African airlines have to contend with many obstacles before they can even launch operations. From excessive government involvement to poor regional infrastructure, African aviation start-ups have historically had a difficult time.
While Africans make up 12% of the global population, African aviation currently accounts for just 3% of global air traffic. We explore why it is so difficult to start an airline in Africa.
Unique geopolitical challenges
Starting a new airline in Africa will always be a challenge due to the unique geopolitical landscape. National governments tend to be heavily involved in airlines, with many start-ups forced to take on the baggage of government involvement.
Simple Flying had the opportunity to speak with aviation professional Sean Mendis at the recent Future Flying Forum (FFF). Mendis has worked in African aviation for decades and was involved in starting up a new national airline in Ghana, amongst other projects.
“African economies are disproportionately influenced by governments, In fact, this is true in most developing nations, their governments have a disproportionately large influence on the economy because of the need for them to participate in it.”
There have been many instances of anti-competitive behavior on the part of governments, especially when nationalized airlines are involved. Government subsidies in particular have led to an unfair playing field, with governments keen to ensure their own airlines succeed at the expense of others.
“Subsidies are really what is causing national airlines to crowd others out of the market. How long can you really sustain a money-losing business model by throwing more money at it?“
Finding the right funding
Securing funding can prove far more troublesome in Africa than in other parts of the world. While funding will be available, it will often come with more restrictive conditions.
“If you’re an entrepreneur in most parts of the world, and you want to set up a business, you can go to a bank, you can go to a venture capitalist, you can go to potential investors, and you can try and get them to give you money to invest in your company to invest in the idea. Something like that is not that easy to do in Africa.”
Instead, start-ups are forced to look at sources of funding that come with their own baggage, such as government investment, high-interest rate bank loans, or funding from a high net-worth individual. This, according to Mendis, “could handicap your business on day one.”
Insufficient regional infrastructure
Poor-quality infrastructure can cause a whole host of problems for an African airline. Mendis gives the example of airports without runway lights forcing many African airlines to operate during daytime hours only
“African airlines are often restricted to running their airlines from sunrise to sunset – 6 am to 6 pm. Because of this, an African airline running the same aircraft as one of its counterparts in Europe or the United States is probably getting one-third less utility out of its assets. And as a result, the unit costs go up.”
Fuel is also a significant issue in Africa due to limited infrastructure. Most fuel is delivered across the continent via road, adding to the overall cost of running an airline.
“Africa has a lot of landlocked countries. Africa does not have pipelines like many developed countries do. So fuel has to get from the ports to the interior. And this has to be done by truck. This takes time. And this has costs associated with it. Once again, high fuel costs, higher costs, and that leads to depression in general of the potential of aviation in Africa so far.“
Improvements in African aviation
Despite the many unique challenges it faces, the African aviation industry has made considerable strides over the last decade.
According to Mendis,
“African airlines today are getting certified with IOSA, which is the global standard for aviation safety audits. They are engaging in better and more consistent training for their staff. They’re engaging in spending more money and world-class maintenance standards and generally raising African aviation to where it belongs in the pantheon of global aviation.”
Source:Luke Bodell | simplifying.com