It’s no coincidence that two of Africa’s biggest economies – Nigeria and South Africa – lead the way in terms of the continent’s most developed private aviation markets.
It’s not rocket science – the more money in a particular market, the more opportunity, one would think, there would be for a sector that relies heavily on high-net-worth individuals and multi-national corporate entities that have the financial means to make use of the benefits that private aviation offers.
As a result, this travel industry sector is a useful gauge when measuring economic climates and prevailing trends.
“Business aviation is a barometer of economic development, so we act as strong advocates too for the industry as an enabler,” said Tarek Ragheb, Founding Chairman of the African Business Aviation Association (AfBAA) in 2015.
Ragheb, a former Senior Vice-President at Gulfstream, set up AfBAA in 2012, as a means of ensuring that operators, financiers, lessors, owners, FBO and flight service providers had a voice. AfBAA seems to be gaining traction in the market, although it’s a little surprising that it has taken this long for the industry to seemingly come together.
Maybe it’s time for the African private aviation industry to kick on and realise the potential it has to make a material impact on the continent’s business travel sector?
“Ten years ago business aviation usage was limited to governments and heads of states, but in the last five years it has developed into an essential means of transport for the international business executive wishing to travel in a convenient and efficient way to the ever-increasing network of business locations around Africa,” says Rady Fahmy, CEO of AfBAA.
Could the African business travel community finally be waking up to the benefits that private aviation offers and developing a more acute understanding of how much their time is worth?
The jury is out, although Fahmy touches on another aspect – that of changing travel patterns and an evolving approach to business aviation.
“The current population has heightened travel requirements, as do the business executives who are supporting the economic growth,” he says.
That African economic grow this largely off the back of the natural resources the continent enjoys, but times are tough. South Africa finds itself in political turmoil, while at the same time its economy is struggling, with projected growth of less than 2% this year. Nigeria also finds itself in a state of flux, with a new political regime still flexing its muscles, an economy hit hard by a falling oil price, a currency under pressure, and the threat of Boko Haram terrorist activity. Kenya, in turn, is also coming out of the doldrums after a challenging few years, mainly due to terrorism and the knock-on effects of the Ebola crisis.
Three of Africa’s biggest economies and three hardly encouraging economic stories to tell, whilst the industry’s other big players, Egypt and Morocco, are also not without their challenges, and Angola has been hit hard by the plunging oil price.
No surprise then that the African private aviation market has felt the pinch.
“The pre-2008 days of simply being order-takers are long forgotten,” says Justin Reeves, CEO of Comair Flight Services, which has branches in Johannesburg and Cape Town, and offers aircraft charter, management and flight support services. “Being a dollar-based industry, there is no doubt that the local market is under strain with the weak Rand. If you’re paying in Rand, then private aviation is becoming pricier than ever and each sale we make becomes a negotiation.”
“I have noticed that both the local and foreign market seem down from last year,” says Dylan Coppard, CEO of South Africa-based Angel Gabriel Aeronautics. “I would say by 20% or so. At the beginning of last year we were still recovering from the Ebola stigma, so I was optimistic that we would see a rebound by now.”
Maybe no rebound just yet, as potential customers tighten their belts and those who are prepared to spend want a little more ‘bang for their buck’.
Or as Stephen Paddy, Marketing and Sales Director for ExecuJet Africa, puts it:“There is downward pressure on margin and upward pressure on service quality.”
Paddy points to the size of ExecuJet – a global private aviation player with a presence in Europe, Africa, Asia, the Middle East, Australasia and Latin America – as one of the reasons why ExecuJet has managed to sustain itself.
“Because of our size and experience we have been able to weather the storm, when some of the small players in the industry have had to call it a day,” he says.
Federal Airlines may not have the size of an ExecuJet, but it has been in the South African market for some time, and whilst its focus remains the leisure travel industry, offering shuttle, scheduled and charter services from its base at O.R. Tambo International, including connections to South Africa’s game parks, it does see its share of corporate business.
According to Commercial Manager Nik Lloyd-Roberts, Federal Airlines has seen “fantastic” growth in its leisure business, but the same can’t be said of business travel.
“The corporate market is stagnant,” he says. “Corporates in South Africa have tightened their belts, in terms of looking at private aviation solutions to meet their company needs. We still see corporates coming through with private charter requests, but there is also a lot of competition out there.”
Not everyone, though, has a less than dim view of the African business aviation market and its current prospects.
“The business in South Africa has been gradually growing and we see Africa as such an important continent that we opened an office in Johannesburg in March 2015 to support the increased demand,” says Mark Abbott, a partner at Vertis Aviation South Africa. “The team sees most business coming from South Africa, but we also handle government flights from across the continent.”
Where are the big players?
Asian Sky Group released its findings on the state of business jet fleets in Africa recently. It found that most key African economies experienced more than three percent of real GDP growth in 2014, with an expectation of at least double that in 2015. Business jet growth in Africa, however, is lagging behind this economic growth, suggesting that African business aviation is poised for some significant expansion.
From a start in 1964, the Africa business jet fleet has grown to 524.
South Africa enjoys the largest fleet with 167 (31%) planes and is the only African country in the ‘Top 20’ fleets of the world. The second largest African market is Nigeria with 19% (97 aircraft) of the market.
“Nigeria and South Africa are often classed as the most buoyant markets,” says Fahmy. “They compete with each other in terms of aircraft sales and movements. South Africa is the more mature of the nations in terms of business aviation which has been driven by the earlier economic growth of the country.”
According to Segun Demuren, CEO of Lagos-based EAN Aviation, the Nigerian private aviation industry has grown by 400% in the last 10 years. He says that the Nigerian business aviation market is expanding, not only in terms of corporate jet users, but also in the fields of medevac, surveillance, logistics, agriculture, cargo, security and rescue services. To strengthen his argument, Demuren points to the fact that in 2015, 25% of the Nigerian annual aviation income, $685 million, was generated by the business aviation market.
That being said, this industry is currently feeling the effects of a Nigerian economy under pressure.
“The continued drop in oil prices experienced in recent years has brought about shortened government revenue in dollar terms and by extension spending for capital expenditure, resulting in a contraction in the economy,”says Demuren. “This of course has negatively impacted most businesses and resulted in several cost cutting measures which include downsizing and reduction in business trips.This has resulted in an over 30% reduction in charter bookings compared to last year.”
Safety is a key issue in private aviation, and South Africa has a good reputation for offering safe service to customers. In some cases, it appears that many clients would rather shell out a bit more cash to charter an aircraft from South Africa, rather than using a company from another country.
“In some cases, clients aren’t willing to take the risk of an unsafe service and will pay for the dead leg of the journey to get a South African plane and crew to their point of departure,” says Roberts.
Safety was one of the key take-outs from March’s Nigerian Business Aviation Conference in Lagos, with a post-event release stating that, “developing safety procedures and a robust infrastructure to support them is essential to the growth of business aviation in the region. Examples of GSM masts randomly placed, airports using out of date charts without being aware, and the lack of information about services available, all mean that operators must do their research to operate safely.”
Reeves would agree on the issue of safety, but has an interesting take on the subject, as it relates to private aviation in South Africa.
“I’d say that SA still tops the continent in terms of safety and quality charter aircraft, but Nigeria and Angola are ahead of us when it comes to cutting out the bureaucracy we encounter with our Department of Home Affairs, SAPS, SARS, Port Health, National Intelligence Agency etc, and until we do so, we will continue to fall behind in making private aviation a booming industry,” he says.
Returning to the list, Egypt occupies third place with 8%(41 aircraft) of the market. The remaining countries in the top 10 include Morocco (29), Angola (28), DRC (17), Gabon (12), Kenya (12), Libya (12) and Algeria (11).
“On the east coast of Africa, Kenya has a vibrant business aviation market,” says Paddy. “On the west coast, Angola used to be a very lively market but it has been severely impacted by the low oil price.”
“The Nigerian market is also experiencing some difficulties at the moment with the oil price being what it is, but it remains a good market for the large jets.”
Abbott has also noticed a slowing of activity in Nigeria and Angola, but says other markets are picking up.
“Previously, all the requests used to come from two or three countries, and now we regularly receive requests from across Africa,” he says. “I think that as the economies grow we will continue to see increased interest.”
However, for that to happen, according to Paddy, the African perception of business aviation will have to change.
“Other regions see business aviation as a commodity or a tool, and they use the tool to the best of their advantage,” he says. “If Africa saw private and charter flights more as tools, then the continent could grow faster.”
And that’s really the nub of it.
What does it cost?
To give you some idea and starting point:
“A popular route is Jo’burg – Cape Town, but pricing depends entirely on your preferred type of aircraft and number of passengers. Our most economical option is the Pilatus PC-12 turboprop, which can carry eight passengers in a luxurious business class cabin to Cape Town in three hours. For a Friday to Sunday weekend return flight, it would cost around the R95,000 ($6,000) mark, depending on any out-of-the-ordinary catering requests, number of nights, pilots and other variables. For a faster jet like the Hawker 4000 that does the same flight in about an hour and 40 minutes, it would cost around the R250,000 ($15,800) mark. Whilst it also has only eight seats, it is in a different class with a much quieter and larger stand-up cabin, is capable of flying to Europe with only one en-route fuel stop, and includes satellite phones, a full galley for freshly prepared meals by your private cabin attendant, and seats that convert into beds.”
Justin Reeves, CEO of Comair Flight Services
Onboard wi-fi?
“It is not as popular in the business aviation arena as one might have expected and this might be largely due to the cost factor. The service is usually satellite-based, which is very pricey to operate. So it is mainly used by our clients on the long intercontinental flights.”
Stephen Paddy, Marketing & Sales Director: ExecuJet Africa
“Proper in-flight wi-fi is still the luxury of luxuries due to cost. It is generally only offered in the larger jets where budget is less important than comfort and speed. The last wi-fi bill that I saw on one of our jets was $3,500 for a mere 370MB, so it’s in the awkward period that it will only become more affordable as technology advances. Until then it will not become a standard offering in the smaller aircraft, as the satellite equipment and installation costs can run into the millions and few passengers would use it at such a high cost for the bandwidth. For those however that aren’t budget constrained, it is popular and they enjoy the ability to stay connected.”
Justin Reeves, CEO: Comair Flight Services
“I think very few private aircraft in South Africa have onboard wi-fi. We don’t have it onboard any of our aircraft, and the reason for that is that it’s an extremely expensive retrofit. We would rather look at improving capability of the aircraft, in terms of onboard comfort.”
Nik Lloyd-Roberts, Commercial Manager: Federal Airlines
Cape Town to Host AfBAA’s Convention
The African Business Aviation Association will hold its inaugural annual meeting in Cape Town on 17 and 18 November. The African Business Aviation Conference (AfBAC) is expected to appeal to an international audience and highlight the latest business aviation developments in the region.Complementing the regular panel sessions, keynote speeches and presentations, the convention will include “fireside chats” with influential aviation leaders and extended networking opportunities. AfBAA will also use the meeting as a platform to launch a forum dedicated to remotely-piloted aircraft systems.The introduction of AfBAC is the first in a series of planned steps by the association to expand its events and networking opportunities, according to AfBAA Founding Chairman Tarek Ragheb: “By offering a variety of platforms from which to communicate, we are fulfilling our mission of promoting the understanding and benefits of business aviation in Africa. Creating forums for debate, discussion and development is a key part of the organisation’s function.”