In recent years a resurgence of national carrier projects has been observed in Africa. However, Africa’s Aviation history is beset by the failure of prominent state-owned airlines such as Air Afrique, Air Uganda, Air Zimbabwe, the most recent being Air Namibia and South African Airways.
This has created a stigma around national carriers and has drawn criticism surrounding the need and value of African owned airlines. A few airlines however have proven to be extremely successful and resilient particularly during this pandemic. How can state-owned airlines succeed? and what are the government’s roles in aviation? What should these new airlines do to avoid the fate of so many?
First and foremost, the purpose of creating a national airline needs to be clear. Whether it is part of a tourism development strategy, to be connected to the rest of the world, like Air Mauritius or Rwandair, to ensure the continuity of the territory and serve the domestic markets, like Congo Airways, or even to develop a specific sector of the economy. A clear objective will drive the strategic decisions, such as corporate structure, capital requirements, routes, fleet, and human resources.
For state-owned airlines, the ultimate shareholders are the country’s population, which also means that a state owned airline’s performance cannot be reduced to profits and losses only. Benefits to the overall economy are therefore paramount.
Governance is often contentious. Who is in charge? What ministry does the airline depend on? In the case of Ethiopian Airlines, one of the world’s most successful airlines, government intervention in the airline’s operations is very limited, providing flexibility, and responsiveness. As we have seen when the pandemic hit, Ethiopian was one of the first airlines to adapt its network, and re-focus its operations on the cargo business. A national airline’s decisional independence is thus a key success factor.
As for privately owned airlines, national airlines need a deep understanding of their core markets, and carefully manage growth. With the seemingly vast financial resources governments can provide, it is easy to grow too quickly. But maintaining a disciplined approach is essential. For example, Algeria’s Tassili Airlines, has grown from serving the oil industry traffic to scheduled regional service over a period of 20 years.
In addition to good governance and a clear purpose, successful national airlines share additional common traits:
A clear and focused business model: Ethiopian Airlines’ current business model is connecting east-west bound traffic though their Addis-Ababa hub. This seemingly simple model has significantly evolved over the years, and was achievable by having a deep understanding of market segments, passenger preferences, and competition.
A distinctive brand and product offering: A flag carriers’ image and product must be aligned with its purpose. For example, Air Seychelles primarily caters to high-end leisure traffic, and as such offers business class seating, lounges and fast track immigration services.
The ability to attract and develop talents: Attracting, developing and retaining talent are key to the success of any enterprise. Often African national airlines rely on external expertise during the startup phase, as Ethiopian airlines did in its infancy. However, investing in the development of a highly specialized workforce, as EgyptAir did with its training academy, has enabled the growth of a strong talent pool in Egypt, on which the local economy can rely.
As passenger levels gradually return to their 2019 levels, national airlines must be ready to face an evolving aviation landscape, with increasing competition, from LCCs, regional startups and foreign airlines. Existing national airlines have the opportunity to address their issues, and the new ones to learn from the mistakes of others. With clear goals, good governance and a disciplined approach, national airlines can continue to be catalysts for the development of aviation in Africa.
The state’s role, is to provide opportunity for the development of aviation, in terms of infrastructure, air service, and traffic rights negotiations. A national carrier is only one possible avenue to stimulate the airline
Author: Arnaud Brun-Khoobeelass – Manager, Aero Advisory Services at Mitsubishi Heavy Industries
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