| How poor business model ruined African
carriers– Christian Folly-Kossi, Secretary General/Chief
Executive, African Airlines Association
By UCHE USIM
Monday,
October 1, 2007
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•Folly-Kossi
Photo: Sun News Publishing |
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When the story of aviation and airlines’ metamorphoses
in Africa will be told, Mr Christian Folly-Kossi will certainly
merit a prominent mention.
The Secretary General of African Airlines Association (AFRAA)
is one of the few men on the continent, who is literally prepared
to give up everything he owns for airlines in Africa to thrive
and assume full control of the lucrative aviation market where
the European airlines are currently calling the shots.
Though he sees better days ahead for the aviation sector,
he is not ignorant of the fact that rescuing African carriers
from the jaws of death is tantamount to trading in the enemy’s
camp because the mega international carriers will be glad
to see African airlines close shops to give them a 100 per
cent control of the market.
With this tall order of rescuing African airlines from the
"humiliation" of the Western world, the Togolese-born
business administrator-cum-economist has become an airline
prosperity and safety crusader, going to various governments
and urging them to strongly support the aviation sector for
the continent to grow.
In this exclusive interview with Daily Sun in Lagos, the AFRAA
chief executive tells a moving story of how big African airlines
died, his challenges as the secretary-general of AFRAA, how
African airlines can prosper, safety issues and many more.
Enjoy it.
Background
I’m from Togo. I was born there in 1953. Traditionally,
we’re farmers who grow cocoa and coffee. May be because
of this background, we grew up to know the impact of international
trade on African economy. I schooled in Togo, both primary
and up till junior secondary as you would put it here. After
that, I took advantage of a programme that was implemented
then by the Catholic Mission which was sending young students
to Europe for their higher education. So, I went to France,
the School of Business Management precisely for my higher
education. I completed my MBA there. But alongside my management
studies, I also read Sociology. I further went for Doctorate
programme. I also read Economics. It’s with this background
that I began working as a consultant in Paris.
Referring to the airline business, I’ll say that before
joining AFRAA as the secretary-general, I was serving Air
Afrique, the defunct multinational airline of West Africa.
Air Afrique has about 11 countries coming together to form
it. I served Air Afrique for 21 years in various management
positions including Director of Finance, Finance Controller,
Area Manager and the highest position I concluded my career
with was that of Special Adviser to the Executive Chairman
of Air Afrique. Actually, I was proposed by some states to
take over the management of Air Afrique.
My friend from Senegal was preferred to me at the elections
and at the same time, there was a vacancy at AFRAA and they
found that I can serve and contribute to the progress of the
organization. I was elected in December 1999 in Khartoum and
took office in March 2000. I was waiting in Cote’Ivoire
to take office when the Kenya Airways crashed in Cote’Ivoire.
The accident occurred early February 2000. I was able to assist
them and luckily, I was in a very good relationship with the
Kenya government in those days and so it helped to facilitate
the contacts needed by the Kenyan authorities. I would say
that the crisis gave me the opportunity to start my work as
the secretary-general by tackling serious issues related to
safety.
Why most big African airlines died
Well, it’s a very bad habit in our countries when it
comes to explaining the demise of any company, we often refer
to corruption, mismanagement and all of that as the cause.
But the question here is, what is mismanagement? I’ll
tell you, having been a Business Administration student, my
view of what mismanagement is. Mismanagement is not the one
who is taking money from the coffers of the company. Mismanagement
is when you don’t have a clear vision, when you don’t
analyze the market forces on ground, you don’t analyze
the strategies of your competitors and define accordingly,
the winning strategy for your company.
If you don’t anticipate the trends and the actions to
be taken to meet the future needs of the market and your company,
then, you don’t qualify to manage and that’s what
we can call mismanagement. And I can tell you that most of
our airlines went down because of that mismanagement. When
there was a paradigm shift and the business model was changed,
many of our airlines didn’t adapt to the new business
model. Let me be specific. We started the airline business
by flying from point to point, that is, from one city to another.
But now, the business model has changed. It has become a hub
and spokes system. You mop up travellers from various countries
around yours, bring them to one point, that is, your platform
(hub) and fly them away and vice versa. That’s how you
can afford to increase your load factor. The question now
is-how many of our airlines moved quickly to that business
model? Very few of them. Most of them were still flying from
their capital cities to the capital city of the colonial power
and when they’re even flying to the neighboring countries,
they don’t organize the flight schedule to connect to
the long haul flight. What I’m saying still applies
today.
And when you look at thriving airlines within Africa and outside,
they’ve departed from that old operational model long
time ago. Kenya Airways, South African Airways and Ethiopian
Airlines will take all the passengers that are connecting
to other cities via their hubs. On the Lagos-Addis Ababa flight,
for instance, you’ll see passengers going to Dubai,
China, Paris, Washington, London etc. That’s how you
can increase your load factor.
And at that platform we call the hub, you feed the different
flights exchanging passengers. As long as we don’t move
to that type of business model, we’ll be weaker, while
the European carriers will be stronger. Why the other carriers
of the world are doing better than African airlines in our
own countries is because they have global network and they
adopted the latest business model of hub-and-spokes system.
Because we failed to do this, that’s why Air Afrique,
Nigerian Airways, Ghana Airways and other big carriers went
down. And let me warn that if those who are emerging don’t
understand this, they’ll also go down. So, forget about
corruption, forget about mismanagement of the funds, these
are minor factors.
And also, I want to address another misleading idea. People
think Air Afrique comprising 11 countries went down because
the various governments were intervening and they were not
paying. No! This is not the reality. What was more killing
than any other factor is when we started liberalizing our
skies, thus putting the strong and the weak on the same scale;
when we opened up our skies to all the mega carriers that
are operating daily flights to our countries and so on.
That certainly did not help matters. If you have five of such
mega carriers, it means that you have five airlines that can
take the passengers you ought to have taken to all parts of
Europe and all parts of the world. These are the ones who
are now controlling your airline business and take the place
of your national carrier in the negative form. How do you
want your own airlines to compete with them even against less
financial muscle, less equipment and so on? So, if you take
this two argument that I’ve given you which is one,
lack of adaptation to the new business model change and at
the same time, the saddening liberalization which brings into
our markets very powerful airlines to compete with our weak
ones, then you’ll understand better why all our major
airlines went down at the same time.
European Union’s blacklist of African airlines
I’ll illustrate the implication of the blacklist in
a very clear way. Imagine we’re in London and all the
big brains of Britain gathered to improve on safety of road
traffic within London and the only recommendation they come
out with is the ban of all the molues of Lagos from the traffic
in London. Will that make any sense? No, because the molue
operators have no reason to go to London and carry out business
there. They’re separate entities doing business in separate
environments. The other result that might come out of this
decision is that any time that a passenger sees an African
car or bus or taxi being driven by a black man, he or she
might scream and say ah!
This might be the molues they have warned us against and as
such they’ll refuse to enter it. More or less, that’s
what happened with the initiative of the blacklist of the
EU which we stood strongly against. They listed almost 100
airlines of the world. The first time, they listed 100 airlines
and they said out of this 100, 95 of them are from Africa.
From the Democratic Republic of Congo, 50 airlines were banned.
We never knew there was any airline operating from this country
to Europe. In Sierra Leone, where people don’t know
how to cross borders, they listed 12 airlines, in Liberia,
the same. Same went for Sao Tome and Principe, Equatorial
Guinea etc.
So we went to the website of these countries to check on the
schedule of airlines operating within Africa and from Africa
to Europe. We didn’t see any of these airlines. So,
we’ve come to the conclusion that these airlines are
mere paper airlines on the list or they were dead airlines
or in any case, if at all they exist , they operate within
the boundaries of their country. So, if that’s the case,
do we need to ban them from the skies of Europe? We said there
is a deliberate attempt to give airlines in Africa a bad name,
giving African airlines that are operating to Europe a bad
name to stand them wide apart from their European counterparts.
There are about 25 African airlines operating into Europe
on a daily basis and on equal safety standards as those ones
in Europe. None of the 25 was on this list. So, the question
now is-what is the use of this list? The list has misled people.
A common man who wants to travel to Africa and he’s
told that a 100 of African airlines are on EU’s blacklist.
He would not take the pain to really know those who are there
and those who are not. He won’t know whether Virgin
Nigeria, South African Airways, Ethiopian Airlines etc are
on the list. The only message he would get is that if you
want to travel, only British Airways, Lufthansa, KLM, Air
France and so on are what he should fly because you’re
safe and you don’t run any risk of flying the airlines
on the blacklist.
This is unfair. If we opt for globalization and liberalization,
if we open our markets to all the carriers to come, and if
on top of this, they’re stronger than us, then we cannot
survive the competition. Most of the individual European carriers
are stronger than all the African airlines put together. Yet,
do we need to compete by giving bad names? So, we’ve
called upon the European authorities to review that message.
What is clear and what they keep saying that is right is that
some of our countries, especially the war-torn ones, are having
their civil aviation authorities completely disrupted. So,
they need to be urgently re-organized.
We cannot rely on their air operators certificates, their
air transport licences and other licences of competence as
it relays to safety that qualifies an airline to operate.
If they want to address that issue, we support them. Let’s
go and see what is wrong and how to re-organize those CAAs
and together, we can complement that with expertise from Africa
and funding from them. And together, we can achieve that purpose.
Having said this, in the last two years, we have come out
with another message. We shouldn’t allow the affected
CAAs to give them the stick they’ll use to beat us.
In our registry, we have 1,436 airlines in Africa registered
since our respective independence days. The airlines that
are dead are still there in our registry.
The paper ones that have never worked are still there as well
and they are there alongside those who’re still operating.
This is what I call the stick we’re giving the Europeans
to beat and hit hard on our good airlines. So, we’re
calling on our CAAs to clear the registries of all dead and
paper airlines, so as to keep only those that can truly be
referred to as schedule airlines there. The registries should
only have those who’re operating modern equipment. This
is because the equipment has to be mentioned because most
of the accidents that occurred in Africa involved old generation
aircraft of former Russian Soviet countries like the Antonov
and the Ilushin.
They are causing about 95 to 98 per cent of the accidents
in Africa. We’ve come to the conclusion that the importation
of these old categories of aircraft should be banned. Yes!
An aircraft is never old as long as it is properly maintained
according to the manuals. But even then, we don’t recommend
the use of old aircraft because mostly, operating is very
costly. They’re usually fuel consuming and require more
frequent and expensive maintenance. So, what’s the point
keeping them? Perhaps, it may keep you happy because you boast
yourself of being the owner of an aircraft bought less than
one million dollars. So, should we continue accepting that
the world comes here and dumps old aircraft just like old
lorries and say we have equipment.
These are main questions from which I must praise the government
of Nigeria which has realized the issue very early and took
the decision to ban importation of old aircraft that are above
22 years old. Many good things are happening in Nigeria. We’ve
not been having many accidents involving Antonovs and Ilushins,
but those countries concerned like the DR Congo, Angola, Sudan
etc, we’re preaching the ban of the importation of these
equipment. Angola has done it some years ago, four years,
we haven’t got any accident. At least, we don’t
have any accident of Antonov and Ilushin anymore in that country.
I think this is an edifying example that others need to emulate.
AFRAA’s role in helping dying airlines
You mean AFRAA’s role is assisting ailing airlines from
going down like NAL, Air Afrique did? Let me illustrate it
this way, you can take a horse to the river but you cannot
force it to drink. All the preaching that I’m making
today were made in those days. I was in charge of AFRAA when
NAL and Air Afrique, my mother airline, went down. I came
and spent many days and weeks coming to Nigeria to rescue
and advise the airline’s management and the government
on what to do but it still amounts to taking the horse to
the river because it chooses to drink or not. I had many discussions
with the then Minister of Aviation, Dr Kema Chikwe.
I also had discussions with the former President Olusegun
Obasanjo. When it came to a matter of necessity, we supported
the idea of South African Airways having a deal with Nigeria
to put in place another NAL but the deal failed for many other
reasons. It’s for this reason that when we couldn’t
find any solution apart from sacking the chief executives
regularly. We also supported the idea of the partnership with
Virgin Atlantic, at least, for this country to have a carrier
and play its leading role in the industry. Our mission for
the country is yet to be met but I look at it that something
good is happening in Nigeria for now.
As for ADC, I’m happy that you raised that airline.
I had a meeting with the chief executive of the airline. I
wanted to be updated on the result of the investigation, if
any, but I wanted to be updated with the situation in general
and see what AFRAA can do. And he made it clear for me that
we needed to discuss with the government and find out where
responsibilities laid and what should be done. Then take us
to foreign authorities. AFRAA will urge the government to
play its role. Behind the scene, we do play a big international
diplomatic role, but as the traditional saying goes, the dog
never gives birth in public and so some of the issues will
not be dealt with publicly.
In the area that the airline is yet to pay compensation to
the crash victims, it’s important to state here that
compensation payment to passengers in such a situation is
not the responsibility of the airline but that of its insurance
companies. We should check if the airline pays its premium
to the insurance companies regularly. If that is the case,
then the liability is that of the insurance companies who
should compensate the passengers because it is for that reason
that we pay premium. Apparently, the carriers are paying and
if we have real evidence of this, then the government should
back the operators to face the foreign insurance companies.
Government should talk to their counterparts in foreign countries
to seek ways out.
We support that justice must prevail.
For Sosoliso Airlines, it was on the list as one of our potential
members because we never exclude any operator from membership
list unless we’re convinced that you’re not qualified.
In this particular situation of theirs, I’m holding
talks with them. I spoke with the managing director of the
airline but unfortunately, he’s in the eastern part
of the country. But we’re communicating and we’re
keeping tabs on the airline to know where and how AFRAA can
give support. We’re not encouraging non compliance with
safety standards. But we’ve come to consider that accident
is also part of our business. When it happens in other countries,
it’s dealt with in a fair manner. Any mistake must be
sanctioned. But if the responsibility is not that of the airline,
that must be recognized and chance must be given for them
to operate, especially if they have not neglected any of the
fundamental rules. We’ll conclude all our discussions
with the airlines and if there is any place we have to pass
a message to the government, we’ll undertake to do it.
Challenges
The secretary-general of AFRAA is in the position of a religion
minister who preaches because he’s seeing the future
looming ahead. He preaches how we should anticipate and most
of the time, the pace at which he’s listened to pains
him. In this era of globalization, when Air France that is
bigger than all the airlines in Africa put together and KLM
that is equally bigger than all the airlines of Africa put
together considered that they were too small and saw the reasons
to merge. Yet, when you talk to our operators who’re
operating one and half aircraft about mergers and consolidation,
they listen with one ear. So, this is a cause of a bit frustration.
But like a mountain climber, you have to keep striving to
reach the zenith and even when forces throw you down, you
don’t need to be discouraged, you simply begin again.
That’s what we’re doing. When I come to a country
like Nigeria, I see 20 airlines. But I said to all stakeholders
that we should consolidate. We better have four airlines of
10 or 20 aircraft than 100 airlines of one and half aircraft.
We should depart from this business model where each individual
must be the owner of the company and have all the money of
the company in his agbada. Business does not work today on
that model. And what we’re saying about Nigeria applies
to the whole of Africa.
We should go for across border investment. We don’t
need to have airlines in each and every individual country
of Africa. It’s difficult to make good profit in airline
business in a country where you have two, three or five million
people as their population. Such countries are many around
us here. So why don’t we find structures in which we
can put in place big airlines that can float shares in stock
exchange that people from all countries can buy from. We can
also take the advantage of regional economic communities to
put in place such regional carriers in which the private sector
can be strong investment. And also put pressure on the various
governments to give support.
When you’re in such dreams, sometimes you get frustrated
because many people are not thinking along that line. More
so, when you dream for economic integration in Africa, you
discover that there’s no point in going for continental
government when you don’t have economic foundation and
this foundation like I said in Accra during the 13th Annual
Aviation and Allied Business Leadership Conference, include
transport (road, rail and air) and air should be well emphasized
because it’s the easiest means of transportation. And
then, energy, ICT and telephone are added to it. If we build
on these pillars, then integrate African countries .
Then, we can give a base for inter-African trade and tourism.
Failing to do that, I don’t see any future political
union or government at the continental level. It’ll
be tantamount to start building a house from the roof before
you get to the foundation. Obviously, that’s not possible.
I recommend what the masons do by getting the foundation in
place, then the walls and finally the roof. It’s on
all those aspects that as a dreamer for African renaissance,
we can be frustrated but at the same time, we’re excited
because I prefer listing among the doers, than among the spectators.
Ways out
I like the market of Nigeria and I like to be fair to this
market. Some years ago, there was no Nigerian carrier because
we were divided, but then, at the same time, there was no
clear option, either to kill Nigeria Airways (NAL) or revive
it. But the position was that as long as we’ve not taken
any decision concerning NAL, we were not going to encourage
any other initiative. Then, we departed from that. Today,
I’m very happy to see carriers like four or five emerging
now. The biggest mistake we were also making was that we were
accepting multiple designation from the European countries.
At the same time, we were preventing our airlines from going
there.
But the good news here is that in Nigeria, the government
has fought to get traffic rights and slots for many of her
carriers to go, for instance, to London. This is a good step.
This should apply to other countries because if we’re
small and yet go in disorder, we cannot fight the big ones.
I believe there is a new concept in business, which is a combination
of cooperation and competition, which is now co-petition.
We can have some routes on which we can cooperate and others
where we can compete. But let’s have this togetherness
spirit prevail in the first place. We must consolidate and
merge where possible. I spoke of the Air France/KLM merger.
We can’t dream of being competitive against the big
airlines of the world without coming together. Let South African
Airways, Ethiopian Airlines, for instance, that operate into
the United States, Canada, Latin America and so on to cooperate
with airlines from West Africa because the direct route passes
through West Africa. If we do that, passengers will stop transiting
from Europe to come to some African countries. West African
airlines can also cooperate with Ethiopian Airlines, Kenya
Airways and co to fly their passengers to the Middle East
and Asia. If we do that, then we can sustain competition with
the big carriers of the regions coming into our markets.
We should establish air routes and links between us and big
economic continents of the world. We don’t trade with
them because we don’t have air links them. And the people
who go there, fly up to Europe and go all the way down. If
you look at the map, you’ll see that they’re completely
detached from us, so why must we pass through Europe to go
there? We should put together the route and then call them
because we need to make the money.
They’re already making money and because we don’t
put the routes, they have to pass through long routes to access
the market. Imagine how much of goods from China are being
sold here and ask yourself, how many African airlines are
going to China. Tomorrow, if we put a new route to Brazil,
Argentina and the likes, you’ll see a new trend of trade.
But then, can we afford to do it alone? No, if we create hubs
in Angola, Abidjan, etc, then the other carriers of Africa
can go, drop their passengers in those hubs and continue and
vice versa. We don’t need all countries airline flying
to Asia. We can have African hubs.
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