'Excellent' 2016 result at Cargolux a team effort, says CEO Forson
Cargolux has filed a full-year profit of $5.5m on revenues of $1.75bn following a strong fourth quarter, ...
High costs and challenges in the African market are not dampening airline ambitions to grow their networks throughout the continent.
Air France this week launched a flight between Accra, Ghana and Paris, while Cargolux noted that it hopes next year to build up an East African network.
However, economic changes, as well as competition, means flexibility must be an essential part of any operation.
“The agility to go from one market to another is important,” said Noud Duyzings, director Eastern and Southern Africa for Air France KLM.
“We briefly put in a service to Port Harcourt, but when the oil and gas market took a bit hit, we stopped. The only thing you can do then is redeploy capacity.”
He added that capacity in Africa could be pretty volatile: “I see carriers putting in capacity because they don’t know where else to put it. I can’t think of an industry where the competition is so intense – but we are used to it.”
Freighters are key to the African market, and support flexibility, he believes.
“Freighter business is perishables, and oil and gas – and that’s Africa, so that’s where we deploy them,” said Mr Duyzings.
“We do a rotation, so we are not dependent on, say, southbound traffic to Nairobi in order to pick up northbound traffic from Nairobi. That’s an advantage of offering freighters.”
Air France-KLM took out two weekly freighters – but that capacity was quickly filled by other airlines.
“We think there is 300 to 400 tonnes of overcapacity out of Nairobi,” he said.
He added that competition in the South African market saw yields drop 30-40%, “a tremendous blow to the bottom line”.
The carrier takes high-value imports into Johannesburg and brings perishables out. Mr Duyzings noted that export markets depended to an extent on government support.
“Ethiopia is doing a good job and Kenya understands the importance. Rwanda is also focusing on air freight and perishables – they are growing roses and avocados. They know they need infrastructure to be a good exporter.”
One observer, speaking at Air Cargo Africa in Johannesburg last week, added that lower air freight prices had led to some modal shift as avocados switched from sea to air.
Cargolux, meanwhile, told media it had an eye on the gap in its network in East Africa, after West Africa suffered declines over the oil and gas business. It is particularly interested in Uganda, Lusaka, Harare, it said, as well as opportunities in oil, gas and LNG in Mozambique
“We are generally always looking for new opportunities, including Africa,” said a spokeswoman. “Particularly East Africa, since we could diversify our northbound traffic.”
Traffic rights in Africa can be problematic, and are thought to have been behind Cargologicair’s swift exit from the African market.
The spokeswoman added: “Traffic rights to and from Ethiopia are particularly hard, if not impossible to get. The restrictions on what commodities you can ship out of Ethiopia would make it almost impossible to operate northbound profitably.”
But increasingly focused governments could boost opportunities for the continent.
“There is so much potential here, and people are talking about the right things. We will see much improvement here over the next 10 years,” concluded Mr Duyzings.