Low Costs, Open Skies

The past few years has seen an increase in low-cost, ‘no frills’ airlines across Africa, and with the major operators falling foul of wider economic burdens, the runway is cleared for them to soar

Before Fastjet launched low-cost flights between Harare and Dar es Salaam last year, the option to travel even medium-length distances was a tumultuous challenge for the majority of potential consumers, but it now appears that the skies are the limit for airlines - and subsequently consumers - just short of premier status.

Fastjet is just one of a large wave of low-cost airlines launching or expanding operations across the continent as they seek to capture middle-income travellers who are tired of dangerous road journeys but cannot afford major international carriers.

It is this middle ground that represents opportunity not only for passengers in need, but also for the low-cost, previously domestically-focused airlines to expand their horizons and tackle the larger multinationals.

The new airlines hope to undercut larger carriers by offering ‘no frills’ services in the same fashion as the likes of Easyjet and Ryanair in Europe, and the results are already being seen one year on.

Average prices at the end of 2015 had already dropped by around 40 percent, with passenger numbers consequently rising in what can be perceived as a chicken and egg scenario. Did the cheap prices bring in the masses, or did a wider customer base enable new airlines to reduce their prices?

Either way, as Zimbabwean businessman, Jonathan Jabangwe asked Reuters’ Joe Brock back in September: “Why aren’t these flights all over Africa? With the global economic situation, every dollar counts.”

Admittedly, it hasn’t all been doom and gloom for the continent’s larger operators; Ethiopian Airlines has been thriving on an ever-broadening international scale in recent times and continues to act as a trailblazer in regards to both service provision and innovation.

However, for every success story like this, there are two or more examples of traditionally larger national airlines under increasing financial pressure; South African Airways (SAA) and Kenya Airways grabbing the most headlines.

Considering the general growth of Africa’s aviation industry escalating by around five percent at present - faster than any other region - it doesn’t take a genius to realise that custom and market share is venturing further away from the traditional providers and landing in the laps of newer, independent operators.

According to the International Air Transport Association (IATA), passenger numbers on the continent are expected to double to as much as 300 million in the next 20 years, and theoretically, the arrival of airlines like Fastjet could capitalise heavily on the gap that exists between themselves and the traditional elite.

‘Open skies’ versus Protectionism

However, it is by no means a given. A similar gap remains in the rules and regulations that either encourage or disallow such discounted options for travel to exist on a large scale, and it is this discrepancy - and the solution of it -which could play a significant role in dictating continental air travel in the future.

Despite an ‘open skies’ agreement being signed nearly three decades ago, the prospect of widespread competition at the time was barely an issue, and now that it is, the trend of protectionism has overridden the agreement in many cases, to the benefit of the larger carriers.

“African countries continue to champion national airlines, despite nearly all ventures resulting in losses or bankruptcy,” Brock said in his article written for Reuters in late 2015. “SAA has been subject to several Government rescues in recent years. Kenya Airways posted record losses this year and may need a $500-$600 million bailout. Nigeria is considering re-launching a state airline and tiny Djibouti said this month it would revamp its previously bankrupt national carrier.

“If governments were more pro-competition and reforms were imposed it could add $1.3 billion a year in revenue to African economies and create 155,000 jobs, the IATA says.”

Fastjet boss, Ed Winter told Brock that he believed Government protectionism to be the main reason “why Africa is so far behind the rest of the world”.

Realistic proposition

Perhaps though, it’s just a lull where only the major African airlines are being truly effected as a result of their countries’ wider economic burdens, and once they recover, they will rejoin the market elite to find smaller nations up at the top of the tree with them; driven by low-cost airlines who were busy at work while the former licked their wounds.

Fastjet is already veering further away from the likes of South Africa to focus on its native Tanzania and surrounding East African markets. FlyAfrica.com is similarly thriving out of its Zimbabwe base, with plans to expand into West Africa in the near future.

And for those who do remain focused on South Africa, at least they can do so in the knowledge that they won’t be blown out of the water by their larger competitors quite as comprehensively as they once would have been.

Kulula, Mango, FlySafair and Skywise are just four, new low-cost examples of the revolution that seems to be occurring.

The aforementioned East is seemingly already catered for too, and if the likes of FlyAfrica.com can activate the main economic powerhouse, Nigeria in the process of its western ventures, then the likelihood of a truly ‘open sky’ across Africa is more of a realistic proposition than many powers that be would either wish for or lead others to believe.