By Bob Karashani, Antony Kitimo, Moses K. Gahigi, Michael Wakabi, Allan Olingo
This came to light at the just-concluded 2021 Dubai Air
Show, where Uganda Airlines and Air Tanzania signed deals that prepare them for
the battle for the skies with ET and KQ. They signed aircraft and spare parts
supply deals with leading manufacturers Airbus and Boeing to ensure seamless
services in the region and beyond.
In the meantime, RwandAir has signed a codeshare agreement with
Qatar Airways that allows the Kigali-based airline to use the Qatari carrier's
huge network to bring competition right to the doorsteps of ET and KQ.
Austerity regime
The falling fortunes of Kenya Airways and Ethiopian Airlines
come amid a financial squeeze, which has seen KQ survive on government bailout,
while the Addis-based carrier has lately gone into an austerity regime.
The change in fortunes has seen the Ugandan, Tanzania and
Rwandan national carriers, backed by the state, shift their models to
expansion, both on aircraft and routes, as they seek to pick up business lost
by their bigger, older rivals, and set up their own hubs.
Kenya Airways has nine Boeing 787-8 Dreamliners and
Ethiopian has more than 20. But the Tanzanian government, which owns one, is
ramping up the competition. On Wednesday, Dodoma placed a $726 million order of
four Boeing freighters and passenger jets to boost the airline's capacity.
Boeing and Tanzania announced on Tuesday an order of a 787-8
Dreamliner, a 767-300 Freighter and two 737 MAX jets. Air Tanzania said it will
use the new aircraft to "expand service from the country to new markets
across Africa, Asia and Europe," in direct competition with both Ethiopian
and Kenya Airways which serve those continents routes.
"Our flagship 787 Dreamliner is popular with our
passengers," said Air Tanzania CEO Ladislaus Matindi, "so, the
introduction of the 737 MAX and 767 Freighter will give Air Tanzania
exceptional capability and flexibility to meet passenger and cargo demand within
Africa and beyond."
Expansionist model
The carrier plans to expand its current fleet, leveraging
the new 737s for its regional network and the 767 Freighter to capitalise on
Africa's burgeoning cargo demand.
At the Dubai event, Uganda Airlines and European aeroplane
maker Airbus announced that they had started exploratory talks for additional
aircraft that will be used to fill a critical gap in the carrier's current
fleet.
The two inked a Flight Hour Services Agreement, under which
Airbus will be responsible for provision of non-engine spare parts for Uganda
Airlines pair of A330-800s.
Under the five-year agreement, the manufacturer will
position a consignment of critical spares in Entebbe to meet the airlines
day-to-day spares requirements. The carrier will also have unlimited access
Airbus' pool of spares and components on an exchange basis, under which
defective parts will be swapped for new ones, with the airline only paying for
time the parts are used at an agreed rate.
Uganda Airlines interim chief executive Jenifer Musiime said
the agreement, which is similar to one entered earlier with Rolls-Royce
covering engines, will help the two-year-old airline avoid the need to tie-up
critical financial resources in stocking up on spare parts inventory.
"This ensures that we have constant access to required
spares supply. The alternative would have been to buy our own spares which
would require an astronomical capital investment running into hundreds of
millions of dollars," she said.
Partnership agreements
Uganda Airlines becomes the first African airline to enter
into such an agreement with Airbus, but Air Tanzania is expected to sign a
similar agreement to cover its fleet of A220s.
On plans for the mid-range aircraft, Ms Musiime said the
talks with Airbus were focusing on the suitability of the A320neo to fill the
gap between 76-seat Mitsubishi CRJ-900 and the 258-seat A330-800.
"The CRJ has the range to reach most of the
destinations planned for the intra-African network, it was weight limited,
meaning that there would be a trade-off between the number of passengers on
board," Ms Musiime said, while declining to disclose how many A320s are to
be procured.
At the airshow, Ms Musiime also signed co-operation
agreements with Pakistan International Airlines and Sri Lanka Airways. The two
tie-ups further underwrite the planned service to Mumbai by raising the
potential for connecting traffic.
The airline has so far been shunned by its peers in the
region, Air Tanzania, Kenya Airways and RwandAir.
Kenya Airways only signed a "partnership"
agreement with Boeing for its newly launched Fahari Innovation hub that is
championing drone usage.
But it is the falling fortunes of the Ethiopian Airlines
that is likely to offer East African carriers a break as the Tigray conflict
unfolds. The Middle East competitors are also circling for the kill.
The Ethiopian prize
The crisis in Ethiopia is denting ET's Bole hub in Addis and
is forecast to hit the airline's bottom line and frequencies. If war were to
break out in Addis, then the airline would suffer serious losses. But it is the
ripple effect of its massive investments in tens of African airlines cutting
across West, Central and Southern Africa, and the mini hubs it has created that
could cause a storm.
In December, the Ethiopian carrier is expected to launch Air
Congo to operate both the medium and long-haul fleet in the DR Congo, which
will comprise De Havilland Canada Dash 8-400s, Boeing 737s and two 787s.
"We just signed an agreement with the government of
DRC, which owns 51 percent of the airline and 49 percent is with us," said
Tewolde GebreMariam, the airline's chief executive officer said.
ET is also involved in starting a new airline in Zambia,
which is expected to be up next month. Ethiopia will hold a 49 percent stake
while Zambia will have a controlling stake of 51 percent.
Currently, it has strategic partnerships with ASKY in Togo,
Malawian Airlines and Chad's Tchadia Airlines. It also has a management
contract with Ceiba Intercontinental of Equatorial Guinea.
Ethiopian Airlines is also keen on setting up an airline in
Nigeria, and had started talks to help in revival of South Africa Airways, but
was not selected by the carrier.
The airlines also plan to restart operations of a Mozambique
carrier after terminating the services in May on the back of Covid-19 that
impacted the aviation sector.
No African airline can match ET's connectivity, with Kenya
Airways, its closest competitor constrained by aircraft and a weak capital base
to launch any impactful route expansion or takeover.
This leaves the monied Middle East carriers, Emirates and
Qatar, as likely beneficiaries.
Prime Minister Abiy Ahmed's government is pushing for
austerity in the airline and the financial outlook looks grim.
Operational efficiency
In previous air shows, ET would make aircraft orders with
Boeing and Airbus worth billions of dollars, but at the 2021 Dubai Air Show, it
only signed an MoU with Boeing that will help it lower the cost of its
maintenance operations through Boeing's 787 landing gear exchange programme.
"As the fastest growing airline in Africa, much of our
success depends on our ability to seek out new ways to drive operational
efficiency in our processes. This Memorandum of Understanding will help in
managing our overall maintenance operations and costs across our fleet,"
Mr GebreMariam said.
As the Tigray conflict rages on, its competitors are cashing
in on the demand, especially from the expatriates fleeing the country.
The conflict in Ethiopia escalated this month after rebel
forces from the northern region of Tigray and their allies made territorial
gains and threatened to march on the capital.
On November 2, the government declared a state of emergency,
reflecting the fears about the war that threatens to tear Ethiopia apart, and
further destabilise the volatile Horn of Africa.
Several countries, including the UK and the US, have issued
travel advisories to their citizens residing in Ethiopia and evacuated
non-essential staff. The United Nations and African Union followed suit.
Safaricom, which has been preparing for operations in Addis, also pulled out
some of its staff.
Kenya Airways then increased its frequencies to Addis,
seeking to take charge of routes once dominated by Ethiopian Airlines. KQ
increased weekly scheduled flights to Ethiopia and other East African
countries. The carrier is even offering incentives -- 15 percent to discount to
passengers who will make bookings with them -- and has increased its frequency
to Ethiopia from three to seven.
KQ has also added flights to other routes, including Dar es
Salaam from 14 to 16, Entebbe from 14 to 16, amid rising competition by Air
Tanzania and Uganda Airlines. While anticipating ET's prop-up of Air Congo next
month, KQ has also increased its frequencies to Kinshasa from five to eight.
Seamless connections
In December, KQ plans to increase its flights to London from
five to seven to capitalise on the increasing demand of travellers during the
holiday season.
"Since UK opened its skies to Kenya, we have been
making five flights weekly but from December, we shall be operating in seven
days a week to London Heathrow Airport Terminal 3. Kenya Airways will increase
its flights because of high demand due to holiday and as the countries ease
travel restrictions," the carrier said on Tuesday.
Last month, KQ signed a code share agreement with British
Airways, which will see BA customers seamlessly connect on Kenya Airways
flights within Africa, and vice versa for KQ customers in Europe. Its
destinations top list includes Douala, Zanzibar, Lusaka, Mombasa, Addis Ababa,
and Entebbe and the Indian Ocean tourist destinations of Mauritius and the
Seychelles.
Kenya Airways customers can transfer from British Airways
LHR hub to 26 destinations within Europe, including Heathrow, Glasgow, Madrid,
Milan, Amsterdam, Frankfurt, and holiday destinations around the Mediterranean
Sea.
Air Tanzania, with a fleet of 11 aircraft has announced four
new regional routes from the commercial capital Dar es Salaam to Nairobi
(Kenya), Bujumbura (Burundi), Ndola (Zambia) and Lubumbashi (DR Congo).
Last month, Tanzania and Belgium signed an aviation
agreement that will allow Air Tanzania to fly to Brussels airport while
Brussels Airlines introduces reciprocal flights to Dar es Salaam, Arusha and
Zanzibar.
The inaugural Dar-Bujumbura flight took off on November 8
while the Dar-Ndola and Dar-Lubumbashi routes were set to become operational
this past week (November 18) and the Dar-Nairobi route -- which is a relaunch
-- on November 26.
Air Tanzania has regional flights to Entebbe (Uganda),
Harare (Zimbabwe), Lusaka (Zambia) and Hahaya (Comoros), plus weekly cargo
flights to Guangzhou.
The Johannesburg route was also cancelled over Covid-19
travel restrictions and has not yet been reintroduced, while a plan to launch
flights to London's Gatwick Airport remains in limbo, despite the airport
allocating a slot for ATCL last year.
Tanzania recently made a down payment of $258.7 million for
the purchase of five more aircraft, which are all expected to be delivered
before the end of 2023, aiming to have a fleet size of 16 planes. Its current
stable comprises two Boeing 787-8 Dreamliners, four Airbus A220-300s and five
Bombardier Q-400/Dash 8-400s.
Regional air derby
Meanwhile, RwandAir plans direct flights between Kigali and
Doha starting December 1, putting the national carrier in pole position to
compete favourably against regional competition.
RwandAir passengers will now connect to Doha and London, through
Heathrow and access the Qatar Airways network. This will put RwandAir in a
position to attract regional passengers, who would ordinarily opt for Nairobi
or Addis Ababa for long-haul flights.
Ethiopian Airlines and Kenya Airways have hubs in Doha, but
the direct flight from Kigali to Doha will be a major boost for RwandAir as a
transiting airline, while the partnerships with Qatar will provide more options
to passengers plying African routes.
RwandAir will also resume its London flights, operating three
weekly flights between London and Kigali with departures from Heathrow on
Tuesdays, Thursdays and Saturdays.
"The codeshare with Qatar Airways is a major
achievement for RwandAir. It gives our passengers access to a world-class
airline and a worldwide network. To make it truly seamless, we will launch
non-stop flights between Kigali and Doha in December 2021," said RwandAir
CEO Yvonne Makolo.
"It gives us access to 265 global destinations and they
greatly improve their pan-African offering. We will also share our loyalty
programmes and RwandAir is the first sub-Saharan carrier to do that. In due
course, Qatar Airways will also acquire part of RwandAir. And we will also look
at other synergies in terms of training, service delivery, and so forth," she
said.
Opening the Kigali-Doha route and the recent codeshare
agreement with Qatar Airways are the latest actions that seem to be laying
ground for the completion of the Gulf airlines acquisition of 49 percent stake
in RwandAir.
Revenue stream diversity
Route expansion and solidifying its existing network seems
to be the plan to recover from the effects of the Covid-19 pandemic.
The airline recently expanded its footprint in DRC by
opening new routes - Kigali-Lubumbashi and Kigali-Goma.
The opening of Kigali-Doha and resumption of Kigali-London
flights are expected to put RwandAir on a solid recovery path.
"We had to shrink our services, but doing so has
allowed us to begin growing again. We suspended thinner routes, but we have
opened new routes as well. Our growth will be organic," said Ms Makolo.
"Diversifying our revenue streams will also be
important. Cargo will be a big part of that as we have had the African
Continental Free Trade Area operating since the start of 2021."
The airline recently resumed Kigali-Kampala route and
Kigali-Mumbai are beginning to pick up as it awaits full resumption of flights
on the Kigali-Guangzhou route, the airline's best performing route before the
pandemic.
Among the airline's West African routes, the Kigali-Lagos
route has been the best performing during the pandemic period, having been
designated its own flight.
The Kigali-Dubai route has also been instrumental during
this time, and will continue playing a key role in the airline's recovery.
The airline also recently resumed its other African routes
like Johannesburg, Lusaka, Harare, Cape Town, which will be pivotal in its
recovery. - East Africa