Foreign Investment Eagerly Participates In African Startups

By Cathy Buyck, Jens Flottau
Source: Aviation Week & Space Technology

“In this way, Europe's majors can limit traffic rights and the entry of new competitors such as the big Middle Eastern hub carriers, Turkish Airlines and Asian airlines,” asserts Mathieu Blondel, principal at Arthur D Little. These “newcomers” are increasing, he observes.

Blondel says that there could be a shift by African governments to choose “new-world” partners for their aviation projects, reflecting the ambition of, for example, China to become a strong economic partner with Africa. HNA Group, parent of Hainan Airlines, invested in the Ghanaian startup Africa World Airlines. “However European airlines remain very well positioned to be the preferred partners. The bulk of long-haul traffic volume is still between Europe and Africa, and European airlines have an intimate knowledge and understanding of the African markets,” Blondel says.

Investing in local airlines is not novel for Air France or KLM. The latter has held a 26% shareholding in Kenya Airways since its privatization in 1995, while Air France has held stakes in several African airlines, including Air Afrique. The transnational carrier filed for bankruptcy in 2002 but Air France was selected as the preferred strategic partner for its successor Air Cemac, after ties with the initial technical partner South African Airways were ended. Plans and talks for the creation of a sub-region airline for Central Africa have been ongoing for more than a decade, but the carrier now appears to be nearing its operational phase. “Air Cemac is up and running. The capital is available, the president of the board of directors is known, the board has already convened. The CEO has been named,” Cemac President Pierre Moussa said on March 7. The capital of the company is divided among the six member states of Cemac—Cameroon, Central African Republic, Chad, Congo, Equatorial Guinea and Gabon—at 5% each. Air France-KLM Group holds 34%, and thus is the largest single shareholder, and 15% is held by Development Bank of Central African States. The rest is reserved for private investors in the sub-region.

“I hope it will become reality. The business case is attractive; it is a bit more complex because there are six countries involved,” Descazeaux concedes. But the joining up of six smaller countries is also the main asset of the Air Cemac project, he says. “You quickly reach scale and you can design an optimized network.”

Gambia Bird Airlines is another example of the renewed European interest to invest in a new African airline. The carrier launched last October and positioned itself as the country's new flag carrier, although it is 90% owned by the Berlin-based airline group Germania. In December a second A319-100, operated by Germania crew under an ACMI agreement, arrived in Banjul International Airport to support the expansion of scheduled flights across West Africa including Ghana, Guinea, Liberia, Senegal and Sierra Leone as well as to Europe (London Gatwick and Barcelona, Spain). The airline is continuously upgrading its systems and in April added an online booking facility on its website and a “low-fare calendar.” In the summer schedule Gambia Bird is operating a single aircraft and a reduced network. One A319 was sent to Germany in March for maintenance work and the aircraft is being used by Germania.

“There is definitely an upswing of foreign, mainly European investment in Africa. The reason for investing in independent, point-to-point projects like FastJet or Gambia Bird is simple: investors are targeting the hidden gold mine that is the African air market,” concludes Blondel.

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