Assisting in Africa
|
Posted Date: 24/09/2008
Issue: Airline Handling International November 2008
Publication: Airline Handling International
There is nothing like a large network airline for identifying what is truly occurring on the ground. Chris Smyth, South African Airways’ (SAA) General Manager of Operations, notes: “The biggest challenge by far is the existence of monopolies. Monopolies tend to neglect equipment and refuse punitive service level agreements (SLAs). Services vary widely between world class at some stations and indifferent at others. In general though, services are improving in most of our African stations as bigger players enter the various markets.”
At home, of course the baggage issues at South African airports have been well documented. What does Smyth seek from a ground handling company that gives him confidence that these problems will be resolved going forward? “We seek integrity, honesty, a ‘can do’ attitude and a very strong professional relationship. It is also about how the handling company treats their staff and the motivation levels present in the staff and the working areas.”
Smyth insists that service levels do not guarantee performance on their own. “The objective of a service level should be to highlight service areas that are important to our customers so that we can make our ground handling partner aware of these and come up with solutions to continually improve the service. The level of co-operation between an airline and their ground handling partner and how they interact and work together will ultimately determine the service levels achieved,” he puts forward.
Smyth continues: “All members of operations management that are affected by ground handling are encouraged to meet with their counterparts in the ground handling company on a daily basis to ensure that any issues are dealt with swiftly and by the right people. SAA has weekly meetings with the SAA Operations management team to list concerns and closely monitor performance of all vendors that are crucial to continuing operations. These are immediately addressed with the ground handler.”
He also says that strong relationships between the management teams play a key role in ensuring that operations continue smoothly. Staff are also encouraged to work closely with their counterparts in the handling company and IT systems play a minor role in managing interfaces.
Heartening for local providers is SAA’s decision to avoid large network deals throughout Africa. “SAA selects the local service provider that provides the highest safety standards and the best value,” Smyth reveals, adding that handler selection is not primarily about price. “In Africa, safety is the primary concern. We dispatch safety teams to each station to conduct audits on the available ground handlers before the contracting team begins working. Only once we have the go-ahead from our safety department do we consider whom to approach. Pricing issues are important but pale into insignificance when compared to the cost of when an aircraft is damaged in a remote station and spares will take days or weeks to arrive.”
Freight handling in S Africa
Swissport and Menzies Aviation have been successful in being granted a licence to operate at airports in South Africa, but so too has Bidair, the local provider (please see p.XX). On the freight side of the equation, there are some very specific challenges facing the movement of perishables from and around this part of Africa on which Francois Wolmarans, the Managing Director of Express Air Services and a Director of Bidair Services, is able to shed some light.
He points out that his company operates beyond South Africa and operates in Namibia, Zambia, Zimbabwe and Tanzania. “We are busy opening up in Uganda and Kenya too,” he adds. Express Air Services is a subsidiary of Bidair and it specialises in airfreight, representing overseas airlines seeking a general sales and servicing agency or cargo handling agent.
Wolmarans says that, unlike handlers from mature markets and economies who may be concerned about investment in Africa, investment in equipment and training in Africa is not an issue for Express Air Services and Bidair. “We are from Africa and understand African dynamics; and, as such, we are keen on expanding our reach within Africa. Africa is not one homogeneous country; it is made up of a variety of countries, each with its own socio-economic and political issues. Yes, we have a problem with investment in Africa as a general rule. That, in the main, I believe has been caused by political uncertainty and insecurity regarding the return on investments made. There are, however, an increasing number of countries in Africa where investment is not a problem due to stable socio-economic and political environments being created.”
Express Air Services has its roots firmly founded in Africa and, as such, the owners and management are very keen to grow their presence on the continent. “In the past, we have not had African groups with sufficient capital behind them looking to invest in Africa in ground handling,” says Wolmarans. “Many of the larger inter-continental groups have been wary of getting involved in Africa.”
“The same principles regarding caution over investment in Africa apply as regards training. As a general rule, where you find socio-economic and political instability, you will find a lack of capital investment in equipment and, in tandem with that, there will be a lack of investment in training,” says Wolmarans. “Do we have sufficient training resources in Africa? I think we do. We need, however, to utilise and invest in such training, and this is no different to investment in equipment”
Wolmarans explains that in countries such as Zambia and Zimbabwe, due to a lack of interest and/or investment by ground handlers, farmers themselves have put in place logistical pipelines and facilities to assist with the export of their perishable products (perishable product exports accounting for more than 60% of exports from Africa). “We, as a handling community, should be taking those profit generating opportunities and investing in such facilities and technologies, rather than leaving it to the farmers whose core business really is not on-airport facilities.”
From war to trade partner
South Africa may be the wealthiest country on the continent but there is an emerging ground handling industry springing up across the continent. Uganda is a case in point. Since 1986, the government – with the support of foreign countries and international agencies – has acted to rehabilitate and stabilise the economy.
Given its heritage, circumstances in Uganda may be very different from those faced in other regions but Madrine Arishaba, Training Coordinator at Entebbe Handling Services (ENHAS), points out that the key issue for handling in Uganda is felt the world over, and that is the rising price of oil. Other challenges for ENHAS include the need to invest in more equipment to accommodate the increasing number of ad hoc flights. Arishaba also points to the high turnover of manpower which is typical in Uganda. On a positive note, ENHAS is introducing a ground damage prevention programme as well as maintaining high safety standards. It is also seeking to ensure competitive pricing.
ENHAS is just one of the ground handling companies based at Entebbe International Airport working under a concession from the Ugandan Civil Aviation Authority. It offers the full range passenger, cargo, baggage and ramp services, including cabin cleaning, document verification and passenger profiling. “There has been formidable growth in cargo exports from the year 2005 to date and this can be illustrated in the statistics,” says Arishaba. “In 2005, cargo exports through Entebbe and handled by ENHAS were 24,090,865kg; in 2006, 26,990,262kg were exported; 28,523,006kg for the year 2007; and 14,937,133kg in the first six months of 2008.” She explains that Uganda mostly exports perishables like flowers, fish, fruit and vegetables. “ENHAS operates a cold store that can contain 420 tons of perishable goods at the same time,” she adds.
So what is ENHAS doing to ensure that international standards are being met in terms of security and freight documentation? “We have a specialised documents verification team. This team is trained in handling dangerous goods and airport emergency procedures. All exports are 100% screened. Security teams man all the cold rooms and strong rooms for valuable goods and the bonds. As an additional surveillance tool, CCTV has been installed in all operational areas,” she responds. ENHAS became an IATA Accredited Dangerous Goods training centre in April 2005 and its management team has also adopted a system of total quality management to improve customer care standards.
Unique moment in history
Also recovering from years of war is Angola. Today, Angola's economy is undergoing a period of transformation. It is now the second fastest growing economy in Africa and one of the fastest in the world. “Angola today enjoys a unique moment in its history,” says Maria Joao Neto, Deputy Marketing Manager at Ghassist. “Following many years of armed conflict, Angolans found peace in 2002. Thus, in economic terms, the focus now is to continuously develop the economy in Angola.” Ghassist is an independent, fully private company, owned by a private investor (MACGRA – 74%; TAAG – Angolan airline – 20%; and ENANA – the airport authority – 6%).
“Growth has been triggered, mainly, by the strong and dynamic mining economy and by the oil sector,” she says. Non mining income, new infrastructure, industrialisation, developing human resources and cultivating international relations are also key. “There are also programmes in place that are intended to modernise the ports, airports and telecommunication systems.”
Work on renovating the international airport has already begun. “The 4th February Airport is mainly used for cargo, including fuel, raw materials and food. It handles fewer than one million passengers a year,” she says. “Plans for a second international airport in Luanda are being drawn up. Two sites are being considered, Viana and Cabo Ledo, but construction work is not expected to begin until 2015 and would take up to 10 years to complete. In the meantime, Huambo airport will act as an alternative international link when poor weather affects Luanda.”
There are 18 airports and a number of small landing strips around the country, and all the provinces are accessible by air. While Angola is currently working on the refurbishment of most of its airports, Ghassist is present at three: Luanda’s international airport, Cabinda and Cunene (Onjiva). “Our expansion plans to other airports are mainly dependent on the reconstruction of the majority of them. However, we plan to extend our activities in the next year to at least two or three more airports: Huambo, Benguela and Huíla,” says Neto.
“Initiatives to liberate intra-African air traffic have increased the ease of travelling between African countries pushing the number of passengers ever higher. Besides that, growth in tourist numbers has seen numbers of visitors per year double in the past six years. Economic growth and Angola’s hosting of the Africa Nations Championship in 2010 are bringing more people than ever to the country,” she says. “Our airport is seeing impressive leaps in passenger numbers.”
Ghassist has a policy of continuous training. “Our company is presently developing a project to computerise all its processes. We have just made an investment in IT equipment for check-in,” she says. The handler is waiting for the GSE that has been ordered to accommodate growing demand. “The biggest challenges we face now are labour and safety related, as well as GSE,” she says. “Nevertheless, we are extremely optimistic and eager to succeed in overcoming any obstacles that we may come across.”
All change in Nigeria
There has been much change at the handling companies of Africa’s primary oil producing country: Nigeria. Nigerian Aviation Handling Company (NAHCo) has recently undergone huge structural change and the loss of 300 jobs following the successful privatisation of the Federal Government’s 60% shareholding in NAHCo.
The Managing Director of NAHCo, Bates Sarki Sule, has identified several key challenges facing ground handling operations in Nigeria, such as the high cost of ground support equipment and insurance claims, the need for total insurance cover and the dearth of skilled manpower.
NAHCo has a three-year (2007-2009) strategic business plan, highlights of which include a review of operational processes, new equipment acquisition, staff re-orientation, human capital alignment, re-branding and business expansion. PricewaterhouseCoopers and Astra Aviation have worked with NAHCo on this project. Already, NAHCo has spent over $7million on the purchase of new equipment in addition to the opening of new stations. The company has invested in the automation of passenger and cargo handling processes, leading to improved service turn-around time.
NAHCo's stock was one of the high performing stocks in the capital market in 2007, yielding over 1,000% capital appreciation to investors. The company's hybrid share offer in September 2007 was over subscribed by 678%, and the company capped its 2007 capital market performance with the Nigerian Stock Exchange President's Merit Award in December 2007. NAHCo has additionally been admitted to the Aviance network.
Also undergoing financial restructuring in Nigeria is Skypower Aviation Handling Company Limited (SAHCOL), a Nigerian Government owned handling company that is similarly going through a privatisation process. Basil Agboarumi, spokesperson for SAHCOL, explains that the privatisation process is still on-going.
Nigeria Airways’ ground operations were carved out of the now liquidated airline in 1996 to form SAHCOL as part of the government’s aviation industry reform. By 1999, SAHCOL formally became independent of the airline, but a loophole caused the handler to become a government owned organisation again in 2004, responsible to the Federal Ministry of Aviation.
The sale of SAHCOL will be carried out through a core investor sale and an initial public offering. It is expected that the sale will provide: better funding, modern equipment, business expansion, and a better motivated and dedicated workforce.
Agboarumi says: “The aviation market in Nigeria is growing very fast, with new interest from airlines based in America, Europe, Asia and the Middle East. The Nigerian aviation market is currently the aviation world’s beautiful bride and, in 2008, we see aviation in Nigeria being moved to the next level.” But Agboarumi concedes that the major problem facing handling in Africa is capital to drive the business. There is also the problem of airlines wanting to handle themselves – both in terms of passengers and on the ramp.
Surprises in Libya
One of the most surprising set of aviation announcements has come from Libya in recent months. Libya has a plethora of airports but there are four international airports: Tripoli International Airport, Benina Airport near Benghazi, Sabha Airport and Misratah Airport. Because of UN sanctions against Libya, air travel was prohibited between 1992 and 1999, which put infrastructure into decline and aircraft left unserviceable
At the end of 2007, Afriqiyah Airways signed a firm contract with Airbus for the purchase of six A350-800s for its long term expansion plan. This comes in addition to the 14 A320 Family aircraft and three A330-200s this young Libyan airline already has on order.
An $800 million programme to improve airport infrastructure and the air traffic control network was approved in mid 2001. In addition, a new airport at Benghazi is planned and a new airport is also under construction in Libya’s capital, Tripoli. It only makes sense that ground handling in Libya also comes under the spotlight.
Libyan Handling and Aircraft Maintenance Services (LHAMS) was established in March 2006 and commenced full activities in October 2006. The company provides – as the name indicates – aircraft handling and maintenance for international and domestic flights at all Libyan airports.
These activities include: passengers check-in, ramp handling; aircraft loading and load control, flight documentation services, and aircraft maintenance from light maintenance up to medium and heavy checks on certain aircraft types. The company also operates aircraft spare parts storage facilities.
“LHAMS Provides handling services to approximately 50 national and international operators with more than 900 flights at 13 airports,” comments Saleh Alfarjani, International Relations and Commercial Affairs Director. “A new addition to our services is providing fuel to customers upon their request. A contract has been signed with Brega Oil Company.” LHAMS is an IATA, TIACA and IAHA member which, says Alfarjani, will help promote cooperation with international partners.
Also in operation as a handler in Libya is Gulf Pearl Aviation Services, a company established in Dubai seven years ago during the UN sanctions on Libya and now in operation as a private company at Tripoli International Airport. Mustafa Rammah, Ground Handling Manager at Gulf Pearl Aviation Services, explains that this is an independent company that is owned by the company’s management. “When the sanctions were lifted, the company was moved to Tripoli as the main hub,” he says. “Also we have equipment at Benghazi Benina International Airport, the second airport in Libya. Gulf Pearl additionally has a presence at the other airport in Tripoli – Mitiga – and three small airports in the country.
Tripoli International Airport’s redevelopment and expansion is having repercussions for the prevailing operations. Cargo flights have been moved to Mitiga while construction takes place over the next 18 months. But Rammah is confident that the new airport will bring with it many more business opportunities for Gulf Pearl.
While LHAMS, as a public company, has permission to service scheduled flights, Gulf Pearl is focused on charter, VIP and tourist flights. “We are the first private company in Libya,” points out Rammah. “We have permission to handle scheduled flights – passenger or cargo – but we are also handling Qatar Airways’ five flights a week and we are handling Air France at Mitiga. They currently have one flight per week but they are aiming for four flights a week.”
In terms of freight, Rammah points out: “We are a consuming country. We do not have infrastructure for production apart from oil, so most of the cargo is incoming. We also handle the equipment the oil companies import.”
Assisting with challenges
Africa is extensive and diverse. This makes the opportunities and risks equally wide. While the multinational ground handler that is able to replicate its blueprint for handling throughout the continent has a definite role to play, there are also opportunities for local niche providers.
Perhaps the most important factor – once socio-economic and political stability is achieved – is organisation. Whether this comes from within the continent or from outside is not necessarily the issue. What matters is that organisation, robust standard operating procedures and technology are brought to the table. Africa is a sleeping giant of a continent and once efficiencies and experience are built into the equation, there is every reason to expect Africa will tackle head on its handling challenges.
An example in Zega?
Colin Rhoda (CR), Managing Director of the Zambia Export Grower's Association (Zega Limited) responds to Airline Handling International’s (AHI) questions about this freight handling company’s operation and the potential for the replication of this model in Africa
AHI What is Zega Limited?
CRR Zega Limited is a privately owned Zambian company. The majority of the shareholders are members of Zega Association through which the company was originally set up. Shareholding is restricted to a maximum of 10% by any shareholder which is enshrined in the company’s Articles of Association. The majority of the shareholders are active growers but not all. National airports Corporation are 10% shareholders, a requirement at the time of the company’s establishment in order to acquire land at Lusaka International Airport to build the cold storage facilities.
AHI Was it born out of necessity and an absence of handling, forwarding and exporting expertise?
CRR There were no perishable handling facilities at the airport prior to the company being established so, yes, it was born out of necessity. However, ramp handling was never in the company’s portfolio and it was more by coincidence than design that it has become its main revenue stream. Indeed it has been the saving of the company as it has been able to reduce its perishable handling costs to next to nothing, thus making the flower and vegetable industry more competitive.
AHI Why are producers ideally placed to handle and export freight? Some would say this should be left to airports and handlers but what makes your members expert handlers and exporters?
CRR It was not design – we happened to be in the right place. Also, we have eliminated several players from the food chain by keeping these services under one roof, so to say.
AHI Can/should this model be replicated? Could this be the answer for freight handling in African countries without existing sophisticated infrastructure and processes?
CRR Certainly, for emerging countries, it is the way forward. It is however a delicate balancing act to provide the service levels required whilst guarding against the danger of falling into monopolistic tendencies. On the one hand, you have the aspirations of the growers to satisfy and, on the other, the strict professionalism necessary to meet the standards airlines demand in terms of service delivery.
AHI What needs to be in place in order for similar growers' bodies to be established? Just the will to succeed or will they need other practical and economic resources?
CRR Government support by way of facilitation (allowing private ground handling companies to operate, for example). The catalyst in our case was a strong grower base which saw the need for the establishment of the perishable handling facility in the first place.
AHI Does Zega own its own facilities and equipment?
CRR We own all our own ground handling equipment as well as buildings and other facilities. The plot on which the facility is built is on a long lease from the airport authorities, being the custodians of the land on behalf of the Government of Zambia.
AHI What will Zega look like in five years time?
CRR The long term future of the company will depend on the country’s efforts to overcome the burden of high fuel costs (Jet A1 40% more expensive than others in the region). Already we see a substantial proportion of perishable exports being exported by road to South Africa and thence as belly cargo on passenger aircraft to Europe because it is cheaper than sending direct. However, Zambia’s expanding mining-driven economy is seeing a major increase in passenger traffic into the country. The tourist industry in particular is recording major investment which will see a major increase in tourist traffic. That being the case, the company’s ground handling business is likely to continue to grow.
On our part, we must continue to invest in equipment and staff training in order to meet the exacting standards of the industry. This is our stated policy.
Related Headlines
| > |
| > |
| > |
| > |
| > |
| > |
| > |
| > |
Issue Advertisers
| > |
| > |
| > |
| > |
| > |
| > |
| > |
| > |
| > |
| > |
| > |
| > |
| > |
| > |
| > |
| > |
| > |
| > |
| > |
