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European Airlines eyeing Africa to cover their losses

Africa Geographically is adjacent to Europe and upcoming economies in Africa are attracting strong European carriers to take their share of business from black continent adjacent to them.At present Africa’s local airlines are less organized whereas flying by Middle Eastern airlines like Emirates,Qatar Airways and Etihad Airways take too long for passenger travelling from to and from African continent to reach Europe and America’s where millions of Africa settled in last few decades.At present only competitors on Euro-African routes(except South Africa) are Afriqiyyah Airways and Royal Air Maroc who with their less resources are unable to compete on many routes.Main problem for European carriers are their high taxes which sometimes amount to above 500/= pounds whereas Afriqiyyah does not go that high and provide cheap flights inclusive of taxes at lesser rates then these.The other problem is a psycological one.I was talking to a gentleman from Freetown Sierra Leone who very clearly said I would fly with any African carrier rather then those who colonised my country and even now when we travel with them they look down upon us.So he opted for Royal Air Maroc although that was having one stop as compared to a direct European carrier with most suitable timings.Although the European Airlines claim of profits on African routes but one in travel business very well know that this is mainly because of their trans-atlantic connections otherwise normally people avoid them due high taxation.If they are to compete in market they’ll have to look into their tax structures.

Deutsche Lufthansa, Air France-KLM and British Airways are expending their reach into Africa and beginning to fly routes to the Congo, Libya, Morocco, Sierra Leone & Liberia  as passenger demand grows.
In November last year Lufthansa, which is Europe’s second largest carrier after Air France-KLM, added flights to the Republic of Congo while fully owned subsidiary British Midland International (BMI) began services to the Libyan capital, Tripoli, in December. The airline has announced routes to Marrakech and Casablanca in Morocco. In addition, Air France is planning to add routes to Sierra Leone, Liberia and Libya later this year.
Lufthansa has predicted that air travel in Africa will increase by an average of 6% every year until 2025, helped by an expanding raw material industry and growing middle class. The International Air Transport Association (IATA) predicts strong growth in Africa well into the foreseeable future.
Figures just released by IATA say show that passenger revenues increased 11.7% between December 2009 and 2010 for Africa while the Middle East saw growth of 14.1% for the same period. Africa and the Middle East occupy the top spots in terms of passenger revenue growth, according to IATA.
According to Airports Council International, international traffic in Africa jumped 9.8% last year, outstripping growth of 3.9% in Europe and 5.5% for North America.
Europe is the main gateway to Africa, with flights between the two continents accounting for 3.2% of all traffic in 2009, according to IATA. That compares with 1% for Africa-Middle East connections and 0.4 percent between Africa and Asia.
Lufthansa’s main brand last year reported an 11% increase in African and Middle Eastern traffic, measured by passengers kilometres flown. The carrier’s market share in the region reached 24% in November, compared with 17% in 2002, Bloomberg reports.
Lufthansa is focusing its network expansion on the oil-rich region around the Gulf of Guinea, with services to Nigeria, Senegal and Angola. Lufthansa and its subsidiaries also serve the North African capitals and East African cities including Khartoum in Sudan, Addis Ababa in Ethiopia and Dar es Salaam, Tanzania.
Lufthansa, which includes Austrian Airlines and Swiss International Airlines, serves 39 African destinations with 269 flights a week. Lufthansa is also expanding its network via the Star Alliance, which includes South African Airways, Cairo-based EgyptAir and soon Ethiopian Airlines. A plan by Lufthansa’s three African partners to set up a new airline to operate in central and west Africa would allow the German carrier to concentrate on hubs like Lagos while the local business would take over regional connections, spokesman Boris Ogursky said.
Meanwhile, Air France-KLM added Kigali, Rwanda and Bata in Equatorial Guinea to its winter schedule and boosted capacity to Africa by 3.5%. It plans to fly to Freetown in Sierra Leone, and Liberia’s capital Monrovia. Air France will begin serving Tripoli in addition to KLM’s daily flights. Air France-KLM’s SkyTeam includes Nairobi-based Kenya Airways.
Virgin Atlantic Airways added Accra in Ghana to its flights to Lagos, Nairobi, Cape Town and Johannesburg in May and British Airways will start flying to Marrakech from March 27. “Africa is a growing and important market to us and we have expanded where we feel appropriate and where we have been permitted in the past few years,” spokesman Richard Goodfellow told Bloomberg.
“It’s not just traffic to France from Africa – Charles de Gaulle airport attracts a big portion of all the traffic coming out of Africa to the rest of the world, to the US or to Asia,” Yan Derocles, an analyst at Oddo Securities in Paris told Bloomberg. “Now this traffic is starting to interest other carriers.”
Africa generates as much as 400 million euros ($553 million) in operating profit for Air France-KLM annually, Derocles estimates. The group reported a 1.3 billion-euro operating loss in the year ended March 31.
Although Africa is most prone to political upheaval and unrest, European airlines are undeterred by this, Frank Skodzik, an analyst at Commerzbank AG in Frankfurt told Bloomberg. “The risk of political instability is higher than in developed countries, but the prospects of strong margins on these routes outweigh that concern,” he said. “Many of the markets used to be monopolies with exclusive rights for one carrier, and that’s very attractive for a newcomer airline.” Often African routes are more profitable than those in European markets.

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