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Reflex Eco Group – Ghana News

Antony Sedzro (Local journalist)

sedtony@yahoo.com

Introduction

Gone were the days when a business traveller flying to Ghana starts the journey two days ahead in order to be sure of not missing an appointment. Neither is it fashionable these days for someone travelling from Ghana to say Tunisia, to fly to Paris before connecting to Tunis. Similarly, a businessman can fly from Accra, the capital of Ghana to Lagos, Nigeria in 45 minutes for a transaction and return all within two hours.

All these are possible thanks to the boom in air travel in Ghana in particular, and Africa in general. According to figures from the Ghana Civil Aviation Authority (GCAA), the industry regulator, in the year 2000 there were 15 airlines in Ghana, but currently there are about 40 in number with others in the pipeline. There were 1.8 million passengers annually using the airport in 2011, but the figure has been projected to shoot up to 6 million by 2015.

In the past two months alone, at least three new airlines have started operations at the Kotoka International airport in Accra.

In June, Rwandair (the national carrier of Rwanda) commenced operations in Ghana and Nigeria; last month Middle Eastern flyer, Royal Jordanian airlines also added the two countries to its routes, hoping to cash in on the large number of Muslims in both countries. Muslims visit Saudi Arabia for Hajj pilgrimage as well as on business trips to Dubai. This week, a new domestic carrier-Eagle Atlantic Airline received its license to start domestic and regional routes in Ghana.

Already the big western carriers are present-British Airways, KLM, Lufthansa, Delta Airlines and Turkish Airlines and others. Africa and Arabian players include South African Airways, Kenya Airways, Ethiopian airlines, Royal Air Maroc, Emirates and many more are all vying for traveller’s dollars.

Reasons for Boom

So what reasons account for this growth in the airline industry?

African economies have being growing in the past few years. Africa’s average growth is projected at 5.5% this year, according to the IMF. Ghana’s economy grew by a whopping 14% in 2011, 8% in 2012 and is projected to grow by 7.8% this year. Compared to European and North American economies that are still recovering from the global financial crisis, these growth rates are attracting capital to Accra and Africa in general.

The growth is also fuelled by the country’s discovery of oil and subsequent commercial production in 2010. Already Ghana is Africa’s second biggest producer of gold and the world’s second largest producer of cocoa, the main ingredient for making chocolate. This growth is seeing a rise in middle class citizens who have savings to spend.

With a stable democracy and its peaceful nature in a sub-region known for its instability, the country is also attractive for business. A business-friendly environment makes it a gateway to the West African sub-region of 250 million people. Many West African countries have commodities that are attracting business travellers including Nigeria (oil), Sierra Leone and Liberia (iron ore and oil), Ivory Coast (cocoa), Mali (gold) and so on. Thus many airlines fly to Accra to pick up passengers to some of these countries.

“On our routes to West Africa, we have experienced a growing demand from the corporate sector over the past 12 months, and look forward to increased growth going forward,” notes Isla Moffett, Sales and Marketing Manager for Nigerian-owned Arik Air in an interview recently. The airline flies to many West African cities from its Lagos and Abuja hubs.

Domestic Growth

A decade ago, one of the quietest parts of the Kotoka airport was the domestic terminal section. These days, customers compete to stand in queues to be served. Until recently, only one domestic carrier (Citylink) was active on the market. Now four new operators are competing for customers in a manner never seen before. Indigenous Antrak Air leads the market with 39% share, Starbow, easyJet founder Sir Stelios Haji-Ioannou’s fly540 (which will soon be re-branded Fastjet) and Chinese-backed Africa World Airline’s (AWA) are all doing brisk business.

Kumasi, the country’s second largest city is the most patronised route. This is due to business people having operations there, the lure of the city’s tourist attractions and Kumasi natives living in Accra who have to return for funerals (funerals are big social events in Ghana). It is also helped by the presence of the country’s only technology university, KNUST, which attracts students from all over West Africa.

Takoradi, Ghana’s oil hub is also seeing significant growth. Almost all domestic airlines fly there and thee business segment of the market is said to be profitable. This is also aided by its proximity to Tarkwa, a major mining town that hosts firms like Anglogold Ashanti, Goldfields Limited and Golden Star Resources.

Challenges

Not all is rosy with the sector though. In April this year, British carrier Virgin airlines announced it will suspend its Accra-London direct route by September this year, a big blow to business travellers on that busy route. Virgin cited high cost of aviation fuel and difficult market conditions for the pullout, an accusation challenged by Ghanaian officials. Since then the cost of aviation fuel has been reduced. Virgin’s imminent withdrawal will hand a monopoly to British Airways on the direct Accra-London route.

Although the Kotoka airport boasts of one of the best safety records in the sub-region, some airlines complain of high taxes and inadequate infrastructure at the airport. Domestic airlines complain of poor airport facilities in the regions, especially the frequent closure of the Kumasi runway for maintenance.

Aside these few challenges, the IATA released its monthly aviation market trends for June 2013 and it made good reading for industry watchers.

“African airlines benefitted from strong domestic economic growth in key markets such as Ghana, Nigeria, Ethiopia and the Democratic Republic of Congo, to post growth of 11.2%”, the IATA June 2013 report said.

It went on to say that “although African airlines’ load factors (70.7%) still lag the global average by around ten percentage points, they have made consistent progress to close the gap this year, and in June, improved their load factor by almost three percentage points compared to June 2012”.

The Ministry of Transport in Ghana is also trying to keep up with this trend. The ministry is to set up a new national airline through a public-private partnership arrangement, build a new international airport in Prampram in Accra, and also transform the Tamale airport (in northern Ghana) into an international one through a $170million facility from Brazil.

With all these developments and an expected increase in oil production, the sky is indeed the limit for Ghana’s aviation industry.

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