Lack of funds, govt interference, corruption... reasons African airlines don’t do well
Inadequate capital, persistent government interference, corruption and inadequate operational competence are some of the reasons adduced for the poor performance of many national airline carriers on the African continent.
Among the major airlines that have failed are Ghana Airways, Nigeria Airways and South African Airways, forcing governments to seek strategic partnerships as part of measures to revive their national carriers.
For that to change, experts in Africa’s aviation industry have proposed some measures for implementation if governments on the continent want to run efficient and profitable national airlines.
Among the measures are good leadership and strict adherence to corporate governance structures, independent management and accountability.
The advice comes at a time when Ghana is making frantic efforts to run its own airline after the liquidation of its first national carrier, Ghana Airways, in 2004 and the collapse of Ghana International Airlines in 2010.
The two airlines failed because of some factors, including excessive government interference, lack of adherence to corporate governance structures, corruption, lack of capitalisation to augment depleting fleet and heavy indebtedness to suppliers and service providers, among many other factors.
Referencing Ghana, the Global business leader and Group Chief Executive Officer (CEO) of Ethiopian Airlines, Mesfin Tasew Bekele, said once the government decided to run a national carrier, measures to prevent government interference in running a national carrier must be put in place to guarantee profitability.
He explained that the airline business was different from other industries like banking because it required special competencies and experience, particularly in leadership, to run it.
“Ghana run its own national carrier for several years but, unfortunately, it became unsuccessful,” he said.
He told the media in an interview that “Several African airlines, not only in Ghana but in other countries did not succeed due to major factors such as interference from the government.”
Following the collapse of Ghana Airways and Ghana International Airlines in 2004 and 2010 respectively, Ghana has been without a national airline for international travel activities.
Both suffered challenges such as mismanagement, lack of operational competency, incessant government interference, inadequate fleet, financial instability and lack of clear-cut vision.
Mr Bekele said: “Once airlines are set up, they should be left alone without any interference to enable the managers to run the business profitably.
“Secondly the leadership must have experience in the field or discipline in managing costs. Any airline that does not manage its costs is bound to fail. This is our general advice to anyone who wants to establish an airline,” he added.
Ethiopian Airlines is reported to be finalising discussions with Nigeria and institutional investors to set up a national carrier for that country.
Against this background, Mr Bekele said Ethiopia was ready to support the Ghana government to do the same.
“We are finalising discussions with Nigeria so establishing a Ghanaian airline in Accra will be a good one and we are ready to support the Ghanaian government to establish a national carrier here.
The government has expressed interest to have a national airline but plans are far behind to realise that dream.
Recovering from COVID-19
Mr Bekele said the performance of Ethiopian Airlines’ during the fiscal year, which ended in June 2022, showed that the business was recovering fully from the impact of the COVID -19 pandemic.
According to him, during the fiscal year, the Airline carried over 8.7 million passengers, which generated US$5 billion.
That, he said, was 20 per cent more than the revenue generated during the pre-COVID period.
“During the last six months, our performance has been great and in line with our plan for the current fiscal year, by June 2023, we expect to fully recover from the impact of COVID-19,” he said.