How will the African airline CEOs turn around the fortune of their airlines?
The AFRAA conference included a fantastic Airline CEO panel entitled: "How can African carriers be turned around to recapture leadership of African skies?"
It was moderated by the "Sir Alex Ferguson" of aviation, Ato Girma Wake, former CEO of Ethiopian airlines and current Chairman of the Board at RwandAir. He began by explaining that the title of the session implies that we have a problem- there's no need to turnaround if you are heading in the right direction.
Ato Girma then asked each panellist to introduce themselves, the airline and say if they were profitable or not. They were as follows:
Mr Busera Awel, CCO Ethiopian Airlines. PROFITABLE
Capt. Ripton Muzenda, CEO, Air Zimbabwe, NOT PROFITABLE
Mr Abderahmane Berthe, CEO, Air Burkina and former CEO of Air Mali- NOT PROFITABLE
Mr Aaron Munetsi, CCO, South African Airways- NOT PROFITABLE
Mr John Mirenge, CEO, RwandAir, NOT PROFITABLE
Mr Mbuvi Ngunze, outgoing Kenya Airways CEO, NOT PROFITABLE
So how to stop the bleeding?
Mr Mbuvi Ngunze cited the example of Emirates, explaining:
'Emirates is not about the airline it's about the whole Dubai economy'
He made the point that an airline provides huge benefits to the wider community and value chain- something I wholeheartedly agree with. So how will KQ move forward?
- Focus on African routes
- Less ASK's but more block hours
Both of these items may stay in place but November 24th saw the announcement that Mr Ngunze will be leaving the airline in 2017
SAA was at pains to say they are not about protectionism at all. There are currently 8 wide body flights to South Africa every day offered by Emirates, but Aaron said their code share delivers good profit for the country. He also cited the example of the code share with ET on the Cape Town- Addis route and explained
'we must focus on what we can do together rather than what others are doing to us'
Their plans for progress revolved around the following:
- Focus on African continent
- Cash flow is king
John Mirenge was asked if possible to make a profit by just flying in the African continent? He explained that the commodity crisis in Africa has hit yields and numbers but he is confident RwandAir can stimulate new routes. Having just taken delivery of one widebody with the second due in November W2016 they are to attack the enemy head on starting with London, Mumbai and the East Coast of the USA and will use these routes to gain African feed to Kigali.
Capt. Muzenda The new CEO of Air Zimbabwe, said that Air Zimbabwe is now an airline with a limited network, so his challenge is to find the optimum size of org to match this. He said that he needed partnerships, not bailouts to grow the airline.
Air Burkina said it is possible to be profitable but only if you use the right aircraft on the right route.
Mr Busera from Ethiopian said that an airline should be profitable in Africa first. If not, it will die! He was involved in setting up ASKY, based in Lome, Togo. When he started, everyone was saying they needed a flight to Paris, but he refused until they were profitable. They posted their first profit this year, so perhaps now is the time?...
He also said that you need no government interference- let the professionals get on with running the airline. Partnerships are key- Ethiopian are a shareholder in ASKY and provide technical and management support.
The idea of an 'African alliance' was floated. With the onset of open skies, perhaps now is the time for this? With it there are the benefits of economies of scales regarding fuel purchasing and fleet renewal etc.
All in all a fantastic session. We will pick up the conversation once the skies have opened at AviaDev 2017, scheduled for October.