Comair Endgame Shows African Airlines’ Vulnerability

The imminent collapse of loss-making British Airways’ franchisee airline, Comair, did not come to many as a surprise. Comair’s problems sum up the precarious situation of many Nigerian and African airlines, which existence hangs in the balance, writes WOLE SHADARE

The unfortunate collapse of Comair, a South African-based airline, has again raised concern over the vulnerability of African airlines. All over the continent, the region is replete with hundreds of airlines that have packed up. In Nigeria, over a hundred airlines have collapsed since the year 2000, highlighting the danger many airlines in Africa are faced with. Depleting revenue, lack of corporate governance, high-interest rates on loans, a harsh operating environment, and an astronomical rise in the cost of Jet A1, among others, have all conspired to wreak havoc on the carriers. Nigerian airlines recently warned that their survival may be at risk if the Nigerian government fails to aid them. Airlines in Nigeria are contending with multiple problems, including high fuel prices and exchange rate fluctuations, forcing them to raise airfares to offset increased operating costs.

Nigerian example

The Nigerian domestic aviation industry could be in serious jeopardy should current trends continue. Industry stakeholders have warned that rising fuel prices and a lack of responsible government oversight could lead to many Nigerian carriers going extinct. The Nigerian aviation market is not only small but abysmal and one that the over 200 million population cannot even sustain because of so many factors primarily occasioned by the economic situation, which has caused a low propensity to fly by many Nigerians. It is shocking that the domestic passenger traffic had oscillated between seven and eight million before the outbreak of COVID-19, which led to the closure of borders around the globe in 2020.

Stifling growth

Policies of government had, over the years, stifled the growth of aviation locally. The local carriers have been put in the ring to box with champions or with the giants with their hands tied behind. As a matter of fact, the carriers’ vulnerability is a result of many factors such as lack of government support, high taxes, poor or deplorable infrastructure, lack of cooperation, very unfriendly environment, poor route network, lack of finance by financial institutions, high-interest rates from commercial bank and absence of Maintenance Repair Overhaul (MRO) facilities and poor connectivity, among others. Traditionally, African airlines have been collectively loss-making for many. According to IATA, the future of African airlines, even before the pandemic, had not really looked too rosy. Many of Africa’s airlines were in poor financial shape before the COVID-19 crisis, but the ensuing loss of revenue is driving most of them to the brink. The carriers risk bankruptcy as governments across the continent lack the financial resources needed to support their national carriers.

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Foreign airlines in flight

Other examples

In April 2020, Air Mauritius (AM) was the first African airline to enter voluntary administration as a result of the crisis, while South African Airways (SAA) was in a form of business protection two years ago. British Airways’ South African franchisee, Comair, filed for business rescue in May. “The reality is that airlines are under pressure and if nothing is done by early July, many African airlines will go insolvent,” says Abderahmane Berthé, secretary-general of the African Airlines Association (AFRAA), the continent’s industry body. AFRAA estimated that traffic volumes would not return to pre- COVID levels until 2022, predicting a 40 percent recovery in Q3 and 70 percent in Q4 of this year. The lack of passenger revenues is bad news for airlines that must continue to pay fixed costs such as staff salaries, aircraft maintenance, aircraft leasing costs, aircraft orders, and debt servicing. Comair, the airline that flew in British Airways colours in southern Africa, will never fly again in Africa. The signs that the airline was at the closing stages of operations were imminent. They were pressed down by regulatory and financial issues.

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Sad end

Comair’s story of liquidation is particularly a sad story to tell considering how the carrier helped in the development of South Africa’s aviation industry. The airline was founded in 1946 and had operated successfully within Southern Africa for over six decades with an internationally recognised safety record. Since 1996, it had serviced local and regional routes under the British Airways livery as part of its license agreement with British Airways Plc and launched South Africa’s first low-cost airline, kulula. com in 2001. The South African Civil Aviation Authority (SACAA) reinstated Comair’s Air Operator (AOC)’s certificate after it concluded the assessment and evaluation of Comair’s evidence to close the Level 1 findings raised during an audit that started on March 7, 2022. South Africa’s domestic travelers were relieved after the suspension of Comair caused a spike in air ticket prices this week. Comair, which operates British

 

Some Nigerian airlines

Airways flights as a franchise partner and low-cost subsidiary, kulula.com, make up 40 percent of available seats in the domestic market. According to SACAA, the evaluation of the evidence was concluded on the evening of March 16, 2022. The impact of this outcome is what paves the way for the director of civil aviation to uplift the Air Operator Certificate (AOC) of Comair with immediate effect. SACAA audited Comair following a spate of occurrences that posed safety risks by Kulula.com and BA Comair airlines. The regulator sought to confirm Comair’s compliance with applicable Civil Aviation Regulations (CARs). The inspection was also aimed at reviewing Comair’s safety management systems (SMS) and quality control management system (QA) to establish compliance related to the reporting, analysis, and follow-up on occurrences, and corrective action plans to prevent a recurrence.

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Cash crunch

The airline, which grounded its domestic flights and Kulula flights a week ago due to a cash crunch, has failed to raise the cash needed to return to the air. Its business rescue practitioners said in a statement recently that the “requisite funding could not be raised for the company to continue with its operations.” Top members of the airline, for two years, tried to save the carrier by seeking to secure funding, but they were unable to do so and had no option but to lodge the application. It is an extremely sad day for the company, its employees, its customers, and

Some African airlines

South African aviation. The collapse has taken around 40 percent out of South Africa’s aviation capacity. Comair had a Southern African network, connecting with BA services, flying between Johannesburg and neighbouring countries, including Namibia, Zambia, and Zimbabwe. It also operated South Africa’s first budget airline, Kulula, whose name means “It’s easy,” primarily serving Johannesburg, Cape Town, and Durban.

Expert’s view

A British Airways spokesperson said: “We’re contacting customers due to fly with Comair to offer them rebook and refund options, including flights on other carriers where possible. “British Airways’ services between London and South Africa continue to operate as normal and we’ll continue to provide support and assistance to our franchise partner and their colleagues at this difficult time.” South African Airways, the heavily loss-making rival of Comair, continues to be propped up by the government.

Aircraft positioning for take-off

Last line

To sum up, despite African aviation continuing to lag, It has a high potential for growth and job creation and will tremendously develop Africa as it connects the continent to the rest of the world.

Wole Shadare