Aviation: Expression For Industry Consolidation Heightens

 

The Chief Executive Officer, Kenya Airways, Allan Kilavuka, has disclosed that the airline industry in Africa needs a period of consolidation if the continent is to overcome its connectivity challenges.

Already, shifts towards new market policies, airline behavior, operation models, and governance are clearly pointing towards a consolidated African aviation sector.

Accelerated by the onset of the pandemic, what were once loose discussions around the formation of mutual pan-African airline ties are now taking shape.

Speaking at the CAPA Leader Summit in Manchester, England, Kilavuka said that the fragmented nature of the sector was due to protectionist measures, stressing that it is stifling economic growth in the region.

Kenya Airways is currently in the process of deepening its ties with South African Airways (SAA), while at the same time looking to add a new partner in West Africa.

Kenya Airways fleet of aircraft. Pic: Al Jazeera

The partnership between the East African carrier and its Southern African counterpart seeks to leverage their respective Nairobi and Johannesburg hubs.

The airlines also hope to strike an agreement with a West African carrier to create a three-hub strategy, allowing them to offer a more comprehensive route network.

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“The continent is very fragmented from an airline perspective,” Kilavuka said.

“We have so many airlines and my personal view is that we need consolidation.
“That’s therefore what we’re working on. We’ve started discussions with all the major airlines in Africa, particularly our neighbors,” he added.

Kenya Airways and SAA announced their planned partnership in September 2021 and finalised the agreement in November 2021.

“The idea is to see how you can use assets from each airline to increase productivity and have a two or three hub strategy that will encourage this large continent to connect to each other,” Kilavuka said.

He said: “It will increase options for our customers and reduce operating costs.
“Future of aviation in Africa lies in consolidation,” saying that better connectivity across the continent would act as a catalyst for economic growth.

Today, industry and airline executives agree that airline partnerships and mutual cooperation are prerequisites for emerging from the pandemic downturn with a stronger and better-connected African market that competes on an international level.

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The African sector has responded with an increased urgency to augment infrastructure and personnel training. This also includes expanding the continent’s regional connectivity by adapting and modernizing its fleets to allow passengers wider access to more destinations through regional airports.

A key motivator in this focus on regional operations is the projected population growth rate on the continent.

Over the past 30 years, the African population has doubled, reaching 1.3 billion in 2018, compared to 550 million in 1985.

By 2050, the population is expected to double again on the back of a growing middle class and projections of 26 African countries doubling their current population.

Improved regulations are expected to enable greater air service efficiencies for the continent’s short to medium-haul fleets, which include regional aircraft types from manufacturers such as the Bombardier (Dash 8, CRJ900), and Embraer (ERJ 145,190, E2), Boeing (737) and Airbus (A320).

At the 51st Annual General Assembly, which was held virtually in late October 2021, airline executives pushed forward the idea of unionizing resources and capacities as a solution to combat the sector’s fragmentation, stagnant regulations, and excessive fuel costs.

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Alongside fragmented airspace, other agitators of the continent’s fuel costs include minimal aviation fuel production on the continent, and an inadequate road network and road infrastructure.

This poses a challenge to the efficiency of fuel deliveries, which are operated by trucks that utilise regional road networks.

Airlines

Price competition on the continent is also a concern as airlines group to unionise the sector. However, the sector’s leaders suggest that the benefits would far outweigh the risks.

The Chief Executive Officer of South African Airways, Thomas Kgokolo, South believes that airline subsidies may hold more benefits over capital injections, as the sector addresses low connectivity on the continent.

Wole Shadare