Sad narratives of African state-owned airlines 

Source: Sad narratives of African state-owned airlines  | Daily News

Aviation in some parts of the African continent has been impacted by an unfavorable political landscape for the past few decades.

In pre-colonial days, globalization, in particular, was impacted as a result of African cities experiencing minimal globalization in the pre-colonial and national phases, because they were nonexistent or under the control and jurisdiction of anti-globalization nationalist forces.

As a result, because of the restricted surplus product owing to the generally small colonial economies, as well as underdeveloped communication and transport facilities, the globalization of African cities in the colonial era was limited.

In the second half of the 20th century, many African countries that had gained their independence deployed their aptitude and resources towards establishing institutions that project their image around the world. In most cases, African airlines with the financial backing of their home governments embarked on ambitious status-seeking expansion programs into Africa, Europe, and Asia. This was to help project its image and signify an emerging and united Africa.

Following the disintegration of colonial rule in most parts of Africa, many Independent African countries started establishing policies geared towards reforming government institutions (including airlines) and improving the business environment. This resulted in the establishment of symbolic airlines that were formed with the aim of improving a country’s competitiveness in the face of global competition.

To these countries, aviation was seen as a political and social function that broke the isolation of these countries that stemmed from inaccessibility. Even in colonial times governments established air links across the African continent and provided a platform for the development of air routes that were largely geared towards transporting extracted raw materials to local cities and ports to be transported to Europe.

Airlines such as Air Afrique, Cameroon Airlines, Ghana Airways, Nigerian Airways, and Zambia Airways, to name a few collapsed in recent years. These airlines were once regarded as a symbol of national pride. Air Afrique, for example, was seen as a ‘shining symbol of Pan- African dreams of unity and model for the region’s post-colonial era businesses.

One of the biggest reasons that have led to the failure of some state owned African airlines is the increased government interference (ill-defined government mandates) and overstaffing. Furthermore, their failure was not only linked to market share dominance in the global aviation market place but also on having an unskilled management/leadership team.

Barkhuizen, Welby-Cooke, Schutte & Stanz (2014) support this view by highlighting that most of the African airlines have emerged at the frontier of the global market, even though evidence suggests that majority are essentially uncompetitive and lack of a skilled leadership team does not give them any form of competitive advantage.

Many aviation experts have argued that past failures of African airlines were decades in the making despite several unsuccessful attempts made by national governments to generate turnaround plans. Some plans have focused on privatization or options to look for foreign equity partners; however few outside investors are unlikely to put any significant investments into African airlines ambiguous future.

There other factors such as deregulation that have also had a wide-reaching impact in African regional and domestic markets. The deregulation of the air space during early 1990 led to the collapse of many locally-owned airlines such as African International Airways, African Airline investments, as a result of the entry of new entrants (low-cost carriers) into the market.

It is not all doom and gloom, as there have also been some success stories. Successful African airlines such as Ethiopian Airlines are wholly government-owned, however, the airline has traditionally been autonomous from government involvement and has demonstrated extraordinary resilience in overcoming political interference.

Ethiopian Airlines has become one of the most successful and profitable airline in Africa and the airline is run on a strictly commercial basis supported by Ethiopia’s growing economy.

However despite Ethiopia being considered one of the fastest-growing economies in Sub-Saharan Africa its record in promoting socio-economic development is weak and is still considered among the poorest countries in Africa (IMF, 2018).

The African aviation market is forecasted to grow almost 5% a year over the next two decades in terms of passenger numbers, faster than mature markets. Suffice to say, this growth is from a small base and most African state-owned airlines actually lose money.

The data reported by the International Air Transport (IATA) supports this assumption, by highlighting that the global aviation industry is on track to make a profit of $28 billion, whilst African airlines are forecasted to make a combined loss of $100 million in 2019.

Despite the failure of African airlines in the past few years, there is a realization that foreign carriers are beginning to dominate local markets. Non-African airlines such as Emirates and Turkish account for approximately 80% of traffic in and out of the African continent (IATA, 2019).

In response, African Governments are beginning to resurrect some of their failed airlines to take back some of this market share. Some examples include Uganda Airlines that resumed commercial flights on the 27th of August 2019 from Entebbe to Nairobi since it’s liquidation in 2001 after years of unprofitability; Zambia Airways (through Zambia’s main development agency) has signed a shareholding agreement with Ethiopian Airlines. Zambia will own 55% and Ethiopian 45%.

“As shareholders, we have a clear sense of the direction we need to take in order to ensure the fortunes and secure growth of the national airline. We will install a performance-driven culture through strong corporate governance structures and make Zambia Airways commercially viable,” says Ethiopian Airlines in a statement.

Furthermore, Ethiopian Airlines has been helping other countries to launch their own carriers in return for a stakeholding share. As a result of some of these partnerships, this has led to the creation of regional continental hubs in Chad, Malawi, and Togo. This multi-hub strategy is in line with its Vision 2025 strategy to carry and feed traffic to its main hub in Addis Ababa.

The strategies being implemented by many African Governments to resurrect, rebrand or start new airlines is commendable. However, some of these countries’ chequered history with such initiatives raise more than a few eyebrows.

African countries like Ethiopia and Kenyan Airways, by and large meet the mark internationally, however, countries like Nigeria have struggled to resurrect their airline since 2003 when they stopped operations. Despite a private airline Arik Air being formed in 2006 out of the misfortunes of Nigeria Airways, their survival was short-lived as a result of poor service levels, interference of the owners in day to day running of the airline, poor corporate governance, and a heavy financial debt to name a few.

There is consistency around the sad narratives of African state-owned African airlines that is centered on political interference and corruption. Whether it is Air Zimbabwe, South Africa to mention a few, their troubles are often traced back to mismanagement (included the lack of a skilled leadership team), patronage and fraud. And to repair the damage, the modus operandi is to always cut cost or replace the man at the top.

What is needed to make failing African Airlines and those being resurrected a success? There are many strategies needed for any airline to be successful, however, one strategy stands out. Change the modus operandi and choose the right team of skilled aviators who can run the airline without any interference.

A solid management team who have the aviation industry experience in commercial planning, aviation maintenance, human resources management, all aspects of operations just to name a few, will be able to map the way forward. It is the right step in the right direction!

(Zimbabwe-born Adiel Mambara, who has a demonstrated history of working in the airlines/aviation industry, is currently the country manager (UK and Ireland) for Royal Brunei Airlines.)