The aircraft ground handling sector in Africa is geared to grow substantially as a result of the forecast demand for air transport, thereby enhancing intra-African and international business, trade and tourism. Indeed there are significant opportunities – but also threats – in doing business in the aircraft ground handling environment throughout the African region.
“Data from major aircraft manufacturers suggest that fleet expansion and replacement is paramount to satisfy the demand for air travel. Hence forecasted demand will not only increase the number of passengers but this growth will also drive airport infrastructure expansion. This prospect may allow Africa to enhance and expand its limited connectivity. More importantly, the opportunity for ground handling companies will increase in scope. Ground handling companies will have to increase their service offerings to accommodate the increased demand of the carriage of passengers, baggage and cargo,” says Vees Lochan, chief operating officer at Airlines Association of Southern Africa (AASA). “One of the major threats that ground handlers face in Africa is that the concession to operate at airports is provided by the Airport Authority and it is for a set period. This impacts the long-term investments in ground support equipment (GSE) as it is then limited to the concession period granted. In South Africa, ground handling contracts are often granted on an open tender basis. The Airport Authority sets the standards required and potential ground handling companies compete/bid for the right to operate at airports. In some jurisdictions, only the Airport Authority is permitted to provide ground handling services. In most cases this tends to be non-competitive.”
“Ground handling used to be provided by African airlines at their respective home bases. However, Africa generally follows the liberalization trends of aircraft ground handling. As Africa represent only 2.5 percent of the world air transport market, ground handling service providers surely continue to assess business opportunities. Indeed the ‘big names’ have more recently begun to operate at relatively big airports in the region,” says Gaoussou Konate, consulting director technical and operations at African Airlines Association (AFRAA). “Business opportunities exist in the relative big airports, and the challenge of being profitable even for duopoly handlers are real at several international airports as their markets are just tiny. Generally, big African carriers handle their flights at their home bases and provide their services to foreign carriers. Four out of the top five air carriers face fierce competition for ground handling business at home either with several local companies or the international handlers.”
According to Lennia Bikoko, quality assurance & safety officer at Lilongwe Handling Company, while global and, more specifically, African flying numbers are on the increase (and so are cargo numbers), Africa has some distinctive threats including a poor safety record and security issues, the lack of adequate resources and infrastructure, a lack of full enforcement of regulations by governments, high airport taxes and fees and comparatively low traffic levels.
“Some major issues include the fact that many accidents and incidents occur due to inconsistency in complying with or conforming to acceptable safety standards and practices, hence a need to enhance levels of safety. Moreover, African governments often deny to give rights to foreign operators on domestic route operations in the name of protecting their flag carrier,” she says.
Africa is a part of the world where the IATA Safety Audit for Ground Operations (ISAGO) and the IATA Ground Operations Manual (IGOM) are particularly appealing to ground handling service providers (GHSP).
“Companies within the African Region are slowly adopting the IGOM procedures because many were more on the Airport Handling Manual (AHM). However, most are now ISAGO registered due to the fact that the ISAGO registration assures safety of a particular provider and also that many airlines prefers to be handled by GHSPs that are ISAGO registered,” says Bikoko. “Both ISAGO and IGOM are very appealing to GHSPs operating in Africa. The only drawback to the ISAGO program is the actual cost of the audit, however, to be able to say that a small GHSP meets the same standards as those GHSPs at the mega airports in the world is very appealing. IATA’s goal for the IGOM is that all airlines and GHSPs globally would adopt or implement the processes and procedures outlined in it. The IGOM is especially appealing for those GHSPs that are handling multiple airlines. The current practice is that GHSPs must operate according to each customer airline’s procedures. So, if a GHSP handles 10 airlines, each of the 10 airlines could have their own process or procedure for the same requirement – this is cumbersome for the GHSP. However, if these 10 airlines would adopt or implement the IGOM, the GHSP would only have to implement one procedure for all the airlines”.
Konate highlights that currently there are 44 African airlines in the IATA Operational Safety Audit (IOSA) registry which seek ISAGO registered handlers, preferably for their ground operations around the Continent.
“Therefore, the number of Africa-based ground handling companies is increasing in the ISAGO registry. At airports where handlers are competing for ground handling business, at least one African-based company is in the ISAGO registry. Even on the small market of Ouagadougou, Burkina Faso, RACGAE, though a monopoly, is in the ISAGO registry to ensure that its services meet the international standards,” he says.
“ISAGO and IGOM should be fully adopted in Africa as the benefit of improved safety oversight and improved quality standards is essential for safe operations in the aviation Industry. ISAGO also contributes to the efficient oversight of the civil aviation authorities. IGOM is an essential and valuable tool for every ground handling company as it is the most authoritative source for the latest industry approved standards harmonizing ground handling processes”, says Lochan.
The GSE supply chain in Africa is characterised by a divide between the regional areas and the international airports. “The supply chain is riddled with challenges, this is because as a continent there are almost no major GSE manufacturers, so GSE is mostly ordered from the West. Once the GSE is ready, it must then be shipped to the nearest port and then, depending on the country, the GSE must be transported mostly by road since very few countries have a proper functioning cargo rail system and even the state of some roads makes transportation even more challenging. So needless to say, it can be months and months before the GSE moves from the manufacturer to the customer,” says Bikoko.
“The GSE supply chain is generally normal at international airports. The low utilization resulting from the limited traffic is the challenge. Pooling on GSE with the participation of the manufacturers could rationalise the GSE availability costs at airports while traffic grows to critical mass levels,” says Konate.
At most of the main airports in Africa, the aircraft ground handling industry has witnessed some deregulation, hence the participation of several international players. In smaller markets, the market is quite tightly regulated, i.e. the sole providers or the couple of GHSPs may have pre-validated fees by the local CAA.
“The ground handling sector is a closed Industry because of the environment they operate in, which is highly regulated and very capital intensive. In certain countries, there is a traction of separation between airport management and ground service provision. At the end of the day, airlines are paying the ground handlers for services rendered as per their agreement but the operating procedures and standards are largely influenced by the Airport Authority,” says Lochan.
“Benchmarking of taxes, fees, and charges, places Africa on the high ends. Private Public Partnerships are more and more involved in airport infrastructure development projects, and private partners want a quick return on investment based un-stability risks in certain African States. Furthermore, State taxes on concessions which are recovered on relatively small traffic. Hence, the basic costs of doing business are often high, and they affect taxes, fees, and charges to air carriers operating to and from African airports. The combination of these high costs are included in the high fares public must pay to travel by air,” says Konate. “Productivity gains, at airline levels, at GHSP levels, at Air Navigation Service Providers levels, airport operators, fewer taxes from States and reasonable ROI set by economic regulation will bring fares at affordable levels and increase the pace of the traffic growth for the benefits of all stakeholders.”
