BTN Europe presents an overview of business travel and MICE predictions for this year
ExCeL London - 24-25 February 2021
Developing new air routes within Africa is a slow process, but rapid economic expansion is spurring efforts to improve connectivity
Immappancy – meaning insufficient geographical knowledge – is something that can hit any corporate traveller or travel buyer like a slap in the face when they try to negotiate routes in Africa.
In 2010, German computer graphics guru Kai Krause pointed out a global misjudgement: that traditional rectangular maps show Africa about 14 times smaller than it actually is.
Krause’s work has since been refined and it’s now generally agreed Africa is three times the size of the US and that the US, China, India, Eastern and Western Europe, Mexico and India could fit within its borders.
All of those regions have better international and domestic air links than Africa. While there are numerous indirect connections from the UK to Africa, (Air France/KLM and Lufthansa each serve 40 African cities, Turkish Airlines 52 and Emirates more than 30), there is a lack of direct capacity on key routes and within the continent.
Adrian Woodward, BCD Travel’s vice-president, partner network, EMEA, says: “The first issue is capacity from the UK, mainly to Johannesburg and Nairobi, which is a huge challenge.”
Woodward welcomes British Airways’ new Durban service but says: “It’s not so much about new destinations, but adding more capacity on those cities that drive economies.”
He names these drivers as being in Nigeria (especially now oil prices are rising), South Africa, Kenya, Ghana and the Cote d’Ivoire.
Without direct services from the UK, joining the dots in Africa is often down to its own airlines, but there are few network carriers serving this vast continent and only Ethiopian Airlines is profitable enough to harbour ambitions to serve all 54 African nations. Its network already extends to 60-plus destinations on the continent, but only one, Cairo, is in North Africa.
Among Ethiopian’s competitors, Kenya Airways is a major network carrier and is resuming routes, including Malindi, this year, but has reported heavy losses. South African Airways, meanwhile, is launching Johannesburg-Guangzhou from 18 September, giving customers “access to the heart of China’s export-led manufacturing industries”, while EgyptAir reported its first interim profit for a decade in February and is beginning to contemplate expansion.
A leading secondary player, Royal Air Maroc, is expected to join Oneworld in mid2020 and plans to add 27 unspecified destinations, but for the moment, its strength is in West Africa where it has 24 routes.
There are many examples of how it’s quicker to fly from Europe to one African country and then back to Europe to fly to another because of the lack of intra-African connections.
However, there are slow improvements. A few low-cost carriers and better airport infrastructure have boosted intra-African airline connectivity by 5 per cent in 2018 with 70 new routes, according to Ciaran Kelly, FCM Travel Solutions managing director, Middle East and Africa, who adds: “A lot more could still be done. It is, for example, just 476 miles from Entebbe in Uganda to Bujumbura in Burundi. Yet to fly between the two, travellers often need to fly via Nairobi, or connect half-way in Kigali, making what should be an hour or so flight take three to four hours.”
The absence of open skies is a big hurdle when coupled with lack of demand from local passengers
Lack of capacity also means high fares; FCM estimates a Johannesburg-New York flight costs 3p per kilometre, whereas Johannesburg-Gaborone costs eight times this.
The absence of open skies is a big hurdle when coupled with lack of demand from local passengers. Consequently, flying between countries can mean using less familiar carriers. “Not all intra-Africa carriers meet or adhere to international aviation standards, but sometimes air connectivity is the only means of getting from one country to another,” says Frank Palapies, chief operating officer – Africa and Middle East, Wings Travel Management.
“Corporates understand this and some of them make concessions for travel on African airlines. Whereas normally they wouldn’t allow travel on certain carriers as they don’t meet US or European standards, clients have to relax their rules as there is no alternative.”
It’s a risk that has to be weighed up, more so now Africa is a centre of investment. Kelly names East Africa as a key area. He mentions Nissan’s proposed plant in Kenya as well as commitments by Volkswagen, Peugeot and commercial vehicle specialist CNH Industrial.
“Numerous companies have also relocated their manufacturing plants from countries such as Turkey, India and China to Ethiopia over the past decade,” he adds, citing foreign investment in Ethiopia’s textile industry, mushrooming from US$166.5 million in 2013/14 to US$36.8 billion in 2016/17, according to the Ethiopian Investment Commission.
Mozambique is another growth area following the discovery of offshore gas a decade ago. The 75 trillion cubic feet of gas is enough for 120 years’ production and prompted Wings to establish an office there in 2017.
“We have seen increased traffic of 35 per cent over the last 12 months,” says Palapies. “The major investment in the market by energy sector companies has prompted mobilisation of employees to Mozambique from other countries, for example, Ghana.”
Kagiso Dumasi, BCD’s Johannesburg-based commercial manager, sub-Saharan Africa, adds: “It almost feels like there is a new scramble for Africa in terms of manufacturing, infrastructure and tourism.” She says the motor industry and China are key investors.
“The African economy flatlined two to three years ago, but now we have quite a big pick-up because there is a huge infrastructure investment and countries are looking beyond mining and resources. They are looking to reopen railways and infrastructure left behind by former powers. Many countries realise agriculture is one way to export and diversify; also call centres are opening in South Africa because of the accent and time zone.”
The average economy is growing at over 3 per cent. Africa is very open for business
A glance at major hotel pipelines also gives a clue as to where the action is. Africa is currently the largest investment centre globally for Hilton and Marriott. Nigeria-based W Hospitality Group’s research puts Egypt’s tourism-led 51 developments at the top of the 2019 list, but business destinations also show strong growth. Nigeria is in second place, with 49 properties and almost 8,000 rooms planned, while Ethiopia has 34 in the pipeline, Algeria 19 and South Africa 18.
Claude Vankeirsbilck, chief operating officer at Johannesburg-based Tourvest, says construction is a boom industry, particularly in Kenya and Botswana, but believes this era may be coming to a close. “It’s absolutely being driven by China, but I’m not too sure that investment is going to continue at the rate of the last few years,” he says.
Vankeirsbilck points to Angola and Mozambique as corporate travel hotspots, while vast offshore natural gas deposits are being developed at South Africa’s Mossel Bay.
He, too, is frustrated by the lack of connectivity and cost of flying. “There’s a concentration on low-cost and regional carriers emerging, but the public are cautious, as many don’t have safety accreditation.”
Another hindrance, he says, is government-operated and monopolistic airports. “Airlines are charged more and ultimately the customers pay. It makes some of the routes among the most expensive in the world.”
Then there is the cost of making a booking. Visas are expensive and difficult to obtain and there’s an inability to make payments across borders. “Less than 50 per cent of our content is bookable on content distribution systems; we have to do it manually. It takes longer and is more expensive,” Vankeirsbilck adds.
However, BCD’s Dumasi is adamant corporate travellers should not be deterred. “The average economy is growing at over 3 per cent. Africa is very open for business,” she says.
[learn_more caption="Why governments should embrace liberalism"] There is surely no one who cannot see the benefits open skies have brought in Europe, so just imagine what it could do for Africa
The Single African Air Transport Market (SAATM) was first proposed in 2018, but so far only 28 of 54 recognised countries have signed up. The African Union is behind the idea, backed by IATA, with both keen to raise the current level of air travel on the continent, in which only 10 per cent of the population participates.
Cost and a lack of connectivity are the main problems, which open skies supporters say can be alleviated by liberalisation to encourage new city-pair links.
Some foreign carriers are taking advantage of the lack of connectivity and homegrown carriers, with Qatar Airways, for example, offering 17 African destinations from Doha. Akbar Al Baker, its group chief executive, told a summit in Rwanda that although Africa makes up 16 per cent of the world’s population, it has only 3 per cent of the world’s air travellers.
“Governments should leave behind protectionist approaches to regulating aviation and embrace liberalisation,” he urged.
IATA believes African countries should embrace open skies “without worrying about what others are doing”. Raphael Kuuchi, IATA’s regional vice-president for Africa, says the industry “is still punching below its weight” and that aviation can act as an impetus for economic growth by boosting intra-African trade.
IATA plans to analyse where the gaps are in Africa’s aviation market and speaking in Cape Town recently, Kuuchi said adopting a single market would put Africa’s airlines on a more equal footing globally.
“In this way, African airlines will have a bigger ‘local market’ that can keep them on a similar competitive advantage compared to European airlines, for instance, which operate in a single European market.”
Actually getting something done, however, may take some time. Of the 28 countries supporting SAATM, only 14 have signed a Memorandum of Implementation. IATA now plans to undertake a study of the economic benefits SAATM will bring to each country that adopts it, but clearly, there is some convincing to be done.
Claude Vankeirsbilck, Tourvest’s chief operating officer, is not optimistic. “You never know what African governments are agreeing to. In the very short term, I don’t think we will see anything different,” he says.
If open skies becomes reality, the issue of visas, which often determines when a passenger can actually travel, remains a vexed one. Similarly, there is slow progress with the African Union passport, first mooted in 2016. It would benefit local corporate travellers enormously, but is still restricted to heads of states and leading officials, and Africans still need visas to visit more than half the continent.
The hurdles are many, and it’s time the issues were tackled head on.[/learn_more]