Friday, January 15, 2010

Folly-Kossi: Espoused The Spirit Of African Unity

Mr. Christian Folly Kossi has served as Secretary General of African Airlines Association (AFRAA) in the last ten years driven by the tenets of a united Africa. As he steps aside end of 2009, he recounts salient aspects of his revolutionary stewardship

Q: You have served over the past 10 years as AFRAA Secretary General. What was your driving force during these years?

A: My generation in West Africa inherited Kwame Nkurumah’s ideology of African Unity. This dream has lived with me over the years. My job at AFRAA has been a fantastic opportunity to contribute to bring African nations and people together through appropriate air transport policies. As I am convinced that air transport is one of the indispensable pillars of Africa’s economic development, serving this section and advocating its interests at the highest levels across the continent was highly exciting, motivating and rewarding.

Q: As you step down as AFRAA Secretary General, what would you really say are your high points?

A: The decade I dedicated to the service of Africa has been immensely gratifying. Our organisation has transformed into a powerful think-tank with a face and a voice to represent it in all international fora and express its views to African Governments, continental institutions as well as industry conferences and the media.

AFRAA has gained full international organisation status and audience. As such it attends the African Union Heads of States summit and speaks at all conferences of Ministers in charge of Civil Aviation. The Association has been a strong continental advocate on all burning issues of the industry that include, for instance, the Yamoussoukro Decision implementation, brain drain, the need for a common air transport external policy, the EU Commission blacklisting, the rules and regulations of EASA and SAFA, ETS, to name only a few. Under my leadership, training has expanded from skills to management training.

AFRAA has also assisted member airlines to migrate from paper tickets to e-tickets and successfully pass IOSA audits. Last but not least, the Association has been instrumental in establishing strategic partnerships between Ethiopian Airlines and ASKY as well as between South African Airways and Air CEMAC. Other such North-South cooperation arrangements are already in the pipeline.

Q: Looking at your advocacy over the years, would you say harmony and cooperation are increasing among African airlines, and are there possibilities of mergers or mega African airline alliances just like the major global alliances?

A: We are seeing big progress in this regard. In addition to the partnership already mentioned, Kenya Airways has invested in Precision Air and recently, Air Burkina, Air Mali and Air Ivoire have signed a cooperation agreement which specifically indicated that it might lead to a merger.Even the promoters of the new Air Senegal are looking again for an African strategic partner. The preaching in the desert is starting to bear fruits.

Q: In your two terms as AFRAA Secretary General, would you say AFRAA was able to deal with volatile fuel challenge for African airlines, and what do you think is the best way to address this problem?

The fuel situation since I came to office has indeed been very volatile. However, the general trend over the years has seen an increase in fuel prices up to mid-2008. Even though there has been a sharp reduction in fuel prices in the recent past, it is envisaged that as the world economic and financial crisis get resolved, the price of fuel will again continue on its upward trend. Over the period from 2000 to 2008, the proportion of fuel costs to the total operational costs has been very significant and has been a major factor in determining whether an airline will be profitable or not. As a result, the major cost cutting initiatives have been aimed at ways and means to either minimize fuel usage or reduce fuel costs.

AFRAA has embarked on a number of activities to alleviate the volatile and increased fuel price situation. AFRAA introduced some consultants and experts on fuel hedging to member airlines so that they can advise on appropriate strategies for fuel cost management. A number of airlines successfully adopted fuel hedging strategies although some of these received bad press following the recent sharp decline in fuel prices. In addition, AFRAA worked hard to introduce joint fuel purchase which unfortunately encountered some hitches but which some of our member airlines who are in AACO are enjoying. Furthermore, AFRAA has encouraged airlines to renew their fleets so as to use modern fuel-efficient aircraft. Indeed, a number of airlines have embarked on massive fleet renewal which has been very beneficial in terms of optimizing their fuel usage. Ultimately, fleet renewal may be the most efficient long term strategy to reduce fuel costs and we believe this is the way to go. However, all the other strategies such as sensitizing all relevant airline personnel about effective ways to minimize fuel usage, fuel hedging strategies and joint fuel purchase all add up to a holistic way of tackling the challenge of increasing and volatile fuel costs. AFRAA has also undertaken some training programmes, in some cases in partnership with the International Air Transport Association (IATA) on the strategies to manage and reduce fuel costs. Through the Technical and Operations Committee, information concerning ICAO’s proposals on operational strategies to reduce fuel usage has been disseminated to AFRAA member airlines for their implementation. These strategies include advice on engine maintenance and prevention of performance deterioration, weight reduction, air traffic management, minimizing non-revenue flying, efficient flight/route planning, take-off, climb, cruise, descent and landing optimization strategies as well as load factor improvement.

Q: Would you say, over the past ten years, that AFRAA lived up to its bidding as Africa’s frontline airline body, and what are the key challenges of AFRAA at the moment?

The fight is still on. The dream never stops. As long as African airlines do not repossess the fair share of their markets almost totally lost to their foreign competitors, the battle must continue.The Association needs to further sensitise African Governments and continental organisations on the burning issues of the airlines which require that a sub-committee of the Ministerial Conference organise itself to periodically hold talks with European Union, the USA and all other emerging economic powers. It is only through bloc-to-bloc negotiation that Africa can rebalance its position on international air transport and have the interests of its airlines appropriately defended.

Q: You have championed the concept of the Club of Ready and Willing States to operationalise the YD. Would you say that AFRAA has done enough to help the implementation of the YD on the continent?

A:I believe AFRAA has put significant effort, time and resources in the promotion of the implementation of the Yamoussoukro Decision. AFRAA played an active role and contributed in the drafting, preparation and negotiation of the Decision. It has played an important advocacy role in promoting the Decision among its members and African Governments.

Following adoption AFRAA was one of the first organisations to convene a continental conference dedicated to the implementation of the Yamoussoukro Decision.

AFRAA is an active member of the various continental and regional organs entrusted with monitoring and supervising of the implementation of the Yamoussoukro Decision such as the Monitoring Body of the AU, the Air Transport Board of ECOWAS and of COMESA. We have consistently and unwaveringly insisted on the full implementation of the Decision on every opportunity and at all forums.

Unfortunately despite all AFRAA’s efforts implementation has not progressed as we all desire. One of the major stumbling blocks has been, in AFRAA’s view, the disparity in the level of development of air transport among African States. Some States have airlines that are effectively competing not only regionally, but internationally, while others are struggling for survival or some even have no airlines. As a result, we have realised that it may not be practical to expect that all the 53 states implement the Decision at the same time.

Experience in implementation of other programs in the region shows that a differentiated approach where those who are ready and willing lead the way has been successful. That is why in collaboration with NEPAD we propose the CREW. This is not intended to replace the existing continental and regional implementation process but to complement it and kick-start the process. The Club is non-exclusive and open to all those who wish to join at any time, nor is it intended to replace existing organs entrusted with implementation which seems to be the concern of some of the organisations.

We have received positive responses from several governments and NEPAD which together with AFRAA initiated the concept has agreed to launch the Club early 2010.

Q: NEPAD says it is re-branding to focus more on aviation development and working with continental institutions like AFRAA and AFCAC in promoting implementation of the Yamoussoukro Decision. As you leave office now, what do you think of the expected synergy?

A: From inception, NEPAD was meant to be the economic arm of the African Union which should spearhead the economic development of the continent in all key sectors that naturally include air transport. For years, it has failed to do so. Now that under a new leadership this critical development institution is waking up and showing interest in air transport and AFRAA, we happily welcome them. As I have a personal friendly relationship with the new CEO of NEPAD, I will make sure that I introduce my successor – since I believe that the partnership of AFRAA with NEPAD can bear fruits beyond the YD implementation.

Q: Liberalisation of the air transport industry is becoming popular globally and is spreading to Africa. How should African airlines position for this trend?

A: Liberalization is unstoppable. We ought to organize ourselves to deal with it. AFRAA’s constant recommendation is to consolidate and address the issue of our small size so that with larger carriers or group of airlines we benefit from economies of scale and better cover our continental domestic markets.While the airlines are doing this, the States should refrain from according 5th freedom rights to their international competitors. In most cases, it is impossible for our airlines to enjoy the same facilities overseas.

Q: Considering your efforts to boost funding support for African airlines, would you say the African Development Bank is giving adequate support to African airlines even after the High-Level meeting in Tunis in 2005 with AFRAA on modalities of working better together?

A: It is a strong view of AFRAA that air transport development in Africa requires the setting up of a special airline development fund. The association proposed this project at its Annual General Assembly in Tripoli in 2003 and requested the States to contribute to the funding of the feasibility study. As no progress was made we organized together with African Development Bank and African Union, an airline CEOs High Level meeting in Tunis in 2005 with the objective of further sensitizing the donors through ADF on the need to financially support the airlines as prerequisite infrastructure for the continent’s economic development. Up to now, the message is yet to pass across.

Q: Would you say AFRAA did enough to help address issues of external foreign policies which could adversely affect African airlines such as the European Emissions Trading Scheme, among others?

A: AFRAA scans and monitors regulatory developments internationally particularly in the major aviation markets such as the EU and the US and regularly briefs its members on these developments and their implications to African airlines. Wherever necessary, AFRAA also brings issues related to these developments to the attention of intergovernmental organisations such as the AU, AFCAC and RECs as appropriate.

AFRAA in this context has limitations. As a non-governmental organisation it has no direct access to governments and approaches governments through sister organisations such as AFCAC or the AU and RECs.

AFRAA was instrumental in bringing to the attention of the AU, AFCAC and the RECs the issue of the EU so-called “Community Designation Clause” and its implication to African air transport. It strongly advocated for a common African position on this matter and was instrumental in the preparation of “the AU negotiating guideline” which was adopted by the Ministerial Conference held in Algiers in 2008. Unfortunately despite the great effort and contrary to the strong advice of AFRAA the instrument was adopted as a non binding guideline thereby effectively reducing its usefulness to member States and the airlines.

With regard to the EU-ETS, we have worked closely with AFCAC which has been coordinating a common African approach to the issue. We share the same view with AFCAC on the matter which supports a global approach to aviation emission and opposes a unilateral solution as well as supporting ICAO as the lead organisation in matters relating to aviation and environment.

AFCAC and the African representative in the ICAO Council have been promoting the African position which also is in line with the position of the majority of States other than the EU members.

Despite the near-universal opposition to the inclusion of non-community carriers in the EU scheme the EU has gone ahead and adopted a regulation that imposes its emissions scheme on non-EU airlines effective 2012. Furthermore, in preparation for the planned implementation in 2012, it has directed all airlines to submit their emission reporting plan and data by August 2009. AFRAA, in line with the position of IATA has advised African airlines not to submit their plan under protest unless they are strongly supported by their governments.

We have also called on AFCAC to bring the issue to the attention of their member governments and plan to work together in coordinating a response. In the meantime, we are hopeful that the Copenhagen Conference in December 2009 on Global Environment would provide a clearer directive on aviation emission and bring the EU within a global framework.

Q: A number of African airlines have placed orders for new aircraft, yet many are not doing the same. Would you say the rate of new aircraft acquisition is good enough for the continent to meet its air transport obligations and play effectively in global aviation industry?

A: Indeed, a number of African airlines have placed orders for new aircraft. Some of the aircraft orders are quite impressive and the aircraft manufacturers need to acknowledge the significant market that Africa represents. The list of airlines that have modernized their fleet is long - suffice here to mention a few, namely South African Airways, EgyptAir, Ethiopian Airlines, Kenya Airways, Royal Air Maroc, Afriqiyah Airways, Libyan Airlines, Tunis Air, LAM Mozambique Airlines, Precision Air, TAAG Angola Airlines and Air Seychelles. Since the African continent is one of the few areas with good growth prospects, aircraft and other suppliers need to facilitate the modernizing of African fleets through availing financing and avoiding the imposition of higher costs since the continent has largely adopted IOSA and many countries have acceded to the Cape Town Convention. There are some airlines that are not renewing their fleet and are still utilizing the aging and fuel-inefficient aircraft. Apart from the higher fuel costs, these old-generation aircraft create adverse impact to the environment not only in terms of greater emissions but also the noise signature. The reason for these carriers not renewing their fleet is largely due to lack of financing because of their small size and small markets. AFRAA has consistently advocated the consolidation of the industry since it is a huge challenge for the small carriers to survive in a highly competitive operating environment. All in all, we are gratified by the new aircraft acquisitions although we still see a lot of room for improvement particularly among the small carriers

Q: As the recession is expected to abate, how can passenger and cargo traffic in Africa be revived, and how can airlines encourage more air travellers in Africa?

A: Despite the recession, the intra-African market is booming and the overall impact of the crisis on African economies tends to be not too heavy. The first move should be to develop more air services across the continent. There is an untapped goldmine on this continental domestic market; in many cases, intra African travellers still continue to transit through Europe to their various destinations. In the cargo business, most Africa airlines are not proactive. These markets ought to be targeted and repossessed. Naturally, AFRAA advocacy is to get all African Governments fully liberalize market access for African carriers so that competition among them drives down air fares and promote intra-African trade, business trips and tourism.

Q: Looking at the progress in the Middle East and Asian markets, how can Africa’s air transport be made more vigorous as an emerging market?

A: In addition to our recommendation here above, Africa should clearly realize that commercial and the business centre of the world is moving east. It is the duty of the airlines to establish the air links that would facilitate African business deal with this new economic power houses. European airlines are overwhelmingly dominating Africa/Europe routes; we have not taken any advantage when the American carriers suspended their operations to Africa till they are now coming back. We should not miss the Asian market opportunities. African airlines must look east right from the Middle East and onwards before the Asian carriers start operating into the continent’s market. Development opportunities are great out there.

Q: As the outgoing AFRAA Secretary General, what is your general assessment and projection for the air transport industry especially the airline industry in Africa?

A: In the northern part of the continent, the airlines will pursue their development and expansion due to the dynamism of their oil and tourism industries. In the coming years, these airlines will all operate across the continent, all the way down to South Africa. A big restructuring of the industry will happen in Sub-Saharan Africa, Ethiopian Airlines, Kenya Airways and South African Airlines will consolidate their operations and overwhelmingly dominate the market. There is room and potentials in West and Central Africa, Nigeria and DRC Congo included, for 2 to 4 other powerful airlines to emerge. All the other African carriers will be restricted in the best case to domestic and intra-regional routes. Even then, their unique choice will be to join an African Alliance grouping or disappear.

Source: Aviation and Allied Business Journal

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