Airlines start lining up for Africa take-off

18.8.2010   (FT)

By Jeremy Lemer

The football World Cup is over, the vuvuzelas have been consigned to the dustbin
and fans have turned their attention from Africa to Brazil, host of the 2014 contest.
But for one group at least, the continent remains in sharp focus: international

According to the International Air Transport Association, airlines increased
the amount of flying capacity to and from Africa by 8.6% over the year to the
end of June compared to 2009, more than any other region except for the Middle

Over the next three years Iata forecasts that the number of passengers travelling
to and from Africa will rise at a compound annual rate of 6.5 per cent, making
it one of the fastest growing regions in the world.

While US and European airlines have been cautiously adding capacity to Africa
for years, the drive has picked up in intensity in recent months, leading industry
executives to talk of a new "scramble for Africa" as airlines position themselves
for the future.

Executives point to high growth levels that suggest an increasing need, and ability
to pay, for travel by air. Africa’s real gross domestic product was $1,600bn in 2008, having grown 4.9%
per year since 2000
– more than twice as fast as in the 1980s and 1990s.

Much of that can be put down to Africa’s large mineral reserves – which have
become a focus of fast-growing Asian economies. Traffic between Asia-Pacific and Africa is forecast to grow at 9%t per year over
the next decade according to some estimates.

US and European airlines are also boosting their connections to resource-rich
regions. In June, Delta Air Lines started a service between Atlanta and Accra and aims to add services to Liberia,
Angola, Equatorial Guinea, and Kenya in the near future.

Lufthansa, Europe’s biggest airline group and a key provider to Africa, has ramped up
its connections, adding two new services in west and central Africa and expanding
several more since 2008. The group now has 222 flights a week to 33 destinations
in Africa.

A recent report by McKinsey Global Institute, entitled Lions On The Move, suggests that the economic foundations of Africa’s recent success are broader
and therefore will have more "staying power".

Natural resources accounted directly for only a quarter of Africa’s GDP growth
over the decade while "the rest came from other sectors, including wholesale and
retail, trade and transportation, telecoms and manufacturing".

Indeed, Airbus, the European aircraft maker, predicts the recent aviation ramp-up
will be sustained. Over the next 20 years the amount of filled capacity on flights
between Africa and other parts of the world will grow at 5.6 per cent each year,
albeit from a low base.

"There is a lot of money in Africa right now," says Glen Hauenstein, head of
network planning at Delta Air Lines, the world’s largest airline by revenues.
"GDP is small in absolute terms but it is rapidly expanding as political stability

In this newly competitive environment, US airlines are playing catch-up. While
European carriers have offered direct services for decades, non-stop flights from
North America to Africa have traditionally been limited, and slumped after the
industry recession following the September 2001 terrorist attacks.

Mr Hauenstein says Delta began experimenting with flights to Africa in 2006 with
a connection between its hub in Atlanta, Georgia, and the tourist destination
of Johannesburg in South Africa, via Dakar, Senegal.

The success of that route has led Delta to try others, with an emphasis on west
and sub-Saharan Africa where avoiding European connections can save US travellers

Part of the problem was aircraft technology, says Greg Hart, vice-president of
network strategy at Continental.

Until the Boeing 777 was developed in the mid-1990s, many destinations in Africa
were too far from the US for direct connections, and even then the 777 was too
big to make some routes profitable. With the arrival of Boeing’s much delayed
787, due around the turn of the year, Mr Hart says that many airlines will for
the first time have the right aircraft for the job. Continental plans to connect
the energy capitals of Houston and Lagos with a service starting in November 2011.
Still, considerable obstacles must be overcome.

According to a 2009 World Bank report on Africa’s aviation infrastructure, while
the continent is fairly well served by airports, lack of taxi-ways and terminal
facilities and "inadequate" air traffic control systems are limiting capacity

Safety is another concern. Last year, Africa had the worst record of any region,
according to Iata statistics.
While most problems relate to aircraft operated by local airlines, several reports
have blamed Africa’s weak regulatory oversight, which raises wider issues.

In response, airlines have worked closely with government authorities and spent
time and money to upgrade local infrastructure for their new services. Continental
will help to upgrade the electrical facilities in Lagos airport to receive the
Boeing 787.

In spite of those hurdles the airlines remain confident that the efforts will
pay off. "The 787 is going to be the pride of our fleet and we are going to put
it into Africa. That speaks volumes of our level of interest," says Continental’s
Mr Hart



The IATA figures for global aviation in June, showing the African numbers, are


(African Revenue Passenger Kilometres, RPK, were up + 21.3% in June, compared
to June 2009   and   RPK for the year to date, up to June 2010 were up +13.2%).