Airlines see surge in traffic to Africa

Published: Saturday, September 29, 2012, 1:32 p.m.

FRANKFURT ? After decades as the poor relation of global air transport, Africa is attracting carriers from Brussels to Beijing as a commodities boom spurs economic growth.

British Airways began serving its 19th destination there on Sept. 10, while Qatar Airways adds its fourth route of the year next month and FastJet starts flights in November with the aim of becoming the first ever pan-African discount carrier.

Airlines hurt by traffic declines elsewhere are rushing to tap a rare growth market as economies in the sub-Saharan region expand an average 5.3 percent in 2012, outpacing Russia, Brazil and much of Asia, according to International Monetary Fund estimates. Hurdles to expansion include safety issues, corruption, state interference and of selling tickets in economies reliant on cash and lacking ready internet access.

"With the right cost structure there's no reason why airlines shouldn't succeed," International Air Transport Association Chief Executive Officer Tony Tyler said by phone from Dakar during a visit to Senegal this month. "We've seen that happen in Asia, Latin America and other parts of the developing world. People here say the easiest way to fly anywhere in Africa is via Paris, which is ridiculous."

British Airways, a unit of International Consolidated Airlines Group, added flights to Liberia via Sierra Leone on Sept. 10 and now serves 16 Africa countries. Brussels Airlines ? 45 percent owned by Germany's Deutsche Lufthansa ? has almost doubled the number of passengers it carries to the continent since 2008 and founded a subsidiary in the Congo.

Gulf carriers are also adding African routes, with Dubai- based Emirates, the world's biggest airline by international traffic, leading the way with 22 destinations, including the addition this year of Lusaka in Zambia and Harare in Zimbabwe.

Qatar Air will fly to Mozambique from October, its 18th African route, after already adding the sub-Saharan destinations of Mombassa in Kenya, Kilimanjaro in Tanzania and Kigali in Rwanda ? the fastest growing of Africa's top 25 airports. Abu Dhabi-based Etihad Airways this year began flights to Nairobi and Lagos, the continent's two busiest hubs, and will serve Addis Ababa from November for a total of eight African cities.

Asian operators are also joining the rush, with China Southern Airlines Co., the nation's biggest carrier by passenger numbers, prioritizing African expansion above other markets, Si Xianmin, the Guangzhou-based company's chairman, said June 6.

Still, the industry is starting from a low base, adding $8 billion to Africa's gross domestic product in 2011, the smallest contribution in any continent, and employing 260,000 people, IATA says. That compares with $231.9 billion and 3.1 million jobs in North America, which has the biggest aviation economy.

Air links have traditionally been strongest with former colonial nations in Europe, in southern and eastern Africa, and on a north-south axis down the continent's spine. That means growth opportunities are greatest on ill-served east-west routes, both within the region and to the Americas and Asia, said Herman Carpentier, Africa sales chief at Brussels Airlines.

The company's response has been to establish Korongo Airlines, an $11 million joint venture with mining entrepreneur George Forrest's Groupe Forrest International in the Democratic Republic of Congo, a former Belgian colony where the economy is forecast to grow 3 percent this year.

The unit, which operates from Lubumbashi in the south of the country to the capital Kinshasa and to Johannesburg, plans to expand to commercial hub Mbuji-Mayi and mining center Kolwezi in the next year, according to Carpentier, who said the model could be replicated in other African countries if successful.

"There's a general lack of intra-African flights, yet other infrastructure is very basic or non-existent in some areas, so air travel is the best way to get around," Carpentier said in a phone interview from Brussels. "I think there's real demand."

High fuel prices generally viewed as negative for airlines are also driving growth in states with crude deposits, boosting business flights and stirring leisure demand among a nascent middle class. Oil is spurring travel across central Africa, from Angola as far east as Uganda and Kenya, Carpentier said.

It's in the east that FastJet will commence flying with the aim of becoming the first discount carrier to span the region. The company is building a fleet of Airbus SAS A319 jets and will operate first from Tanzania then Kenya, Ghana and Angola using licenses held by majority investor Lonrho, a mining, oil and agricultural group active in Africa for more than 100 years.

The challenges for such startups are very different from those faced elsewhere, according to Ron Peri, CEO of Orlando- based airline ticketing specialist Radixx International, who sums them up as the "Three Cs" ? for a cash-based economy, the prevalence of corruption, and a general lack of competence.

"If you have strong cash markets but not necessarily the strongest personal ethics you wind up with corruption all over the place," Peri said in an interview. "You need to have audit trails everywhere. In Africa they talk about 'revenue leakage,' which is shorthand for 'my employees are robbing me blind.'"

Graft isn't limited to those directly involved in revenue collection, according to IATA's Tyler.

"Governments can't stop interfering and squeezing to try and get money," he said. "They should look at aviation not as a cash cow to be milked but as an engine for economic growth which in the long run will provide much more tax revenue, employment and social development. We've seen that happen in Asia."

Source: http://www.heraldnet.com/article/20120929/BIZ/120929872

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