Air Afrique is a brave attempt by a number of African states to run a combined airline. It is not commercially successful, and a number of previous African airline consortia have failed. NICK FADUGBA looks at a new study recommending a combined West African airline, and examines the problems which smaller African airlines faced.
Galvanised into action by the twin threats of financial insolvency and political in-fighting, Air Afrique executives in Abidjan, Ivory Coast, are pulling out every stop to put Africa’s show-piece multinational airline back on the road to prosperity. But the battle to regenerate Air Afrique involves much more than the fate of a single airline – it could prove decisive in determining whether similar collaborative ventures are embarked upon by the continent’s surfeit of struggling individual carriers.
Focus on Air Afrique’s problems and prospects has sharpened in the wake of a recommendation by a study group that the 16 member-countries of the Economic Community of West African States (ECOWAS) should set up a regional airline.
ECOWAS was established by the Treaty of Lagos in May, 1975, with the primary objective of promoting trade and economic co-operation in West Africa, including the strengthening of air links. In its air transport report, which was prepared by Canada’s Aviation Planning Services, the ECOWAS study group points out that the lack of co-ordinated air services among West African states has resulted in low-frequency flights on most routes.
Total passenger traffic within West Africa is currently 700,000 per annum, but is concentrated at a few key cities such as Lagos, Abidjan, Accra, and Dakar. Of the 120 possible routes linking the 16 national capitals in the region, only 10 have a yearly traffic in excess of 20,000 passengers, or 25 passengers a day for every destination.
According to the report, an ECOWAS airline would be responsible for planning and co-ordinating air services in the region and, through more efficient equipment utilisation, would optimise flight frequency without the need for additional aircraft. It is questionable, says the report, whether the desired level of co-ordination can be attained if it is left to the airlines to provide it voluntarily. Due mainly to historical and economic factors, most African airlines have tended to seek co-ordination on intercontinental rather than on regional routes, with the result that, today, there are only five joint operation pacts within ECOWAS, compared with 19 on routes to Europe.
The rationale behind the frequent calls for joint airlines in Africa is easily discernible. During the recent 17th Annual General Assembly of the African Airlines Association (AFRAA) in Nairobi, Kenya, it was noted that although the continent of Africa has the largest number of scheduled state airlines – 47 – it carries only 4.8 percent of the world’s air traffic and earns only 3.9 percent of the total revenue. Many of the continent’s carriers are simply too small and uneconomic to compete viably in the competitive international air transport industry. In Nairobi, AFRAA members once again reiterated their desire to harmonise their activities as a means of enhancing their economic viability and operational efficiency, but several officials openly admitted that it would be a slow and laborious process.
AFRAA Secretary General, Semret Medhane, who has for many years spearheaded the campaign for increased co-operation and co-ordination among African airlines, is particularly anxious that Africa should draw lessons from the contrasting experiences of North America and Europe. In spite of their many obvious differences, there are striking similarities between Europe and Africa, such as their multiplicity of national entities, languages, and political systems, which have led to the proliferation of national airlines given more to regulated rivalry than to co-operation. In North America the absence of a myriad of independent nations has encouraged the development of a highly effective and efficient air transport system, with carriers tailoring their operations to markets rather than to national goals.
Says Medhane: “In Europe, aircraft utilisation is relatively smaller than in North America: the routes are shorter and air travel more disjointed, the effect being higher costs of operating and higher fares. Africa has followed the European experience and, in the absence of a Pan-African authority on civil aviation matters, AFRAA is advocating a change of course toward the North American example. The consequence of failure to change will be higher costs, a reduced level of convenience and, because of the minimised use of air transport as a catalyst, a slower rate of continental development.”
Despite its present predicament, it would be premature to sing Air Afrique’s nunc dimittis. The airline’s new President and Director General, Auxence Ickongo, has vowed to restore the carrier to its former glory and, more importantly, profitability. To this effect, the stringent (and apparently effective) austerity measures recently introduced by Ickongo’s predecessor, Aoussou Koffi, are being tightened further. The recent increase in the company’s capital and sale of a Boeing 747 cargo aircraft are expected to ease the immediate financial pressure and allow breathing space for long-term planning.
In many quarters, Air Afrique is still perceived as a precursor to a Pan-African airline. What is certain is that the joint venture provides aviation officials and politicians throughout Africa with a unique opportunity to study at close quarters the advantages and pitfalls of a multinational airline. Perhaps Air Afrique’s most noteworthy characteristic is its foreign-equity participation. France’s independent carrier, UTA, holds 28 percent shares in the African airline through Paris-based company Sodetraf (Societe pour le Developpement du Tourisme en Afrique). This French connection can be explained by the fact that the 10 West African countries which own the remaining 72 percent shares – Benin, Central African Republic, Chad, Congo, Ivory Coast, Mauritania, Niger, Senegal, Togo and Burkina Faso – are all former French colonies, and retain close political and economic ties with France.
The foreign participation in Air Afrique is proving both beneficial and problematic. On the one hand, UTA provides vital technical support, but on the other it competes very vigorously for the same passenger and freight traffic. Some Air Afrique officials are livid that their airline has to play second fiddle to its own shareholder, UTA, in the African market. It is said that UTA is making handsome profits at Air Afrique’s expense. This seeming conflict of interest has prompted calls for a parting of the ways, but while both sides agree that there are matrimonial differences a divorce is said to be unlikely.
Air Afrique’s experience has shown that satisfying the individual air transport needs of each member state is a major difficulty for a multinational airline. Two of its founding members, Cameroon and Gabon, pulled out in 1971 and 1976, respectively, and established their own national carriers, Cameroon Airlines and Air Gabon. Last year, Burkina Faso said it would re-examine its membership following the airline’s decision to end services to one of its cities. The cost-cutting measure was part of the strategy to close “unprofitable” routes. Officials in Ouagadougou said that the country wished to remain a member but did not want to be penalised “unfairly” for Air Afrique’s financial problems.
Compared with previous multinational ventures in Africa, Air Afrique has shown remarkable resilience. West African Airways, Central African Airways and East African Airways all eventually succumbed to the political and economic dictates of emergent nationalism. But while their ghosts may haunt today’s protagonists of African airline consortia, it is acknowledged that these companies made a significant contribution to the development of air transport in Africa.
West African Airways Corporation, for example, was set up in 1946 by BOAC, and comprised the four British colonies of Nigeria, Gold Coast (Ghana), Sierra Leone, and Gambia. WAAC pioneered regional air services in West Africa. It also operated a Lagos-Khartoum service, linking West and East Africa. In 1957 WAAC achieved intercontinental status when it chartered Argonauts and Boeing Stratocruisers from BOAC to begin direct flights from Lagos to London.
In the late 1950s, with its member states standing on the threshold of political independence and eager to establish their own identity, WAAC’s demise became a foregone conclusion. Ghana Airways was formed in July, 1958, and Nigeria Airways in May, 1959. Since then both airlines have had varying degrees of success. With great difficulty, Ghana Airways replaced its ageing VC10 with a DC-10 in 1983, but insufficient traffic and a burdensome repayment schedule have forced it to lease the aeroplane to a Caribbean airline for two days a week. Nigeria Airways, under its new management, is undergoing a major reorganisation designed to improve its commercial performance.
The reduced economic activity in both of these ECOWAS countries has led to a substantial fall in air traffic between Accra and Lagos. The downward trend was temporarily reversed by the recent mass expulsion of aliens from Nigeria.
WAAC’s two other former members, Sierra Leone and Gambia, have never been able to afford the luxury of wholly-owned state-carriers. Instead, they have had to enter into partnerships with foreign airlines. In 1961 British Caledonian’s predecessor, British United Airways, had a 70 percent interest in Sierra Leone Airways. The Sierra Leone Government later increased its shareholding to 51 percent, but a heated dispute over the repatriation of earnings led to the airline’s dissolution in 1982. Almost immediately a new national carrier, Sierra Leone Airlines, was formed between the Sierra Leone Government (with 60 percent shares), Alia (20 percent), and private interests (20 percent).
Gambia Airways was set up in 1963, with British United Airways support. In 1965 the Government’s equity was increased to 60 percent, while British Caledonian held 40 percent. An indication of the carrier’s financial performance is that, when last year’s miniscule pre-tax profit was declared, it was described by officials as a “landmark”.
In the same way as WAAC, the Central African Airways Corporation – comprising Zambia, Zimbabwe and Malawi – was a casualty of political events. It was dissolved soon after the break-up of the British-ruled Federation of Rhodesia and Nyasaland in 1963.
These independent states have found that running a modern airline can be a costly affair, more so when they duplicate each other’s services and cannot benefit from economies of scale. Little wonder then that, under the aegis of the Southern African Transport and Communications Commission, they are now discussing ways of pooling their financial, material and manpower resources.
The collapse of East African Airways in 1977 and the attendant political acrimony seemed to confirm the doubts of sceptics about the viability of joint airline ventures in Africa. The negative image was enhanced by the protracted public squabble over the distribution of EAA’s assets.
EAA was established in 1945 by Kenya, Tanzania and Uganda, the three members of the East African Community, an essentially economic grouping. By 1975 it had made impressive progress, linking 31 African towns and cities and servicing many international destinations. But political and financial wrangling soon proved terminal. The airline’s demise meant that a comprehensive air network, built up over two decades, was fragmented abruptly.
With a mixture of pride and jingoism, all three countries quickly launched their own airlines, but the merrymaking was short-lived. The harsh realities of the capital-intensive air transport industry soon intruded. Today, some officials in East Africa privately contend that their impoverished and heavily-indebted flag-carriers would actually be better off within the protective confines of a multinational airline.
Kenya Airways is still locked in battle with foreign carriers for the country’s tourist traffic. It hopes that its newly-ordered Airbus A310-300s will prove to be the much-needed elixir.
Air Tanzania’s faux pas in leasing a Boeing 707 and 720B in late 1979, which were grounded soon afterwards for technical reasons, has effectively limited it to regional services, depriving it of vital foreign exchange. Meanwhile, Uganda Airlines is gallantly trying to disprove the International Monetary Fund’s contention that the flag-carrier is an “economic liability”.
Precisely what relationship will exist between Air Afrique and an ECOWAS airline is unclear. One possibility is that Air Afrique would surrender its entire West African route network to the new regional carrier in return for a monopoly of intercontinental services; but where would this leave non-Air Afrique members such as Nigeria Airways and Ghana Airways? More importantly, how are the already economically-weak ECOWAS states going to finance a joint airline? These are some of the areas which will have to be thoroughly examined if the costly mistakes of previous ventures are to be avoided.
There is still room for cautious optimism. As a first step on the long road to an integrated air transport system in Africa, AFRAA is advocating closer co-operation among African airlines in such areas as the standardisation of equipment, manpower development, and technical and commercial activities.
Semret Medhane warns, however, that the vested interest of each AFRAA member in its trunk routes – mostly long-haul services to Europe – means that African services are still being given a low priority. This could constitute a major stumbling block to regional ventures such as an ECOWAS airline.