African Airlines Push Consolidation To Boost Airline Sector
With the devastating effects of COVID-19 on global aviation, partners and aviation experts in Africa have stressed the importance of leveraging the benefits of airline consolidation to foster the sustainability of air transport in Africa. . They noted that closer cooperation and partnerships would help the continent reap huge benefits for aviation.
Experts spoke at a high-level virtual meeting hosted by the African Airlines Association (AFRAA), Lufthansa Consulting and Kenya Airways in mid-September. A statement issued by AFRAA noted: âAir transport plays a fundamental role in the socio-economic development of Africa.
The sector is a catalyst for the promotion of tourism and the promotion of trade and regional development. However, Africa accounts for less than three percent of global air traffic and over the past 15 years the continent has had the lowest level of market consolidation compared to other regions of the world.
The discussion at the event set out the reasons for a few partnerships and limited airline consolidation, the challenges and benefits of consolidation, and steps to be taken by industry stakeholders to address the situation. . AFRAA Secretary General AbdÃ©rahmane BerthÃ© said in his remarks: âThe aviation sector is in shock from the impacts of Covid-19.
We need to devise new approaches to doing business in the face of growing concerns about the sustainability of African airlines.
âA crucial element of the success of African airlines is consolidation and collaboration. The commitment of States, airlines and all relevant stakeholders is necessary to effectively achieve the required results in airline consolidation in Africa. “
Speaking at the workshop, Kenya Airways CEO Allan Kilavuka said: âIt is crucial to trace and learn from the footprints of consolidation from different parts of the world as we reorient African aviation towards our collective dream of flying towards a better future.
Consolidation and collaboration are essential ingredients for the resilience and sustainable business operations of airlines.
âThe ripple effect of enhanced collaboration between airlines will be an increase in the industry’s contribution to Africa’s sustainable development and therefore we need to raise the tenor of the discourse and ensure that the industry of air transport matters in Africa and for Africa â. Lufthansa Consulting Africa Market Manager Ms. Catrin Drawer said: âWe need to meet the challenges of the ‘new normal’, a reset in our thinking and approach.
We need new business models, significant innovations in operations, adaptive management open to change, a true growing synergistic relationship between airlines and other relevant stakeholders. New challenges require new solutions now and in the future to bring both resilience and lasting success.
âThus, meaningful synergy and partnership, whether through existing contracts and alliances or new agreements, will be essential. We can’t bring back yesterday, but together we can shape the future.
Lufthansa’s consultants provided in-depth analysis and a history of airline consolidation from a global perspective to an African perspective.
The impacts of consolidation for African airlines, passengers, freight, air transport growth and connectivity were discussed. Case studies were presented at C-level by Kenya Airways, Air Afrique and Ethiopian Airlines to enrich discussions with first-hand experiences on the challenges, benefits of consolidation as well as lessons learned.
The workshop provides relevant recommendations, including a call for operators to consider various consolidation models, including capital partnerships between two airlines or through a group of investments, cooperation between two or more well-matched airlines. , or the formation of a new joint airline. .
The âAir Afriqueâ concept remains a valid consideration for Africa. He called for corporate governance as well as increased participation of development finance institutions (DFIs) to help consolidate airlines across Africa.
Experts from Regional Economic Communities (RECs) have been urged to provide greater support to African airlines to foster consolidation on the continent.
The workshop also called for exploring cargo opportunities for air cargo consolidation, government support as well as proper assessment of airlines entering the consolidation.
Experts also called on industry stakeholders to âwalk the talkâ – translate ongoing discussions into action in the interest of delivering accelerated benefits to the aviation ecosystem.
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