By Chinelo Obogo, [email protected]
The rising cost of aviation fuel which has become a major cause for concern for Nigerian and African airlines, and an issue the Airline Operators of Nigeria (AON) is losing sleep over, may indeed not be a source of worry for operators in other parts of the world.
While travelers in Africa have had to bear the brunt of the high cost of jet A1, as price of flight tickets have almost gone out of the reach of the average passenger, the situation appears not to be so for passengers in Europe and the Middle East.
The Chair of the International Air Transport Association (IATA) Board of Governors (BoG), who is also the CEO of Rwand Air, Yvonne Manzi Makolo, said the cost of fuel, high taxes and increased cost of other facilities have made the cost of airlines in Africa the highest in the world.
Speaking to aviation journalists on the sideline of the 79th IATA Annual General Meeting (AGM) and World Air Transport Summit in Istanbul, Turkey, Makolo said African airlines pay five times more for fuel than their counterparts in the Middle East and Europe.
My focus as chair of IATA board
I am hoping that in the next few years, we will be seeing a lot more females taking on leadership roles, more equity within the aviation industry in terms of diversity but also a big focus on African aviation as well on the international stage. It would not be from the view point of just African airlines are not safe or African airlines are not profitable, you know all the negative stories. I really want to see African aviation in a more positive light by showing what we are capable of, and working together with all the other airlines to elevate the quality of aviation within the continent and connecting our continent even better than we are right now. Because as you know, the share of global traffic for African aviation is less than 3 per cent which is not acceptable. So we would want to see that growing.
Positives for African aviation
The positives are that number one, we are connecting a very vast continent and doing that in the face of a lot of challenges. As you know the cost of operating is very high and skilled labour, infrastructure and the issue of open skies are big challenges. But in spite of that, we are trying our best. We have a very young population so the issue of getting adequate skilled labour can be resolved by having a lot more of them joining the sector and training them. The African continent is the next frontier of aviation. So, partnering within ourselves, within the continent and with other players will help us get to that level.
More women needed in aviation
The industry recognises that not having a enough women in the industry is a challenges and that a lot more needs to be done in a very deliberate way. Airlines need to be very deliberate in terms of brining more women on board and to ensure that they go up the ladder within the industry. I am hoping that my appointment will inspire a lot of airlines to consider, especially when they are recruiting or promoting people within the organisation, to really take into consideration and be more deliberate in terms of giving women an opportunity to excel.
Benefits, challenges of Single African Air Transport Market (SAATM).
SAATM is a no brainer because when you say you want to grow aviation in Africa, there is no way that can happen with all these restrictions where they dictate the type of aircraft that you are going to use, which points you are going to enter, whether they give you fifth freedom of not, frequencies that you are going to operate, etc. That just will not work. We have been talking about SAATM since I joined the industry and what I am happy about is the fact that a decision has been made start with the pilot countries and right now, we are about 45 that are signatories to it, but even the ones that have signed up to it are not necessarily implementing it.
Beyond SAATM, we also can talk about Open Skies but then we have closed borders. We need to look at the visa regime within Africa and how we are making it so difficult for people to move within the continent. So that goes hand in hand. I am hoping with the pilot phase, we will see some tangible results and a lot more countries will be willing to open up and move away from the whole protectionism mindset.
In terms of the routes that have been opened, the pilot project is just starting so we are already operating a few of those markets. We are happy about how they are doing. For some of the routes we have to operate fifth freedom routes as well which is a key part of SAATM and which is part of our strategy in terms of opening up new routes. But once we develop, we can move to direct routes for those. At Rwanda Air, we haven’t had a lot of challenges in terms of opening up new routes as most of the governments have been very willing to open up to us. I hope that continues as we grow and add additional frequencies and routes within the continent.
Aviation charges, taxes, put in place by African governments
I think in a lot of African markets, the perception is that flying is a luxury. But it is a necessity given how vast our continent is. It is really important to find the most efficient way to transport people and that is aviation. So taxing aviation that highly, that is what makes it a luxury instead of being an enabler but it should be for families to connect, for businesses to be transected across the continent. So, we really need to relook at what we are doing in terms of charges. Because if you look at your ticket price, more than half of it is taxes or fees that we are paying but if we can reduce that and make flying cheaper, then we have a lot more people flying and the government will benefit from that as well because we will move to volumes, instead of just restricting to the small group of people who can afford it.
Again, in terms of Jet fuel within the continent, we are already paying such a high premium, two times, sometimes even five times more than what airlines in Europe and the Middle East are paying for fuel, which puts us already at a disadvantage.
That is another reason why the ticket prices are so high because of the fuel surcharge. So we recognise even as African airlines, the importance of achieving the net zero target. But then we are already operating at a disadvantage with such high cost. Which means government needs to incentivise the producers, because even within the continent, we have the raw materials for it but are people willing to invest in it to produce it and if they are producing it, will they produce enough of it? If they produce enough of it, will we be able to afford it? Again, ticket prices will shoot up and traffic will go down. So, it is a very trickery dilemma that we are facing right now.
Rwand Air’s strategy for Nigerian market
For Rwand Air, the Nigerian market is the biggest market after Rwanda and it is growing. But the biggest challenge we face right now with Nigeria which is limiting our operations is repatriating our money. We have a lot of money stuck in the country which is significant and for a small and medium size airline like ours, it has really put a strain on our cash flow. So that also constrains what we can do within the market because ideally, we should be flying not only daily but maybe double daily. But we are not able to do that because, when are going to really get our money out? So we had to shrink a bit of our operations both to Lagos and Abuja. But we hope that once this issue is resolved, we can really go all out because it is a strong market and we are looking forward to growing our presence there.
It is the same thing within the African continent, the potential is huge, there are still a lot of markets which are not served well, so we are looking forward to fill in those gaps. Now even with the implementation of the Africa Free Trade Area, the potential grows even more. So we are really focused on really connecting Rwanda to the rest of the African countries and beyond the continent.
First month sales, fleet size and Qatar deal
In terms of cargo, we did get our dedicated freighter last year and then as you saw, we recently launched the Kigali hub with Qatar Airways. So, the A310 is on that arrangement Qatar Airways cargo where they bring 777 freighter a week to Kigali and the A310 distributes the shipments within the African continent and Rwanda is able to buy a capacity as well on those freighters for our clients.
So far, it has been doing very well and we are looking at expanding to more markets within the African continent. Our dedicated freighter is also doing well and we are operating it three times a week to UAE, Sharjah and within the African continent, Nairobi, Entebbe, Brazzaville and we are looking at opening additional route for that. In terms of our fleet going forward, we are still finalising the fleet mix but we are looking at doubling our fleet within the next five years, adding additional 737s, additional narrow bodies so that we can connect the African continent very well.
Rwand Air not yet returned to pre-COVID-19 numbers
We are not fully back to pre-COVID numbers especially passengers but in terms of revenue, yes we are back. But we are hoping that by the end of this year, early next year we will be fully back to pre-COVID numbers.
We operate very similar routes with Qatar currently, so it is not a constraint for us. In fact, especially with the extended codeshare, it gives us an opportunity to really grow and network beyond, because we are able to connect Kigali with Doha and they are able to take our passengers beyond Doha, whether to Europe or to US. We are serving nine markets in the US via Doha, so it is an advantage for us and it doesn’t constrain us at all.
Partnership with other airlines
I think it is very important, and especially need to connect the continent to the level that we need to. Partnership both amongst the African airlines and the international partners, it is key. African airlines have a lot to offer. Yes, for some airlines, a lot more needs to be done but we still have a lot to bring to the table. Partnering with African airlines gives also the international partners a way to access the market and for us to access the international market as well. So, it is key for us, that is why I said I would really like to show a different face of African aviation.
Rwand Air on track to join One World It is something that we have been discussing, but nothing has been finalize yet but it is something that we would want to see down the road.