Carriers re-enter radically altered marketplace that calls for deep pockets and smart business strategies
From Lagos to Lusaka, African governments have in recent weeks laid out ambitious plans to revive their flagship carriers.
At last month’s Farnborough International Air Show — a biennial trade exhibition for the aerospace and defence industries — Uganda and Nigeria placed orders for aircraft to jumpstart their national airlines while in Zambia, the government has teamed up with Ethiopian Airlines to revive a limping Zambia Airways.
Air Tanzania, which has been operating a domestic network for the past three years, recently took delivery of a Boeing 787 Dreamliner, as part of plans to launch long-haul flights.
Although most projections paint a positive picture for African aviation and incumbents such as Ethiopian remain upbeat about the prospects for the continent’s air transport market, analysts warn that the comeback carriers are entering a radically altered marketplace that calls for deep pockets and smart business strategies.
“It is instructive that none of the airlines that collapsed in the closing decade of the past century and the early 2000s really failed because of competition as such,” said Fred Ochieng Obbo, a veteran of the regional air transport industry.
“They failed due to a combination of internal and external factors. So while there is a business case for an airline in many of these places today, success is going to call for more than just buying a gleaming fleet of aircraft.”
According to Mr Obbo, African airlines faced the tandem challenges of underfunding and rising costs amid loss of shareholder commitment.
Fuel prices were rising, making their aged fleets economically and operationally inefficient.
In many cases also, they were operating aircraft that were too big for the markets they were serving.
But coming from the depths of World Bank and IMF-sponsored structural adjustment programmes that many had signed up to in the mid 1980s, their principal shareholders — the governments — were not in a position to financially support the needed strategic and technological transition that would have helped them survive.
In some cases, there was no national consensus on options such as divestiture that would have attracted private participation to keep them flying.
As they make a come back today, some variables have changed for the better. The manufacturers have developed new aircraft families that are not only more fuel efficient but offer a diversified product range that give the operator a better fit between the network and aircraft.
Read more here