AFRICA-AVIATION: Hard Landings

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IPS Correspondents

HARARE, Jan 3 1996 (IPS) - Africa’s state-owned airlines are no different from most of the continent’s public enterprises. They are mainly grossly inefficient, loss making and neck-deep in debt.

Salvation for the carriers lies in regional joint ventures to fight off stiff international competition brought about by an ‘open skies’ policy, experts say.

The prestige of owning a national carrier is proving an expensive luxury. Very few are safe from heading the way of Zambia Airways which went bust last year and was replaced by a private carrier, Aero Zambia, owned by mainly Belgian investors.

“At a time when airlines from other continents are pulling their resources together for greater market shares, aviation authorities in Africa are content running small non-profit making national airlines,” says an airline official in Cote d’Ivoire.

“At the same time you they can be heard complaining about their markets been taken over by multi-nationals. But it is a game of competition,” pointed out the source who opted for anonymity.

But if African airlines had gone ahead and implemented the ‘Yamoussoukro Declaration’ their governments had signed seven- years-ago, it could have been a different story.

African Ministers responsible for Civil Aviation met in Yamoussoukro, Cote d’Ivoire, in October 1988 and worked out a new African air transport policy which set out clearly what needed to be done to save African airlines from going to the wall.

They called for integration. “We commit ourselves, individually and collectively to make all the necessary efforts to achieve the integration of our airlines within a period of eight years,” signed the 40 aviation ministers who attended the meeting.

Integration was to have been achieved through the strengthening of existing co-operative structures and the creation of new entities either on a sub-regional basis, or through practical affinity. The integration process was to be implemented in three phases.

Seven years on, phase one is yet to become airborne. When aviation ministers met recently in Mauritius they attributed their tardiness to a lack of commitment on the part of their governments.

The market-driven ‘open skies’ policy — the deregulation brought about under economic reforms — represents a new challenge.

In Southern Africa, some of the most profitable routes on the continent, major European airlines carry 80 percent of traffic between Europe, and 11 of the 12 Southern African states. In Zimbabwe, more than eight European airlines come into the country every week compared to about six from the region’s 10 airlines.

Today, every airline on the continent is heavily indebted. The largest, Air Afrique, owned by 11 Francophone countries in West and Central Africa and Air France, DHL and Abidjan Catering — has a debt overhang of 200 billion CFA francs (408 million dollars).

Zimbabwe’s nation carrier, Air Zimbabwe owes the government about 50 million U.S. dollars in debt despite making an operating profit 20 million dollars in 1995, according Air Zimbabwe general Manager Huttush Muringi.

As a cost cutting measure, Muringi has ordered Air Zimbabwe to cut the number of staff travelling to international destinations. “No more than 10 staff members can travel to international destinations on a single flight,” says Muringi.

Faced with stiff competition, Air Tanzania suspended its inter- continental operations in 1993 citing its unviability. At one stage the airline was understood to be negotiating with Air Zimbabwe to jointly run inter-continental flights.

Air Malawi now only operates within the continent. “Joint ventures are necessary because with our weak economies we do not have the financial resources to keep upgrading our airlines to be able to stay in business,” says an Air Malawi official in Zimbabwe.

According to the Organisation of International Aviation, Africa represents only three percent of international traffic. International airlines carried 1,203 billion passengers and nearly 20 million tonnes of cargo in 1994, but Africa accounted for little more than five percent.

Airlines in the region are operating below the acceptable level of seat occupancy to meet their costs. To counter this trend, regional airlines want a reduction in the number of gateways and hubs granted to European airlines.

The airlines now plead that the right to pick up passengers and cargo from a particular foreign country should be traded in favour of intra-regional joint ventures.

They fear that if European airlines continue to dominate the region’s skies, this would naturally damage the traffic and revenue of regional services which, to a significant extent, depend on interline connecting traffic to and from intercontinental services.

About 60 percent of traffic and revenue in the case of Air Botswana is from interline connecting traffic to and from intercontinental services.

The clipping of the wings of national carriers through privatisation may offer a part solution. Cameroon is planning to privatise its loss making carrier while Congo is letting go its internal operator Lina Congo. Ghana is also thinking likewise.

Rwanda may however be the acception that proves the rule. It boasts a healthy state-owned air service despite a wretched economy.

“Our company is healthy despite the economic slump the country is going through,” Air Rwanda technical Services Manager, Denis Shyirambere told IPS.

“Our activities have known a tangible boost and we are not afraid of competing on a regional level,” he said.

AFRICA-AVIATION: Hard Landings

By IPS Correspondents Reprint | | Print |

IPS Correspondents

HARARE, Jan 3 1996 (IPS) - Africa’s state-owned airlines are no different from most of the continent’s public enterprises. They are mainly grossly inefficient, loss making and neck-deep in debt.
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