluation. ‘Fleet strengthening’ includes 16 aircraft in 2015-16, mainly Boeing 737-800s.  Long term the fleet is expected to double from 59 to 100 aircraft by 2030. 

Tunisair  launched Tunis-Niamey-Abidjan flights in March. They also opened a Tunis-Moscow route with an A320.

NON-AFRICAN AIRLINES

Air Asia. The Malaysian low cost carrier aims to start four times weekly services between Kuala Lumpur and Mauritius services in October.

Air China .As noted in the preface above dropped Beijing – Addis Ababaon 25^th May just 7 months after launch. Ethiopian will not be upset.

Emirates  is to add a third Dubai-Cape Town frequency, all B777-300ERs, in July giving it an almost unbeatable 3 times a day one stop proposition to almost anywhere in the world . The airline also flies to Johannesburg four times daily and once to Durban where it has been joined by Qatar and Turkish.

Iberia withdrew from Luanda on 1^st June leaving BA providing  IAG’s  nonstop link to Europe twice weekly.

TAM (Brazil) starts a Sao Paulo-Johannesburg link in October.  South American carriers have been absent on the continent since the demise of Varig in 2006. At various times Varig had a high profile in Africa in the 1970s and beyond, at times operating  and to Dakar, Abidjan, Luanda, Maputo and Johannesburg.

Turkish Airlines The ever growing Turkish carrier is to launch a thrice weekly A330-200 service to Seychelles in October.

United Airlines  hasn’t had much luck in Africa. Setbacks have included the cancellation some years ago of a route to Nairobi just the day to open due to suddenly realised security concerns. What with the general hassles with which the long stayers have earned to cope plus remittance problems and general security related issues it has all just proved too much and the final withdrawal (for now at any rate) was the end of the Houston-Lagos B787 operations at the end of June. Predecessor Pan Am had a long history across Africa, latterly in the 60s and 70s flying B707s from New York to Dakar and then to Johannesburg  or weekly on to a multi stop trans Africa route from Senegal serving  Monrovia, Accra, Lagos, Nairobi and Dar es Salaam. 

MISCELLANEOUS

Angola’s Government is considering the creation of a new carrier to boost domestic connectivity

Libyan carriers are to resume services from Tripoli to Tunis at the end of May.

Nigeria’s  debt-ridden Nigerian Civil Aviation Authority (NCAA) imposed a 60-day deadline on local carriers to settle all outstanding debts including, most importantly to them, the full remittance of the recently introduced 5% Ticket Sales Charge (TSC). 

St Helena received its Aerodrome Certificate on 10^th May. This formally enables/legalises the  operational opening of the new airport.  Comair B737-800 test flights have revealed wind-shear difficulties and have yet to start their contracted weekly service to Johannesburg. Once this has happened the supply ship will be retired. It remains unclear how cargo too large for the B737s will reach the island.

Swaziland ‘s impoverished government has bought an ex Air China 340-300 . The seller will be pleased with the price of US$13 million for what is to be a VVIP transport for presumably occasional use by the King Mswati2. The 63% of the population whose daily income averages $1.25 a day will no doubt also be impressed. 

John Williams

IATA jump the Brexit gun.

The normally conservative IATA has joined the frenzied speculation on the possible effects of the UK leaving the EU by saying that passengers could fall by 3-5% by 2020 due to the likely fall of sterling and economic downturn.

The reality is that the vote having been announced on Friday and it now only being the following Wednesday, nobody has a clue as to which way the processes and dynamics of the divorce are going to go and what the end position is going to look like. The possibilities cover a wide spectrum. The outcome will depend on how much common sense and how little political grandstanding prevails as well as what other factors come into or out of play. There is a lot of water to flow under bridges and over the Channel tunnel during the next couple of years. In the meantime life will go on, people and businesses will figure out how to adapt to new realities as they emerge and even if lower baselines do temporarily emerge upward growth from them will resume unless the economy is seriously mismanaged. No doubt the usual suspects will claim that a third Heathrow runway or a less satisfactory alternative is not now needed. The fact is that, given that it's already long overdue and that it will be a boost to economic activity, the need for more London runway capacity is undiminished. 

So, many thanks IATA for the view. Like all others currently obscuring the sky, it should though be put on the shelf and left to mature.

Istanbul strikes chlly chord.

The Istanbul attack is exactly what the new megahub airports and airlines of Turkey and the Middle East had hoped would never happen in a business where confidence is so crucial. Terrorist hits are the one thing that could derail their seemingly all conquering approach to establishing themselves as the new dominant force on routes between Europe, the Middle East, Africa, Asia and Australasia. Conveniently situated close to midpoints between almost anywhere and anywhere else and able to exploit their 24/7 base operations they are able to grow and make profits where others fear to go, each route adding to the classic hub synergy of all the others at, thanks to the mix of  sector lengths required and high utilisation, costs way below those which could be achieved by airlines based towards the ends of the routes. Security has always been their biggest but unstated fear, and the most difficult to guarantee. Overnight it has become more urgent.

The plane beats the train.

Cathay Pacific received the first of its A350s last week. The first revenue service is this week,- on 1st June.

On Britain's railways new types of diesel or electric trains take months,-in some cases more than a year (Hello IEP) ,- to get into service.

Why?

African Roundup Update.

Three topics head the news.

-Kenyan aviation is in disarray.

-Fastjet has slammed on the brakes to stem its losses.

-Ethiopian flies onwards and upwards.

So what’s happening?

First let’s look at Kenya where “The Pride of Africa” has been taking a few dents and the Kenya Airports Authority has ditched the plan to build a brand new terminal for the “national” carrier and its assosciates specifically aimed at, though not necessarily designed for, hub traffic. The fate of the planned second runway is not clear.

Kenya Airways has been awash with consultancy companies as it struggles to regain profitability … and its lost pride.   McKinseys, Deloittes and PJT Partners have each been charged with and charge for separate elements based mainly on financial restructuring.  McKinseys is confident that profitability can be re-established within 2 years.  Fleet restructuring is underway with the sale or lease of the full B777-200/300 fleet already completed.  The network is being trimmed to focus on intra-Africa routes, including keeping  London frequencies at once daily rather than rebuilding to the abandoned ten and ideally onwards towards double daily. The shrinkage strategy is similar to SAA’s but the South African carrier was never as dependent on hub traffic as Kenya Airways and Ethopian are).  600 staff are now to lose their jobs. But is it achievable?

 ‘2,000 staff must go’, was a key consultancy recommendation made to ailing Air Afrique in 1992. Deemed totally unrealistic it was never even attempted. Kenya Airways' disposal of the new over-large 777-300s is understandable but disposing of the very useful and versatile midlife 777-200s could be something the company will regret unless they are quickly replaced with more 787s.

Kenya Airports Authority ‘s move effectively calls a halt to the essential onward march of the country , Kenya Airways and other airlines  in building an unchallenged dominance of hub business.  Construction of the new terminal building at Nairobi was already under way. It was poorly situated away from the existing crescent of linked buildings and devoid of a robust link with it ( Buses will never do for a serious hub and serious 21^st century travellers) but it did stake out a national aspiration as part of the Government’s ‘Vision 2030’ programme. There has been no mention of fate of the second runway. Possibly spiraling national indebtedness to Chinese loans is causing some political cold feet although the hugely expensive second stage of Standard Gauge Railway project has recently been confirmed. This will take the line on westwards from Nairobi to Kenya’s western border with Uganda .

While Kenya seems to be abandoning some of its exciting strategic objectives  no such problems in Ethiopia where the airline continues to fly above the continents woes, steadily growing its fleet and network. A350-900s are due to be added this year. Addis Ababa airport also struggles to keep up with the demands of its hub role but ground will be broken this year on a new one with four runways.

Away from the hubbing business and strategically on the very different tack of creating a Pan-African group of co-branded  low cost carriers, Fastjet’s troubles continue .12% shareholder Sir Stelios Haji-Ioannou is challenging the company’s ‘bloated cost base’ and some familiar faces have gone. CFO Nick Caine had left earlier, having given plenty of notice to be closer to his New Zealand family . Now CEO Ed Winter was the first to step down  followed quickly  by legal Director Christa Yates. Sir Stelios has also pointed to breaches of the Brand Licence, a claim which the company contests. Away from the publicly the airline seems to be responding to ‘bloated costs’ by raising base fare levels and reducing some frequencies. The active fleet has also been cut from six to five A319s, this at a time when the original vision had seen the group steadily growing towards thirty aircraft.

On a smaller scale, Swaziland is in the news. Its government has established a new carrier, Swazi Airways, with an imminent launch of operations to Durban. This will mark the governments third finger in the aviation pie. Why thee interests are not combined under one umbrella isn’t clear. A leased B737-300 has been secured. State embarrassment at the underutilisation of the new King Mswati III airport is one driver. The sole operator, SwaziAirlink, offers several daily EMB135 frequencies on the single route, to Johannesburg.  Government is a 60% shareholder in this competitor company which is a successful joint-venture with SA Airlink.  The government owns a third , though since 1997 non operational airline, Royal Swazi National Airways which hangs onto life by operating a sales-shop, in effect a travel agency ,in the capital, Mbabane.

Historically Royal Swazi operated a single F28-3000, 3D-ALN, new in 1978. This aircraft may have a unique history in being involved in not one but two hijacking incidents.  In 1981 it was involved in ferrying mercenaries on a coup-bound mission to the Seychelles which went very wrong when Customs, on arrival, discovered one of the AK47s. Then in 1993 a highjacker took control of a Maputo-Manzini flight demanding a re-routing to Australia.  Both incidents involved much gunfire and from then on the little warrior proudly bore the patched repairs to its wounds.  Swaziland, Mauritania and DRC were familiar operating bases and it was last seen parked-up at Lanseira  part cannibalised and ‘not looking too good’. It may still be there?

1.  EAST AFRICA

Air Tanzania The single Q300, it’s sole aircraft, has returned after heavy maintenance.  The state-owned carrier also flies a wet-leased CRJ100.  The network is minimal.  Precision Air and Fastjet dominate the market.  The latest of many stalled ‘re-births’, a new national carrier with Tanzania National Parks as an investor, was announced in March 2015. It’s probably seen as a backstop insurance if either of its rivals should reduce their flying.

Ethiopian Airlines is going ahead with restarting  thrice weekly B787-8 New York services on 3rd July .Sensibly the idea of trying JFK this time has been ditched in favour of Newark and its extensive range of Delta connections. The revived route adds to the current Washington and Los Angeles (routing via Dublin) operations and will call at Lome, Togo, to link with Asky to provide a direct link from West/Central Africa to New York and its  gateway to the USA.

 In the meantime 6 March saw the launch of Delhi services using B737-800s.

Fastjet PLC. Before Ed Winter’s departure a profit warning was issued. This led to 12% shareholder Sir Stelios Haji-Ioannou calling for an EGM and the dismissal of senior management citing excessive operating costs and remuneration packages.

Fastjet Tanzania :The need to reduce costs  saw the suspension on 6^th February of the twice weekly  Dar es Salaam-Lilongwe, Malawi, operations launched in July 2015. The refusal of the Malawi’s government to grant access to the commercial capital, Blantyre, including denying domestic rights Lilongwe-Blantyre, was cited as making profitability impossible. The airline have a point in that ever since Lilongwe’s “new” Kamuzu International was opened and passengers forced to travel via it rather than Blantyre where most people wanted to go, Malawi’s aviation growth has been hobbled. Some international flights are now permitted at Blantyre but it needs to be fully opened up and market forces allowed to dominate if Malawi’s national economy is ever to make the most out of aviation. Artificially protecting Lilongwe airport is a mug’s game and deters the business traveller in particular.

Another economy measure has been to reduce frequencies between Kilimanjaro and Nairobi from daily to twice weekly. It’s a difficult route where high frequency competition with smaller aircraft rules the roost and for very low yield traffic prepared to put up with the Kenya/Tanzania border hassles on the road, the high frequency buses from Moshi and Arusha towns between which Kilimanjaro Airport lies provide acceptable mass transport. More cheerfully the Dar to Nairobi is up to double daily.

Fastjet Zimbabwe: South African regulators granted access to Johannesburg and daily Harare-Johannesburg flights ops began on 1st February. Next up was a twice weekly Victoria Falls-Johannesburg route which started on 25^th March. The airline is a Zimbabwean ‘designated carrier’ in the BASA with South Africa. 

Kenya Airways: The gloomy background is touched on in our introduction. Expensive consultants have been everywhere,- at least at the Embakasi headquarters, seemingly concentrating on company’s financial entrails. Mackinsey Consulting holds out 2 year US$ 346m savings from short/medium term debt restructuring recommendations while Deloitte Consulting has been advising on improvements to systems, processes and activities’ plus long-term debt restructuring .In another corner is PJT Partners (US) appointed as transaction advisor on balance sheet restructure and long term capital refinancing.

As part of the jettisoning of all possible costs overboard has gone a 787-8 on wet lease to Oman Air for 3 years. That takes the widebody fleet down to a total last seen around ten years ago. Another item of family silver has gone with the sale of the seven weekly Heathrow slots to Air France/KLM followed by their immediate leaseback. The other three had gone earlier. It’s unclear whether that was by sale or just not operating them.

Also due to go overboard in the quest for a return to profitability within the next two years. are 600 staff. This might be expected to meet some political opposition.

Rwandair has selected Ethiopian Airlines as ‘strategic partner’. Ethiopian is to take a 49% stake and have management involvement.

   SOUTH / CENTRAL AFRICA

Air Mauritius eff May plans to launch Dar es Salaam and Maputo services in May with hopefully Lusaka, Harare and Manzini and possibly Gaborone to follow. 

Air Namibia the troubled state-owned carrier is to receive US$45m as the first tranche of a 3 yeartotal of US$129m in state funding.

Namibia Flyafrica.com / Zimbabwe Flyafrica.com The Low Cost operations of both carriers continued to be suspended whilst AOC compliance issues remained unresolved with the respective regulators.

Fly Blue Crane (S Africa) is seeking licences to operate to Swaziland and Mozambique. Their current domestic network links Johannesburg, Cape Town, Kimberley and Bloemfontein. Two ERJ145s are used.

Proflight (Zambia) has gained IOSA certification .

SAA . We didn’t mention them in the headlines this time but their life isn’t getting any easier. Joining the lions at the door are threats of legal action from Comair and Nationwide citing historic un-competitive practices. Nationwide was grounded by the South African CAA in September 2007 and subsequently folded its wings in April 2008.  Comair has previously been to court, albeit unsuccessfully, challenging the legality of financial state guarantees awarded to SAA.  

 In his March Budget speech the Finance Minister precluded further funding and state guarantees for state-owned carriers SAA and SA Express and suggested merging them including offering a minority shareholding for sale.

A new fleet renewal strategy is to be unveiled in May but for now 8 B737-800 leases have been extended for 18 months.

SAA The Finance department seems to be in trouble too. The filing of its 2014-15 financial statements is overdue. So are the appointments (by Government unfortunately) of (another) new substantive CEO and Board  have been outstanding since late 2015.

SA Express: The loss-making, state-owned carrier is to seek Government money for total fleet replacement of more than twenty elderly CRJ100s and Q400s. Current State ‘going concern guarantees’ total US$65m

3.   WEST AFRICA

Aero Contractors (Nigeria) 60% state owned via Asset Management Co (AMCON)

has sacked the Board and initiated a forensic audit of the past 5 years accounts. The current fleet of 17 aircraft is mainly B737-400/500 and the network is domestic plus Accra. The new CEO is Tunde Fagbemi. This low profile carrier is Nigeria’s oldest operating airline.

Air Côte d’Ivoire launched a Abidjan-Abuja Q400 route on 16^th February. Happily the airline continues to resist the temptation of long haul services to Paris. Competing with daily Air France 777s and a weekly A380 would be no fun at all.

Air Guinee: The government is pursuing the revival of the state-owned carrier, once an IL-18 operator, dissolved in 2002. Initial talks have been held with Rwanda on possible financial and technical support.

Camair-Co had its leased B737 impounded at Paris for contravention of lease contract terms in relation to repair of damage to the aircraft. 

Fly Caminter (Cameroon) is a Yaounde-based start-up planned by Regourd Aviation, Paris.  First launched would be a domestic in 2016 launch. 

Fly Salone (Sierra Leone) ceased flying 90 days after the launch of a Gatwick-Freetown route. As too often with long haul flights cash difficulties are cited. A lot of money can be lost in just one rotation.

Green Africa Airlines (Nigeria)is another proposed Lagos-based start-up and has been granted an Air Transport Licence.

Mauritania Airlines International is talking of fleet renewal this year with later model B737s and  ERJs. The fleet now is two B737-500s, one B737-700 and one ERJ145.

TACV (Cape Verde) the leased B737-800 was seized in Amsterdam.  Accumulated debts now seem to stand at US$97.5m. 

4.   NORTH AFRICA

Air Algerie intends to add a pairs of B787-9s and B777-300ERs to the fleet which now stands at 24 B737-6/800s, 3 B767-300s, 8 A330-200s and 15 ATR42/72s.

A new route from Algiers to Guangzhou is planned for October.

Royal Air Maroc  in a new departure is scheduling thrice weekly three times weekly local/regional  flights on the Accra-Monrovia-Freetown corridor from mid April using Ghana’s  5^th Freedom. An Accra based B737-700 is to be employed.

Tunisair  launched Tunis-Niamey-Abidjan services in March.  Also launched was a Tunis-Moscow route with an A320.

.   NON-AFRICAN AIRLINES

Aigle Azur (France) started  Lyon-Dakar services on 28^th March.

Atlantic Star Airlines (UK) is operating and marketing a 20 May first flight “charter” flight Gatwick - St Helena operated by TUI-fly with an ETOPS B737-800. There will be a technical stop in Banjul on an overnight south-bound routing and following morning northbound.  All this is subject to the new airport opening as planned. Comair (S Africa) expects to start weekly scheduled services from Johannesburg under its BA franchise. They will use a B737-800.

Brussels Airlines was to up Entebbe ops from 4 to 5 weekly from 28^th March but this will have been held back by the post bombing movement and passenger volume restrictions at Brussels airport. These can be expected to rise with experience gained and the progressive reopening of on 29^th March.

6.   MISCELLANEOUS

Ethiopia’s Government is to lift the historic 50-seat cap on private sector aircraft.

Ghana has dropped  the need for visas for visiting AU citizens .

Kenya Government says ‘almost all’ ICAO/ US FAA audit tasks are now complete for Nairobi to be granted Cat1 status enabling direct Kenya-USA flights. When Kenya Airways might introduce them will presumably depend on the availability of aircraft from their now reduced widebody fleet of seven B787-8s.

John Williams
April 2016.

London Feed- Not quite as in Sunday Times

The Sunday Times Business Section wrote on 10th April about the possibilities for feed traffic if FlyBE takes over some of the vacant ex BMi domestic slots and how "All BA's long haul rivals at Heathrow including Emirates, Singapore Airlines and Virgin Atlantic are crying out for (non BA) feeder services from the north. Er, maybe not quite.

The world has moved on a bit since that might have been true for most of these long haul bretheren. For business from the north and Scotland heading to worldwide points south and east, Emirates is very happy bypassing Heathrow via its thrice daily departures from Manchester and Birmingham, twice from Glasgow and once from Newcastle. Manchester has the Heathrow avoiders Cathay Pacific, Singapore, Turkish, Etihad(x2), Qatar (building to x 3) Turkish (x3) not to mention all the European marauders including KLM, Air France and Lufthansa. All of these offer quick and easy international to international transfers at their home hubs. Edinburgh has Etihad, Qatar and Turkish.
Apart from all the other comparative attractions of the airlines and airports concerned, international to international connections are always less hassle than domestic to international or vice versa.

The upshot is that there might not be as much in Heathrow as FlyBE, neutral though it is, might hope. They won't have the frequencies to wrest much of the higher yielding point to point traffic off BA and and on the frequently used/imposed (by the long haulers) mileage based straight rate prorate formula the money left for short haul parts of a long haul journey can be pitifully small. Carrying other people's feeder traffic over short sectors has seldom ever been a good way to riches, or even viability.