What are the challenges that could hinder this innovation?

In my previous post, I talked about the different opportunities that could favor the establishment of a low cost carrier in Africa. However, in spite of these opportunities, there are several challenges that could impede on this innovation.

The African market is very unique in the sense that the rapid expansion in Africa's aviation industry is hampered by a number of factors such as:

• Poor record of safety and security 
• Protectionism from governments

According to me, one of the biggest challenges facing African airlines are safety regulations. In effect, the poor safety record which damaged African airlines could significantly jeopardize the launch of a LCC within the continent as; several carriers are banned from European airspace by safety regulators.

In an attempt to operate between African states, it would not be sufficient to persuade the licensing council that the carrier is able to safely and efficiently operate within states. Indeed all traffic rights are controlled in terms of bilateral agreements which date back to the late 1940s and the creation of the UN and the International Civil Aviation Organization (ICAO), in which these bilaterals specify the routes and the frequency of flights each airline serves. These agreements are settled at a government-to-government level and are considered as an artificial barrier to entry, which inhibits supply and consequently, demand. Therefore, breaking this monopoly and obtaining some reform into the system could prove to be beneficial. But how? - Now that is the question.

 

Despite the growing awareness of the role that the aviation industry could play in the development of the continent, the industry is still not the top priority of African governments. Additionally, despite increased liberalization of the African aviation industry and the growing presence of foreign companies, some African governments are still reluctant to open their skies fearing foreign competition could undercut national airlines, some of which are short of commercial viability besides being just symbols of sovereignty.

Are there any other challenges you think can hinder the establishment of a LCC within Africa? Please feel free to comment and share your thoughts. 

What are the opportunities in Africa that could favor the establishment of a Low Cost Carrier?

Africa is renowned for being the world’s second biggest and most populous continent, as well as one of the fastest developing areas for commercial aviation. However, Africa is equally the least developed market in regards to air traffic.

This market could therefore potentially offer several opportunities and challenges.

Having a population of above one billion, research undertaken by Boeing asserted that the African air traffic is predicted to grow at 5.7% per year, which is significantly faster than the world average of 4.9%. Likewise, as a result of economic growth which led to an upsurge in wealth of African citizens, it could be hypothesised that launching a LCC in Africa will enable people to benefit from aviation as, there are approximately 68 million people journeying by air within the continent and Airbus predicted that by 2030, it will rise to 130 million. 

It is undeniable that air transport has the ability to generate growth and economic development by promoting and encouraging trade and foreign investment. However, up until now, the aviation industry in Africa has been designed to business traffic, high network individuals, and tourists, due to the fact that an “average” person in the street does not think about travelling by air as it is still perceived as a luxury that is solely accessible to certain members of society.

Growth in air transportation has directly maps into economic growth due to spillover effects through creation of direct and indirect jobs in the industry and other auxiliary sectors such as tourism. Expansion in air transportation creates market opportunities for local entrepreneurs by creating regional and global economic centers.
In 2010, the aviation industry in Africa supported about 7 million jobs (including 257,000 direct jobs) through the impact on travel and tourism which translated into USD67.8 billion of the continent's GDP.

Africa can maintain the growth of its aviation industry if more and more people can afford to pay for the cost of air travel. However, in a research conducted by Prabu, he studied the tendency of flying and noticed that in Europe, it is 2 seats per head while, it is only 0.02 in Africa. In percentage it is 32% per seat kilometre in Africa, in comparison to 8% per seat kilometre in Europe. This subsequently supports the fact that air travel is significantly expensive and this is one of the several factors that does not permit an average individual in Africa to travel. Thus, democratizing air travel within the continent is aviation's next boundary.

Air travel is essential to the prosperity of Africa as it opens up opportunities that did not exist before. Fostering the African aviation industry may be one of the driving forces of regional integration on the continent. Better connected African countries and regions through a viable air transport industry could be the catalyst that can boost intra-African business, trade, tourism as well as cultural exchange. Developing the aviation industry may also represent an opportunity to mitigate chronic transport problems faced by the 16 landlocked African countries.  

What are other potential opportunities within Africa that could favor the establishment of a Low Cost Carrier within the continent?



Shaping the future of air travel within Africa

Today, innovation is about much more than new products. It is about reinventing business processes and building entirely new markets that meet untapped customer needs. Most important, as the Internet and globalisation widen the pool of new ideas, it is about selecting and executing the right ideas and bringing them to market in record time.

It is undeniable that a thriving aviation industry is a gateway to economic development. Aviation has become a key component of globalisation and with the surge in economic growth on the African continent, accessibility has become very important.

This blog will not only aim at assessing the feasibility of launching a LCC in Africa, but will equally aim to review the means by which the establishment of a LCC in Africa could shape the future of the African aviation industry.

Hope you enjoy reading these weekly posts, and feel free to share any comments, suggestions and your thoughts on this topic.