Final frontier: Big business sees African potential

More business is coming out of Africa for charter brokers, operators and freight forwarders. Charter Broker looks at how companies are pushing back the frontiers of private aviation in the east, west and north of the continent as the football World Cup takes centre stage in the south.

South Africa, host of the 2010 football World Cup, may be the region attracting the attention of charter brokers but the longer term frontier lies to the north, east and west. The continent boasts oil, minerals and raw materials which have attracted investment and interest from economic superpowers such as China. The Maghreb, Arab speaking North Africa, has an affinity with the Middle East while firms from North America and Europe are also prospecting and investing.

Security risks, a scarcity of FBO and maintenance facilities compared to the more developed markets of North America, Europe and Australasia, and the long-term nature of the market are among factors that have inhibited many from planting business seeds in East, West and North Africa.

However, that is slowly changing as the need for raw materials drives international companies to build commercial relationships with African firms and governments.

Skyward Aviation, which has built a diverse charter broking business in Africa and the Middle and Far East, is looking to expand in Europe. Ali Tunde Bolarinwa, evp of Skyward Aviation which is headquartered in the Dubai international airport free zone, says that the broker is seeking representation to expand its growing network.

The company focuses on demand out of Africa as well as demand into the continent, handling, for instance, an increasing number of Haj flights for pilgrims from Nigeria who make the trip to Mecca at least once in a lifetime. "There are around 75 million Muslims in Nigeria and organising their flights to Saudi Arabia is a large part of our business," says Bolarinwa.

Bolarinwa, who previously worked for the International Air Services training school in the emirate of Ras al-Khaimah, UAE, says Skyward Aviation also services a constant private charter demand from Saudi families for aircraft including the BBJ and Gulfstream.

Skyward, which has an office in Lagos and representation in Riyadh and Shanghai, also arranges a large number of cargo flights to West Africa from exporters based in South East Asia.

"There are two aspects of our business that we would particularly like to expand and improve," says Bolarinwa. "We would like to fill more of the empty legs that are experienced by cargo aircraft returning from Nigeria to the Far East and Skyward Aviation would also benefit from expanding its network into Europe. I have been conducting fact-finding missions and believe there is good potential in this regard."

Medical opportunities

Expatriates working in Africa are inclined to take out insurance for medical repatriation and this means that the air ambulance sector has tended, in the past, to be better represented than private charter. Italy's SpA Lombardi Air Ambulance is opening bases in North Africa and Eastern Europe as it expands the scope of its business. The company says: "We are implementing new international governmental and institutional collaborations as well as partnerships with leading global insurance groups."

The company was launched in 2007 after Capt Carlo Gioia spotted a demand for a structured organisation that could address the technical and human issues involved in aeromedical transport. "We operate a fleet of intensive care unit configured aircraft able to reach any destination and have benefited from an extraordinary growth in 2009 of more than 300 per cent," the company says.

But the continent is attracting more attention from private charter operators including Abu Dhabi's Royal Jet and Switzerland's Vistajet who are developing both mature and emerging markets.

VistaJet reports that it is expanding into West Africa after experiencing rising interest in its services. It has launched a new partnership with West African businessman Kola Aluko who has joined the company's advisory board. Thomas Flohr, ceo, says: "A number of clients have signed up for more than 1,200 flight hours and we expect this to increase in the coming months and years." Africa will, he predicts, become an increasingly important part of VistaJet's global network.

Royal Jet, which is adding two more BBJs taking the total to seven by 2014, sees growing potential in Africa. "What we found during the recession is that demand from government missions, heads of state and delegations have increased," says president and ceo Shane O'Hare. "We also have emerging markets in Africa where there is very strong trade despite recession, such as between China and countries in Africa."

The group, jointly owned by Abu Dhabi Aviation Co and the emirate's government, operates a fleet that also includes the mid-range Gulfstream 300, the long-range Gulfstream IVSP and the Learjet 60. It serves corporations, governments, jet-set individuals and heads of state globally. The corporate sector is recovering but at a slow pace, with modest growth expected this year, said O'Hare. "From August we will add a Lineage 1000 having signed a new aircraft management deal with UAE-based business conglomerate, the Al Habtoor Group."

Coordinated expansion

The development of business in Africa is part of a coordinated expansion which encompasses cargo as a sector and other continental markets such as Europe. Royal Jet, chaired by HE Sheikh Hamdan Bin Mubarak Al Nahyan, has launched the '100 Club' relationship programme. "To join, customers need only commit to a minimum of 20 hours flying time during a year. Depending on the number of hours flown in a year, members' discount increases proportionally up to a maximum of nine per cent," he explains. Members can call on 24/7 assistance and have access to the full Royal Jet fleet.

One BBJ has been refurbished to make it the world's most technologically advanced and luxurious executive jet, according to O'Hare. "We have invested a considerable amount of money in this refurbishment, despite the difficult market conditions of the past year, once again reaffirming our commitment to providing guests with the most luxurious in-flight experience possible."

Gulfstream says it expects to "aggressively continue" to build opportunities in Africa and the Middle East. Jeff Miller, president of communication, says the overall market is shifting from North America to global markets. This "dynamic shift" led to Gulfstream's participation in the Avex International Airshow, which it describes as its Africa and Middle East aviation platform. The show takes place from in November this year at Egypt's Sharm El Sheikh international airport.

Freight forwarders are also stepping up their presence in Africa as they build and consolidate global networks. The WCA Family of Logistic Networks has opened an eighth regional office in a move that David Yokeum, president, said was necessary for the benefit of the network. "Feedback from members clearly indicated that the WCA family had to strengthen its efforts in the African continent," Yokeum adds. "Members demanded more strong and professional independent freight forwarders in the region with a wide range of capabilities to further extend the reach of the alliance."

But the move was made bearing in mind that, though Africa was a fast emerging market, many international freight forwarders were very cautious about doing business within the continent. Gangadhar Iyer, appointed to meet the challenge of providing contacts and reassurance for the network, has lived in Africa for more than 14 years and has worked closely with shipping lines, air carriers, transport companies, customs brokers and freight forwarders across the continent. He is fluent in English, Portuguese and French.

Iyer says: "The biggest task will be to identify the best freight forwarders that can fit with the networks. I will visit each office, review their facilities and meet their staff. My initial plans are to concentrate on countries that are fast developing and having little or no membership representation within the group." Independent freight forwarders will have to pass the rigorous financial checks.

Ghana, Iyer adds, was an ideal location for the new office because of its easy access to the northern and southern parts of Africa with an excellent infrastructure in place to visit neighbouring countries as well as regular connecting air flights to various parts of the continent.

The importance of selecting qualified forwarders is critical in Africa due to numerous challenges faced by the logistics industry within the continent. "What may look like a clear straight road on a map might actually be a road riddled with crater sized potholes, or may pass through areas infested with wild animals or even bandits and robbers," Iyer says. Qualified members would have to be local experts with knowledge of such challenges and be able to find solutions and recognise the potential time constraints in order to build good communication channels with partners and customers.

But Iyer says: "This expansion will not only benefit the forwarders in the region and existing members around the world but shippers and consignees now will be able to have more reliable options to select from, knowing that top forwarders within the group can partner with each other in and out of the continent of Africa."