Connect with us

Business News

Future of African carriers lies on ‘unity’ model

Published

on


By ANTHONY KITIMO

The survival of African airlines depends on collaboration and not competition. This was the general thinking of top executives of African airlines attending a workshop on the future of aviation on the continent.

The consensus of the September 14 workshop hosted by African Airlines Association (AFRAA) was that African airlines should pursue a consolidation model and adopt the concept of “Air Afrique” that would create equitable partnerships between airlines or across a group of investments, co-operation between two or more well-matched airlines, or the formation of a new common airline.

This, airline executives believe, will enable loss-making airlines to improve their services and keep them afloat.

Cargo consolidation

Ethiopian Airline Group Vice President Strategic Planning and Alliance Busera Awel said more co-operation through alliances, pooling of resources, code sharing and interlining is what African airlines need now. “We call for government and private sector collaboration to achieve concrete steps in airline consolidation in Africa,” said Mr Awel.

Cargo consolidation was cited as an important key to better airline performance, majority of which have been making losses in the past few years. Industry players evaluated case studies including South African Airways, Kenya Airways, Ethiopian Airline and discussed recommendations by Lufthansa Consulting.

Advertisement

Kenya Airways CEO Allan Kilavuka said it was important to learn from the consolidation cases from other parts of the world as airlines reset Africa’s aviation as a collective dream.

“Consolidation and collaboration are essential ingredients for resilience and sustainable business operations of airlines. The ripple effect of strengthened collaboration among airlines will see an increase in the industry’s contribution to the sustainable development of Africa and therefore we must elevate the tenor of discourse and make the airline industry matter in and for Africa,” said Mr Kilavuka.

He said to this end, Kenya Airways signed an agreement with Congo Airways in April, to lease them two Embraer E190 jets to boost the latter’s domestic operations and flight frequencies.

The workshop held under the theme Leveraging Airline Consolidation for Air Transport Industry Sustainability was attended by over 200 airline representatives — CEOs, representatives from airports, Civil Aviation Authorities, aviation decision makers and industry players — who called for uniform implementation of harmonised regulations and the establishment of an enabling working relationship between regulators, airlines and regional economic communities.

‘New normal’

Lufthansa Consulting’s Catrin Drawer said airlines need to meet the challenges of the “new normal” and reset their thinking and approach with new business models, meaningful innovations in operations, adaptive management that is open to change, and synergistic relationship between airlines and relevant stakeholders.

“New challenges need new solutions now and in future to bring both resilience, and sustained success. Thus, synergy and meaningful partnering, whether through existing contracts and alliances or new agreements, will be essential,” said Drawer.

AFRAA Secretary-General Abdérahmane Berthé said the aviation sector will continue reeling from the impact of the Covid-19 pandemic in the next two months and there is a need to address the sustainability of African airlines.

Meanwhile, regulators in Asian hubs like Singapore and Hong Kong have threatened to retaliate against European Union plans to force airlines to start using take-off and landing slots frozen during the coronavirus pandemic, a move that could oblige Europe’s carriers to fly empty seats for thousands of miles at a loss.

Authorities controlling slots at major Asian airports are ready to slap similar “use it or lose it” conditions on European carriers flying to Asia’s cities — raising the prospect of an industry trade war over the uneven impact of Covid-19.

‘Trade wars?’

After rare unity during the pandemic, when carriers were being bailed out or trying to stay afloat, industry leaders say the dispute has rekindled fundamental differences across a fragmented sector as the world stages a multi-speed recovery.

“Is it a trade war? Certainly the germ of one,” said former Australian aviation negotiator Peter Harbison, chairman emeritus of the Sydney-based CAPA Centre for Aviation consultancy.

“And it will be accentuated as more airlines collapse and international markets remain closed, or at best, uncertain.”

Tensions have grown since July, when the EU announced plans to force airlines to use 50 percent of their rights or lose them to rivals from next month.

That move partially reinstated competition rules that had been waived as airlines struggled to survive the pandemic.

But while the EU decision reflects a traffic recovery that is well under way in Europe’s mainly short-haul market, Asian carriers are protesting they will be unfairly penalised because their long-haul networks will take much longer to recover.

■ Additional reporting by Reuters



Source link

Comments

comments

Facebook

Trending