 Airlines in Africa are adjusting and providing themselves with more efficient fleet as a way of serving the industry better and ensuring their market share does not decline. Airline competition has got more intense as more African airlines look towards more domestic and regional routes, and those on continental services try to firm up their foothold where they face very big competitors. Some carriers in Africa have had to withdraw their operations to the Middle East and Europe under the pressures of very strong competitors and unfavourable market conditions. Operators like Virgin Nigeria have suspended their intercontinental operations to consolidate on domestic and regional operations, while Zambia Airways suspended all operations as a result of the economic crisis. This trend could intensify the struggle for the traffic within Africa which is projected to sustain robustness on the strength of intra-Africa business travels. From outside the continent, even though Continental Airlines pulled out of Lagos leaving largely Delta Airlines connecting the US direct to Africa, strong competition has emerged from the Middle East carriers like Emirates and Qatar Airways with growing frequencies spreading to new destinations in Africa. Large-sized new-comer, Turkish Airlines, which passes through Africa on its way to South American markets has joined the age-old players such as British Airways, Lufthansa, Air France, among others, to vie for traffic in Africa. These external competitors all realize the rich potentials in Africa, widely described as one of the emerging markets, and are increasing their services into parts of Africa. Also, the major global airline alliances including SkyTeam and Star Alliance have sought stronger presence in Africa though through African memberships. Furthermore, Air Arabia plans a hub in Morocco, while low-fare carriers and mainline carriers from Europe feast on traffic on Moroccan routes and some other Northern African destinations. This scenario makes it essential for African airlines to have better efficient airplanes to compete favourably on domestic, regional and long-haul routes. Besides, the running economic crisis has cut down traffic, and airlines have to provide high quality and flexible services, based largely on more efficient and comfortable aircraft, among others, to attract more of the dwindling traffic rather than giving up the struggle.
In the face of growing competition and new industry requirements - including environmental benchmarks, fuel efficiency and passenger preferences - several African airlines are engaged in fleet renewal programmes and have made orders for or indicated interest to order the latest equipment in the market – from the B787 Dreamliner, NextGen B737s, A350XWB to the A380. Some of the deliveries are as far out as 2017, while some fall around 2012 to 2014 because of tight bookings that had stretched the production capacities of aircraft manufacturers when these orders were made. Though the reduction in fuel price late 2008 reduced cost pressure on airlines, the advent of acute global economic crisis late 2008 brought a new dimension to the challenge facing airlines. Some airlines outside Africa have deferred or cancelled some of their aircraft orders to match dwindling traffic and to afford them more funds to drive their businesses. New-comer, Arik Air, acquired its new A340-500 airplanes from one of such cancellations. In the case of African airlines, older less-efficient airplanes which are present in many fleets need to be replaced, while some airlines may add capacity to power into new routes. Passengers are becoming more demanding regarding comfort even on short-time flights. These requirements necessitate the acquisition of newer airplanes among African airlines even in the short-term. To remain in contention in the present-day market realities, African airlines need to overcome the lure to step down their quest to acquire newer airplanes on the reason that oil prices have ebbed. Besides fuel-related cost reductions, newer airplanes offer more customer satisfaction and environment-efficient services.  They could also save airlines the extra hassle of retrofit for emerging technologies, among others. This is also in line with global target to achieve a 25% improvement in fuel efficiency by 2020 compared to 2005. Further efforts are needed, says IATA, in user-preferred air routes, optimising the regional air route structure and implementing performance-based navigation procedures for all phases of flight. These would largely be driven by newer more efficient aircraft. The industry is expected to rebound by 2010, and a number of airlines and airports are making projections of upswings in their businesses for later 2009 and 2010. Where airlines go for old planes, the temporary shot in the arm they may get, ipso facto, could ultimately become a shot in the leg where such airlines would be searching for newer planes when the opportunities may have gone. It is also expected that oil prices could rebound when the economic meltdown ebbs because improved economy would spur oil-based activities that would drive up demand for oil.
Boeing’s projection of 2008-2027 shows that Africa will require 560 airplanes valued at $60 billion within the forecast period. From 2008-2027 also, Boeing says globally 29, 400 airplanes valued at $3.2trillion would be required. Some of Boeing’s reasons for airlines’ requirements are thus: “As airlines seek better financial returns, they match the airplanes used more closely to the precise economics of the routes they fly. This means that airlines will in general use larger regional jets and single-aisle airplanes, and more small- and medium-sized twin-aisle airplanes.”
From another perspective, while Airbus agrees to increased aircraft requirements in Africa, specifically, for passenger aircraft with more than 100 seats, Airbus says deliveries in Africa 2007-2016 would be 464 aircraft, while in the period 2017-2026 there would be 416 deliveries for Africa constituting 4% of world deliveries. These could result from increasing regional markets, and fulfilled long-haul ambitions of some airlines in Africa.
 According to Nigel Benson, Director Sales and Leasing for BAE Systems, “the global credit crunch is making finance for new aircraft deliveries harder to access and more expensive and African airlines have a challenge to find $8 billion over the next three years to finance some 220 new aircraft that represents the backlog that is on order. ” However, even though the crisis has reduced funding for aircraft as Mr. Benson has said, considering the number of less efficient and older airplanes in service in many fleets across Africa, the economic crisis cannot take away the need for newer and more efficient aircraft among African airlines. Mr. J.P. Fourie of National Airways Corporation (NAC), had said before the crisis became acute late 2008 that the way to get the $60 billion into Africa is by getting the African market involved in the funding. Before the crisis, some African banks had done specifically well in this area. In South Africa, the Investec Bank has invested with NAC in various parts of Africa; Rand Marchant Bank has also done notable investments in the continent. In Nigeria, First Bank, Zenith Bank, Union Bank, Oceanic Bank and Bank PHB have all assisted in aviation-related ventures. Institutions in Africa have to show responsibility and preparedness to take up responsibilities in their own countries. Mr. Fourie’s submission remains instructive, as there is optimism now among analysts that these funding institutions would return to action when the economic gloom blows over.
The capital markets have limited capacity to meet the funding requirements for aircraft acquisitions because of the current economic crisis. Boeing’s analysis on the state of capital markets showed that 2007 had better funding available than 2008. And the condition in 2009 may not be very different from 2008. However, given that the acquisition of newer aircraft is essential in Africa, airlines on the continent need to liaise with aircraft manufacturers to get airplanes in the short-term. Airbus and Boeing are seeing this possible, aware that the global credit crunch has limited the credit available in the funding market at a period that airlines need newer aircraft for improved operations. “Cancellations and deferrals from other regions have brought opportunities for African airlines to take delivery of their aircraft earlier,” says M David Dufrenois, Airbus’ Vice President of Sales for Africa.
Besides, to be able to attract the limited funding in the market, airlines in Africa should review their business models, realigning even temporarily to meet current market needs. Ready markets and prevailing policies attract airlines. This is the case with Dar es Salaam where airline frequencies are increasing due to availability of affordable goods hitherto sought from Asian markets. Also, Lagos-Accra and other such attractive routes are being fed with many more aircraft capacity. Contrariwise, several other city pairs within and between regions suffer from inadequate flights due to lack of ready markets. And limited traffic in parts of Africa has resulted in accusations of market manipulations by big carriers over smaller airlines. Airlines should, therefore, play more roles in encouraging governments to create trade and business-friendly environments to boost markets to which newer aircraft would be deployed profitably. Countries need to shore up their credit ratings to make their airlines attractive to funders, while ratification of the Cape Town Convention would also be immensely beneficial. Also, airlines expanding to new routes in parts of Africa should match the prevailing markets with right aircraft capacity. Another important factor for African airlines is to capitalize on the benefits of commonality, as using more different airplanes would entail hiring more different crew, and incurring more cost. To sustain optimal performance of acquired aircraft, airlines need also to look out for better after-sales support. Aircraft manufacturers and parts suppliers appear more likely to work in closer partnership providing value-added services to support airlines in this time of economic crisis. And airlines should explore these opportunities.
 Furthermore, good safety record is essential among airlines. In 2008 the African accident rate was 2.5 times the world average with one accident per 471,000 flights, IATA states. And this is a tremendous improvement over three years ago. Already, a number of African airlines are on the IATA operational safety audit (IOSA) register, while EgyptAir and Royal Air Maroc are among the first airlines to join the Safety Audit for Ground Operations (ISAGO) pool audit group. The audits would enhance operations and save costs among airlines, making airlines more able to attract financing and other forms of aircraft support.
According to IATA, ISAGO aims to mitigate the US$4 billion damage done globally each year, and ISAGO applies the same principles that made IOSA a success to ground handlers. While searching for newer airplanes also, African airlines could seek the terminal benefits from their retired airplanes by decommissioning through environ-mentally sensitive programmes, such as the Airbus’ PAMELA project.
Meeting newer aircraft requirements in Africa is a possibility that would ride on the back of several factors including the commitment among airlines to acquire such vital equipment, and working closely with aircraft manufacturers, among others. This also would be enhanced by conducive operating environment. Airlines should act swiftly to seize existing opportunities to acquire aircraft in the market, realizing that crisis periods also come with advantages. In the on-going crisis, airlines need to discontinue uneconomical activities and outsourc e where necessary. With high quality services and flexibility, airlines in Africa may not preclude making profits in 2009, a trend that is expected among some airlines in Europe.
The words of Mr. Taleb Rifai, Secretary-General A.I. of The World Tourism Organization (WTO) is noteworthy: “We must also recognize that the measures we need to take now urgently but precisely will require unusual action. It is time to revisit our existing structures, policies and practices. It is time for innovations and bold action.” And a vital aspect of that bold action is getting more efficient aircraft to drive better operations.
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