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Are the fastest growing African economies waking up to business aviation?
The International Monetary Fund has revised its 2018 predictions for the 'fastest economic growth' on the continent of Africa. Ethiopia is top, followed by the Ivory Coast, Rwanda, Senegal and Tanzania. We speak to operators and support companies in these countries to find out how the private jet industry is developing.
Cessna Caravans and Caravan EXs are by far the most popular models that are based within the five countries predicted for fastest growth in Africa this year. There are very few private jets registered; local operators gravitate towards turboprops where the Caravans dominate.
Read this story in our July 2018 printed issue.

The majority of its people may be farmers but the wealth of the African continent comes mainly from oil and minerals. Recent drought and price slumps have put a brake on growth but change is afoot, and there are five bright stars in the African firmament whose sustained growth rates should exceed five per cent according to revised International Monetary Fund (IMF) predictions: Ethiopia comes top, followed by the Ivory Coast, Rwanda, Senegal and Tanzania. Most of them import oil, their cities and consumer classes are swelling and they are seeing benefits from mobile banking. Some have sound economic policies and most are holding down inflation. Ethiopia has a new railway, Senegal a new airport.

But there are risks: heavy government borrowing to replace oil revenue and fund capital projects; the world economy and its trade wars could flatten demand for raw materials; and there's politics, where elections feed on public budgets and can cause months of uncertainty. The World Bank thinks a drop in commodity prices, higher-than-expected global interest rate rises and ongoing debt mismanagement by some countries could set the continent back. But its top performers for 2018 are non-commodity intensive economies.

How does this impact on the business aviation community? One of the greatest challenges faced by aircraft owners and operators is that of support, says ExecuJet vice president Africa Gavin Kiggen. "For a business aviation market to truly thrive you need proper support for the various aircraft, especially when it comes to maintenance. With the pre-owned market being rather depressed the past few years, the initial cost barrier to entry for new owners has basically been wiped out, making ownership possible for burgeoning property and tech entrepreneurs."

He says it is difficult to put exact numbers to the level of aircraft ownership in these regions as an aircraft may not necessarily be registered in the country it is based in. Owners may prefer offshore registries to create more lucrative tax opportunities. "However, should you stroll along any flight line at an established African business aviation airport you will note the importance of so-called 'ramp presence', with large intercontinental business jets clearly highlighting the importance of the owner," he adds. These types mostly include aircraft from the three major long-range business jet OEMs: Bombardier, Gulfstream and Dassault.

In the past the age of an aircraft was not a factor in the acquisition process, however owners now see that ageing aircraft incur increased maintenance costs and more down time. "There is certainly a move to more modern and efficient aircraft," Kiggen continues. And while there are certainly aircraft that have shown their mettle in the African region for scheduled commercial airlines, most notably from the Boeing stable, with the increase in point-to-point rather than hub-to-hub travel, various smaller aircraft have come to the fore.

African aviation infrastructure is still largely in a developmental stage but has improved drastically. The governments have realised that it is critical to bringing development into their countries. Where there is a lack of airport development Kiggen is seeing oil and gas companies develop their own runways for interim operations, especially when they have completed the exploration stage.

Luanda-based Bestfly managing director and CEO Captain Nuno Pereira says the company flies charter operations all over the continent, landing in at least 60 to 80 per cent of Africa's countries. Sometimes it transports state officials and politicians, but the majority of the time it's business people from oil companies and large supermarket chains. "In Africa there are supermarket chains called Shoprite and PEP, others too, that focus their efforts towards the lower income citizens. They fly a lot in the region opening new stores and so forth, and this is the type of flying we do, all over the continent," he says. Bestfly flights are a mix of ad hoc charter and medevac, with high-end passengers representing 80 to 90 per cent of his business. "But mainly we fly businessmen around the continent, developing businesses, new projects and so on, things that really impact the day-to-day life of the citizens," he says.

However the company is adapting its strategy so that it becomes less dependent solely on its Angolan business. "We are looking to go after new markets in the region that can sustain the continued growth of the company. We have an aircraft based in the north east of Africa, an Angolan aircraft that we placed on an ACMI contract there. That is increasingly our strategy, to be an Angolan company with an international reach."

He goes on to explain that if some of the population are anti business jets it is because they really don't understand the impact these flights have on their daily lives: "Maybe they are not utilising the services, but one thing is for sure, these flights have an impact not least because the new jobs that are being created by these top end individuals will affect everyone."

Ethiopia – the most populous landlocked country in the world

EBAN's Handbook data currently shows that most business aircraft and helicopters in Ethiopia are based at Bole International in Addis Ababa. Abyssinian Flight Services has a Bell 407, some Caravans and Diamond Twin Stars that it uses for passenger, leisure, freight, air ambulance, utility, survey and photography operations. Trans Nation Airways has Bell 222 and DHC-8-200 types; National Airways has an Embraer ERJ-135; Aquarius Aviation a Commander 690A; East African Aviation has a King Air 300 and Zemen Flying Service has a Caravan.

Ethiopia is predicted by the IMF to achieve the fastest economic growth in Africa this year at 8.5 per cent, and there is an expectation that it will double within the next seven years. Its economy is concentrated in the services and agriculture sectors and is boosted by a number of large-scale infrastructure projects including the Grand Renaissance dam and a railway network. But, while it has seen high GDP growth, per capita income remains one of the lowest in the world. Much of the investment in Ethiopia has come from overseas and the country has been selling its state-owned businesses to outside investors like China, which is not only its biggest foreign investor but also its largest trading partner.

Kiggen says: "It is clear in Addis Ababa that there is a focus on construction and manufacturing. In most of these African regions there is increasing urbanisation, which in turn drives development. Addis Ababa sees a lot of government delegation movements as the headquarters of the Africa Union is based there, and most of the heads of state meetings also take place there, so it has a distinct advantage." He adds that Ernst & Young's foreign direct investment (FDI) inflows research for 2017 reports that of the $7.1 billion FDI that was invested in the East African region, 54 per cent is being directed towards Ethiopia. Add to that a new head of state who is also 'business friendly' and it creates an atmosphere for growth and opportunity.

The recently signed Single African Air Transport Market (SAATM) agreement by 23 of the countries of the African Union (AU) to open the skies over the continent will go a long way to boosting traffic, lifting economies and creating jobs. The continent is home to 12 per cent of the world's population but accounts for only one per cent of the global air service market. Kiggen adds that with Ethiopia especially, there is a strong belief by government that aviation is a key driver of the economy.

For some time, Ethiopia partially restricted other airlines flying into the country in order to develop the state-owned Ethiopian Airlines. Now that regulations are being relaxed there is more competition and this translates positively for business aviation. "There is an open economy with a new prime minister, and a very active continental body that is trying to reshape the region's narrative as a 'Dark Continent'," he says. "We believe business aviation will benefit from the opening up of skies and borders, enabling business interests from Asia, the Middle East and Europe to flow into the region."

Pereira says aviation in Ethiopia is growing, but this is mainly being led by the commercial airline sector. Ethiopian Airlines represents a significant chunk of the national GDP and Addis Ababa is used as a main hub for East Africa. He says its aviation industry differs to that of the rest of the continent: "They have a different structure of commercial aviation that is well established, and that means there is less need for business aviation. If you have a strong network and lower cost to fly commercially, that is what happens, and it reflects on business aviation. However, if the economy continues to grow, the business aviation side of things will naturally grow as well."

Universal Aviation manager, operations and administration, Tanzania, Hussein Qubah adds that while Ethiopia is a hub that serves as a major aircraft maintenance point in Africa, political instability has particularly challenged operators; a state of emergency ran from October 2016 until August 2017, and another has been in place since February of this year following the resignation of the then prime minister. Most executive flights that do come in are going to Addis Ababa for AU summits he says, or carry those managing ongoing infrastructure projects, and tend to be in Gulfstream Vs, Boeing 737s and Falcon 50s. Problems facing operators include difficulties in paying fees and obtaining permits, an inability to operate to multiple airports and limited airports of entry, which mostly affects operators with short range aircraft. "Bureaucracy continues to be a challenge," he says, "but there is easy access to foreign currencies in Ethiopia." He feels that reform of the entry visa process is important but political stabilisation is vital.

Ethiopia's Krimson Aviation started off as a flight support company working alongside some of the smaller international trip support companies, supervising their flights on an ad hoc basis. CEO Dawit Lemma says: "We started three years ago and in our first year I would say we handled no more than four flights in the whole year. We have significantly grown since then and now we are actually competing with the large global trip support companies. Indeed, we have surpassed one of our largest competitors this year for the number of movements in Ethiopia so far, so we are proud of that."

The company has recently expanded into charter brokerage. He explains: "A local operator here needed some help selling seats on its aircraft and so we came on board to develop its operation." The company also offers MRO solutions, as more often than not local operators are at the mercy of the OEMs who he says will attempt to extract as much from the work as possible via extra services. Krimson is not a maintenance company, but as a former aircraft engineer Lemma does have experience. But he says that his core business is trying to help local operators to get the best solutions for their needs, as an aviation support services company.

Business aviation in Ethiopia is not the preserve of the local population and Lemma says the sector would be best described as commercial general aviation. There is not a single private jet that is registered locally; local operators have only turboprops of which Cessna Caravans are the most numerous. There is no business aviation 'culture' and aviation stakeholders regard the Caravan and the B787 as the same thing.

Other challenges local operators have are a lack of access to finance and a burdensome regulatory environment. "I'm actually very nervous about the sector, I feel that it has stagnated. We only have six operators and all but two are really struggling," Lemma says. Ironically, Ethiopia has a very strong commercial aviation culture and its national carrier, Ethiopian Airlines, is a world renowned carrier.

However, he feels the potential for business aviation in the country is huge. Its economic growth is driving foreign investment and tourism as well. Investors, businessmen and tourists who are looking to travel around Ethiopia, as well as in and out of it, have to fly because Ethiopia is very mountainous and is poorly served by ground transport. "Average altitude is 3,000m which makes travelling by road very difficult, and the train system is only just being rebuilt, so flying is the only way to get from A to B quickly and efficiently," he says.

There are only four points of entry in Ethiopia, and the majority of investors and tourists arrive at the capital, Addis Ababa. Once the aircraft lands it cannot perform cabotage and fly domestically, and as neither investment opportunities nor tourism are limited to Addis Ababa people have to use a local operator. This, he says, will open up a wide range of possibilities for local operators and drive the development of the business aviation industry.

"I've been in the aviation industry for just over 18 years and that is long enough to know that operating aircraft is not where the money is," says Lemma. "The provision of services to the aircraft is where the true profit margins are." He hopes to build an FBO in Ethiopia since he says there are none in the country at the moment, but current regulations do not permit a private company to participate in ground handling or MRO services. Once things change he hopes to have a full service FBO with ground handling, ramp services, aircraft management and light maintenance. "Base and heavy maintenance is not so attractive when you think about the amount of work and investment that is required versus the margins," he adds.

Ivory Coast, home to the world's largest church and birthplace of Didier Drogba

The Ivory Coast is among the largest economies in the West African Economic and Monetary Union and the IMF forecasts 7.4 per cent economic growth in 2018 thanks to the recovery in domestic and foreign stocks. With the help of the IMF the country has been able to collect more taxes and control government spending, which has lowered the budget deficit. Around two-thirds of the population works in agriculture-related industries; the country is the world's largest producer and exporter of cocoa beans and raw cashew nuts and is also a major player in the coffee and palm oil industries.

Jetex Flight Support has recently signed a memorandum of understanding with AERIA, the operator of Felix Houphouet-Boigny International airport, to be the exclusive operator and manager of a newly-built FBO in Abidjan, the country's economic capital. It will be the company's first FBO in west Africa and its second location on the African continent after Morocco. Jetex president (Europe) Salem Youssef says: "We chose Abidjan because it is an economic powerhouse for West Africa. It's a very urbanised and industrial city. We're excited to offer VIP services and become the first to do so in the region."

Air BP too foresees great things and has added six new locations on the continent, one of them also at Felix Houphouet-Boigny International airport. General manager Southern Africa Anthony Leon says: "With Africa set to be one of the fastest-growing aviation regions over the next 20 years, there is enormous potential for both business and commercial aviation. We will continue to invest in Africa."

Universal's Qubah says that the country relies on scheduled flights at present, and there are no common mission types due to there being no important natural resources or exploration projects. Here again there is a lack of suitable infrastructure and of local qualified personal.

But the Ivory Coast is a good location for international companies to base their west African HQs says flight support services company Astra Aviation director Philip Eyre, particularly for banks and oil and gas companies. He adds that business aviation here is not so much domestic but rather for intra-west African trips, and while demand across all sectors has grown, increasing commercial activity has restricted business jet growth, except when passengers want to arrange multiple country trips.

The Ivory Coast is one of the biggest markets for Bestfly's Pereira, which he reckons is down to its government making the right moves to stir the interest and confidence of foreign investors. "We have to keep our fingers crossed, because instability in our part of the world can create problems for the economy. Hopefully the Ivory Coast government can maintain its good progress," he says.

Diminutive Rwanda has a population of about 12.5 million

Rwanda's economic growth is predicted to be 7.2 per cent in 2018 according to the IMF, and the country's 'Vision 2020' has the goal of growth acceleration and poverty reduction through four thematic areas: economic transformation, rural development, productivity and youth employment, and accountable governance. Rwandan president Paul Kagame has set an example for Africa says Pereira: "From where they were 20 years ago to where they are now is an amazing story. Nowadays Kigali is a cosmopolitan city, and probably one of the cleanest cities in Africa: it has banned plastic bags."

Kiggen says that President Kagame is turning his country into a destination of choice for business on the continent. "What they have achieved since the civil war and genocide has been nothing short of a miracle," he says. The country is investing in a new and modern international airport and the US FAA has given approval for national carrier RwandAir to commence flights to the USA towards the end of the year. Kiggen says that President Kagame is a strong advocate for investment in his country, and is even known to meet business delegations there on an ad hoc basis.

Rwanda serves as an alternative base for east African businesses wanting to move away from Kenya and Ethiopia says Eyre. It is a regular conference destination, hosting AU and IMF level conferences, with a business-friendly government and a high end tourism sector specialising in gorilla viewing trips. But while the government uses business aviation for trips out of the country, all other activity is inbound. Indeed, the only fixed wing operator in Rwanda is the government itself. Government conference related flights and CEO level business activity is growing, but RwandAir is growing quickly too. The country is now more broadly accessible via scheduled flights and that is having a negative effect on charter operations.

Challenges exist in terms of multiple airport security checks and permits can be difficult to obtain, especially for rotary aircraft adds Eyre. Kigali International airport's terminal and ramp can be congested but the new airport should relieve this. He feels the government needs to make permit approval processes easier, and address the lack of hotel rooms now that conference activity has increased.

Qubah adds that there is interest in helicopter charters for gorilla tracking in Akagera National Park as well as aerial excursions around Rwanda and her neighbours. Kigali International airport-based Akagera Aviation, the country's first tourist operator, recently took delivery of two AW119Kx helicopters. The company has been operating an AW109 GrandNew and an AW139 since 2010 and says its four aircraft are perfectly suited to the hot and high conditions of the country. The new rotorcraft will provide a significant increase to airborne services nationwide, supporting local communities and the growing demand for tourism.

Senegal, whose capital was the original end point for the Paris-Dakar rally

The authorities hope that Dakar's recently-opened Blaise Diagne International airport will serve three million passengers a year. The country's economy is driven by mining, construction, tourism, fisheries and agriculture and the government is considering oil exploration projects. The IMF has predicted growth of seven per cent for 2018.

"This is not a country we do much work in," says Eyre, "but it has a stable government and is relatively peaceful, so safe for regional staff to be based there." It also offers reasonable connections with the rest of west Africa and Europe. "But the new airport is out of town, which will be a negative, and communications with the new airport are not as good as with the ground handling agents in Leopold Sedar Senghor airport," he says.

Dakar-based Arc en Ciel Aviation chief pilot Guillaume Nicot finds that Senegal's economic growth is not mirrored in its business aviation industry. He says the Blaise Diagne International airport development is not best suited for the VIP market; it may be new and beautiful but it is poorly situated. Arc en Ciel is postponing its own investment in aircraft and facilities for a couple of years and instead concentrating on its medevac operations. Nicot says for this year in particular the company's focus is staff training and achieving BARS aviation risk standards.

Tanzania experiences a decline in poverty

Ten operators have based aircraft at Julius Nyerere International airport in Dar-Es-Salaam according to EBAN's Handbook data. Cessna Caravans are popular; Auric Air Services has some, as do Newton Air, Zanair and Pelican Aviation and Tours. As well as Caravans, Coastal Aviation has PC-12s, Flightlink has Citation V Ultras, TanZanair has Beechcraft 1900Ds as well as King Air types, and Fly Safari Air Link has Citation Mustang and R66 types. Safari Plus has King Airs and Everett Aviation has AS355, AS365, AW139 and H145 helicopters.

At Arusha airport Caravan operators include Coastal Aviation, Northern Air and Zantas Air Services. Those who have added to their Caravan fleets include Air Excel with a Let 410UVP-E; Regional Air Services with a DHC-6-300; Tropical Air with an H125, a Let 410UVP and Piper twin pistons; and Zanair with a Cessna 404.

At Abeid Amani Karume International airport in Zanzibar EBAN has records for Zanair, which has a Caravan and a 404. Mwanza airport is the base for Auric Air Services' four Caravans.

With an overall population of around 58.7 million Tanzania is predicted to maintain a rate of growth of around 6.4 per cent this year. Private sector involvement in the country's development could help finance the government's ambitious investment plans, be a source of finance and innovation, and create jobs for new entrants into the job market.

Astra Aviation had planned to open an office in Tanzania but Eyre says its president had some 'anti-business' policies in place, particularly relating to the extractive industries, so it cancelled the project. Reportedly charter volumes are decreasing, and indeed the company has not had a single charter request for Tanzania this year.

Re-aligning business aviation against commercial services

Kiggen says there is yet to be interaction between commercial and business aviation in these regions. ExecuJet has held informal exploratory talks with East African carriers and a South African carrier regarding synergies, and feels that the more interaction that is created between business aviation and airlines, the greater will be the opportunity to understand the challenges and possible solutions faced by both.

However, he adds that the business aviation charter market is growing off the back of what has been referred to as the 'African Affluent'. These new clients are significantly younger than their European counterparts, with the average age being around 40 years.

Forty per cent of the African affluent are millennials aged between 21 and 34, and 71 per cent have a university degree or higher compared to just 56 per cent of their European counterparts.

"Social responsibility and being environmentally friendly are top priorities for Africa's most wealthy as they work towards a long-term sustainable strategy," Kiggen says. It is to be hoped that the fastest growing economies on the continent will lead the way in extending that interest towards business aviation.

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