What place for RAM in an African sky that is being reconstituted?

RAM, Kenya Air, Ethiopian Airlines… The big companies that dominate the West African market are starting to see new entrants.

After Air Sénégal a few years ago, it is the turn of Air Côte d’Ivoire to start its flights to Casablanca. Today we are witnessing a real realignment of heaven in Africa. Long dominated by big names such as Royal Air Maroc, Syrian Airlines and Kenya Airways, the African aviation sector is becoming an increasingly competitive space. With its new strategy, symbolized by a very focused institutional signature under the slogans: “Dream Africa” and “Meet Morocco”, Royal Air Maroc shows growing ambitions on the continent.

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After being shocked by the impact of the pandemic, like so many other companies, RAM aims to quadruple its business over the next fifteen years by purchasing ten new devices per year. The goal is to have a fleet of 200 aircraft capable of carrying 31.6 million passengers by 2037.

Africa is therefore among the priorities, as the Dream Africa campaign was deployed in 28 countries, including 17 on the continent. Another competitor we should take seriously is Ethiopian Airlines, with a fleet of 140 aircraft. A fleet that should almost double to reach 271 aircraft by 2035, with the company having notably announced the purchase of 84 aircraft during the last air show in Dubai. Ethiopian Airlines serves a network of 133 passenger destinations from its hub in Addis Ababa, making it the airline with the most flights in Africa. In recent years, airlines in South Africa and Kenya have in turn gone through a phase of financial turbulence, but they are still in the race. They, along with the two others mentioned above, are part of the top 100 best companies in the world.

The West African destinations everyone is looking for

Newcomers and old companies… Everyone is keeping a close eye on the tasty West African market. For example, South African Airways, which almost went bankrupt in 2020, made Abidjan its twelfth African destination, arriving three times a week. Launched in 2018 after the bankruptcy of Sénégal Airlines and 9 years after the disappearance of Air Sénégal International, Air Sénégal takes over and tries to avoid turbulence. The company has a strong focus on Africa and serves from Dakar to Nouakchott (Mauritania), Abuja and Lagos (Nigeria), but also Accra (Ghana) and also Casablanca. With regard to the continent, Air Senegal has based its strategy on low costs.

“The real economic model of low-cost airlines is based on three principles: a refined and clear offer, cost reduction without intermediaries and sharing value with the customer. It goes without saying that low-cost can only be competitive if the reduction of certain services is reduced or transferred to customers, such as check-in, baggage and additional paid meals. However, it seems that certain small companies have taken the low-cost path by limiting their added value only on the price variable, while sacrificing passenger safety by using risky aircraft, less trained and older cabin crew, and relying on passenger patience by increasing passenger safety. delays and incidents,” warns economist Abdelghani Youmni.

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Unlike RAM, Air Senegal offers quite low prices, but limited service (long layovers, delays, minimal service). “Excessive delays. We think we pay the difference in RAM in case of inconvenience and especially in case of damage. After a difficult flight, I was not at the end of my problems when I noticed that I had lost one of my suitcases,” a source told us during his latest experience with Air Senegal. “The low-cost business model deserves respect if its underlying logic is in the direction of reducing unnecessary costs, without in any way compromising safety standards or even customer experience, especially in terms of delays and deprogramming. So if a user, with full knowledge of the facts, fully agrees to pay for a cheaper plane ticket, but in return agrees to go through less central airports or to travel in the early or late hours, I don’t see that , I absolutely don’t see how this business model would be problematic.

On the other hand, any debate on aircraft maintenance, pilot rest time or other safety-related topics would be absolutely unthinkable, because these are indisputable conditions,” comments Hicham Alaoui, CEO of Allianz Trade. Air Côte d’Ivoire, which launches on May 14, lists prices of Dh9,000 (normal season) for an Abidjan-Casablanca route, a far from cheap approach.

The economic benefits of air transport liberalization

A recently published research report from the Office of the Chief Economist of the World Bank’s Infrastructure Division (Toward a Competitive Air Transport Market in Africa: The Role of Bilateral Air Service Agreements Liberalization) sheds additional light on the economic benefits of liberalization. This analysis shows that bilateral agreements lead to a reduction in flight prices, but also to an increase in their frequency and demand for air travel.

The effects of the opening of air transport markets are reflected in several aspects: price reduction; increased competition; increased frequency of flights.

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“Each of these direct effects leads to an increase in demand, which can be attributed to lower fares and higher flight frequency. The increase in demand also has an indirect impact on prices through density benefits on the one hand, and on flight frequency through economies of scale on the other,” the report explains.

And according to the bank’s experts, the effects of liberalization on ticket prices translate into significant profits for the benefit of consumers, on the order of $330.3 million to $424.4 million (or 29% to 37% of revenue generated by air passenger transport). ).