AFRAA Wings Magazine - Nov 2008, Issue 10

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Cover

insideNov 2008 issue no. 10

The objectives of the journal are to provide brief account of the activities of AFRAA and feature

additional information of interest to member airlines and the aviation industry.

Unsigned material may be reproduced in full or part

provided it is accompanied by reference to Africa Wings; for rights to reproduce signed articles, please write to

the editor.

Although every effort is made to ensure the accuracy of the information and reports in this magazine, the editors,

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or for any effect therefrom. The views expressed by contributors are not necessarily those of the editors or

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PublisherAFRAA/PANAPRESS

Managing EditorChristian Folly-Kossi

Editors in ChiefRaphael Kuuchi

Biava SeshieEphrem Kamanzi

Editorial TeamAFRAA Directorate

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Cherif Seye

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Special Report

-AFRAA Carbon Emission Policy-SITA & Rwanda take steps to improving aviation safety in Africa

Feature

-Loss of Skilled Manpower-The Future of Travel Agencies-Time to re-engineer African Airlines media relations.-African Aviation: Changing with the times.

Safety & Security

-Emergency planning & Response Management.-Accounting treatment of aircraft maintenance cost

Airlines Update-EgyptAir becomes 21st member of Star Alliance-Ethiopian & ASKY sign MOU-Virgin Nigeria best Airline in west Africa-LAM: A Giant in the Making

Profile -New Chairman & CEO of EgyptAir Group-Afriqiyah appoints CEO & Commercial Director-Capt. Boyo- A Solid pillar of African Aviation

Forum-AFRAA/AFCAC/ACI-Africa Sign MOU-1st AFRAA/ACI- Africa ICT forum-AFRAA/ICAO Aviation Statistics Workshop-Fight oil price rise with E-Commerce

News briefs

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Afraa Magazine august 2008.indd 1 11/11/2008 11:18:32 AM

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Editorial

The sudden outburst of the current financial crunch and the subsequent economic recession has led to panic and restlessness all over the world. Heads of States, Ministers of Finance and Heads of the World financial institutions are holding meetings all around to stem the effect. Africa seems to be the only continent maintaining indifference, probably because we under estimate the potential far

reaching impact on our economies or because we are overwhelmed by our present dire-need state that we feel the current crisis cannot make our situation any worse.

Whatever might be the reasons, we are wrong not to mobilize our resources like the others and address the crisis or take advantage of it by revisiting our fundamentals and in particular the way we do business. In the Chinese hieroglyphics, the concept of crisis is rightly captured by juxtaposed symbols of danger and opportunity. The teaching is that in times of crises, we ought to search for and focus on the hidden opportunities.

In the airline business, our continent has been in crisis for decades. Half of the continent is dominated by the foreign carriers. This is likely to worsen with the EU/US single airspace concept. The size of most of African airlines is just too small and operations ineffective to withstand worldwide competition. Yet the crisis and the anticipated recession will result in the mega carriers of the world intensifying their market penetration in Africa. This unfortunately will happen at the expense of African weak airlines. It is high time we heed this latest wake-up call, and go the Chinese way; look for opportunities and work hard to change our fate.

AFRAA believes that African airlines and States have a few stimulus measures to adapt in order to create the enabling environment airlines need to thrive and be successful.

The small size issue needs to be squarely addressed. Small carriers should merge or forge continental alliances with the relatively big airlines of Africa. In this regards, States should discount the notion that airlines ownership is inextricably linked to their sovereignty. The national flag and anthem amply play that role. States should now encourage airlines consolidation and cross border investments. Those States that have no airlines currently or have ailing carriers should opt for multinational solutions. States must extend their support to these solutions without taking the driving seat in their management.

Consolidation will yield economies of scale that can further enhance additional partnerships through joint projects and negotiations. Already, AFRAA is championing joint projects for its members in areas such as; fuel supply, ICT common platforms, ground handling services, equipments and spare parts procurement among others.

LOOKING BEYOND THE CRISIS

On the travel service supply side, the continent operators still lack air services into some major emerging economic power-houses of the world such as Latin America and the Far East. The air links with North America and Asia remain limited and poorly spread. Africa need to expand its presence on routes to emerging destinations with enormous traffic growth potential in order to grow its traffic and revenues and regain part of the lost intercontinental traffic.

May I remind States at this juncture, of their responsibility to ensure that African carriers are not victims of unfair competition. African States must engage other regions, and in particular the European Union (EU) in bloc-to-bloc negotiations on matters pertaining to the EU single airspace and other bilateral relations with third countries.

There should be a level playing field which guarantees a balance in the number of European vis--vis African flights operating in our markets. This failing, most African airlines will soon disappear. We urge the African Union through the African Ministers responsible for civil aviation to constitute an adhoc sub-committee to negotiate with third party blocs on evolving regulatory and bilateral issues. AFRAA and AFCAC will provide the necessary technical support to such sub-committee.

Of course, the preamble to all this must be the full implementation of the Yamoussoukro Decision that would enable African airlines to develop more dominance on their continental domestic markets and provide air services across the continent for African passengers. Under the leadership of AFCAC as Executing Agency, the earliest formation of the Club of the Ready and Willing (CREW) States is the way forward.

Christian Folly-Kossi,Secretary General AFRAA


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Special Report

Commercial aircraft typically operate at cruising altitudes of 8 to 13 km, where they release several gases and

particles which alter the composition of the atmosphere and contribute to climate change. Carbon dioxide (CO2) is the most important greenhouse gas because of the large quantities released and its long residence time in the atmosphere. Even though there has been significant improvement in aircraft technology and operational efficiency, this has not been enough to neutralise the effect of increased traffic, and the growth in emissions is likely to continue in the decades to come.

Growth in Aviation EmissionsEmissions from aviation currently account for about 3 percent of total European Union (EU) greenhouse gas emissions, but they are increasing fast by 87 percent since 1990 as air travel becomes cheaper without its environmental costs being addressed (EC, 2007). The rapid growth in aviation emissions contrasts with the success of many other sectors of the economy in reducing emissions. By 2020, aviation emissions are likely to more than double from present levels.

The Proposed EU DirectiveThe proposal for a directive follows up on a September 2005 Communication which concluded that bringing aviation into the European Union (EU) Emissions Trading Scheme (ETS) was the best approach, from an economic and environmental point of view, to tackling the sectors emissions. This was subsequently supported by the Council and European Parliament (EC, 2007). The directive will treat all airlines equally, whether EU-based or foreign. From 2011 all domestic and international flights between EU airports will be covered, and from 2012 the scope will be extended to all international flights arriving at or departing from EU airports. After having examined several types of market-based solutions (airline ticket or departure taxes and emissions charges) the Commission concluded that the most cost-efficient and environmentally effective option would be to include emissions from aviation in the EU Greenhouse Gas Emissions Trading Scheme.

International Airlines ResponseThe African Airlines Association (AFRAA) has been working in conjunction with other international airline associations such as the Association of Asia Pacific Airlines to have a common response to the European Union directive on carbon

emissions. AFRAA believes that the proposed legislation is both premature and flawed.Firstly, the legislation appears to reject established role of the United Nations International Civil Aviation Organisation (ICAO) in setting globally harmonised standards for aviation, including environmental issues. In particular, article 2.2 of the Kyoto Protocol, as signed and ratified by the EC, provides that polices on emissions from international aviation should be pursued by working through ICAO. Efforts towards this objective are ongoing. EU legislation, insofar as it includes international aviation, is therefore premature.Secondly, the extra-territorial impact of the proposed legislation will bring the EU into conflict with non-EU governments. The proposed inclusion of non-EU carriers within the scheme, on the basis of unilateral action by the EU without the consent of other governments, would be in violation of the tenets of the Chicago Convention and

existing international aviation agreements and practice. There is near unanimity amongst non-EU governments around the world that such actions require mutual consent of the relevant governments. Far from establishing the EU ETS as a model for a harmonised global approach, any attempt to force non-EU airlines to participate in such a scheme would be counter-productive, inevitably triggering serious legal and political conflicts.

How African Airlines can Reduce their Emissions in PracticeAFRAA is working with African airlines to reduce their emissions in several ways, notably by encouraging investment in more efficient aircraft and engines and in optimising operations. Although the biggest improvements would typically arise from accelerated fleet renewal, many aircraft in the current fleets also hold potential for improvements. For instance, some aircraft can be retrofitted with winglets, new surface treatments that reduce drag (air resistance) and even new engines. Airlines can also optimise their timetables, route network and flight frequencies to minimise the number of empty seats flown. ICAO has published a catalogue of Operational Opportunities to Minimize Fuel Use and Reduce Emissions. In the longer term, research into more efficient technologies and alternative fuels may provide additional opportunities.

AFRAA CARBON EMISSIONS POLICY- Dr. Elijah Chingosho

cont. to pg 5

Aircraft emissions such as this are few in the aviation industry. Aviation contributes about 2% of global CO2 emissions.


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Special Report

Ethiopian Airlines has won Corporate Achievement Award for its excellence in the airline industry by Aviation &

Allied Business Publication. This prestigious award was given to Ethiopian Airlines in recognition of its outstanding contributions to the development of the airline industry in Africa. Through its commitment for excellent services, Ethiopian Airlines has been recognized for its continued contribution in setting the pace in the airline industry in Africa thereby contributing significantly to socio-economic integration and development.The Award is a testimony of Ethiopian Airlines commendable and profitable operations over the years despite serious challenges that have adversely affected many large and small airlines globally. said Mr. Busera Awel, Vice President Commercial of Ethiopian Airlines.

Ethiopian wins the 2008 Corporate Achievement Award

The award plaque was handed over to Mr. Busera Awel by Mr. Jeff Radebe, Member of Parliament, Honourable Minister of Transport of the Republic of South Africa at the 14th Aviation & Allied Business Leadership Conference in Johannesburg, South Africa in August.

VP Commercial of Ethiopian, Ato Busera Awel receiving the award plaque from Hon. Jeff Radebe Minister of Transport, Republic of South Africa


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AFRAA position on aviation emissions AFRAA supports ICAO efforts in minimizing the impact of aviation emissions on the environment. AFRAA agrees that the ICAO Committee on Aviation Environment Protection (CAEP) should be the worldwide environmental technical forum.

African airlines expect that emphasis should be on those measures that reduce emissions without negative impact on the growth of air transport, particularly in developing countries

African airlines: Support continuous development of technology as a vehicle to reduce emissions Support improvement in global air traffic management to create shorter-straighter routes

African airlines do not believe that imposition of aviation emission charges is an effective solution to the problem of emissions due to: Difficulties associated with direct application of those charges The potential discrimination against aviation in comparison to other more polluting sectorsAfrican airlines believe that emission trading could be a more effective solution than imposition of charges or taxes. However, inclusion of aviation emissions in Emission Trading Scheme (ETS) should

follow ICAO guidelines based on mutual agreement of States and airlines involved.

AFRAA believes that since the Kyoto Protocol does not set emission targets for developing countries, inclusion of airlines from developing countries in the emission trading scheme of

the European Union would be inappropriate.

African airlines believe that although the United Nations Framework Convention on Climate Change has requested ICAO to handle issues pertaining to aviation emissions, it should respect the fundamental principle of differential responsibility for developing and developed countries. (Developing countries are exempt from the Kyoto Protocol)

The Executive Committee of the African Airlines Association (AFRAA) held its 146th meeting in Cairo, Egypt. The meeting was hosted by EgyptAir.

This was the second statutory Executive Committee meeting in 2008 and was convened to review and take decisions on some administrative issues, consider preparations towards the 40th Annual General Assembly and receive reports of the Standing Committees as mandated by the articles and by-laws of the Association.

The meeting in Cairo also accorded members of the Executive Committee an opportunity to meet and welcome the newly appointed Chairman and Chief Executive Officer of EgyptAir Group, Capt. Tawfik Assy following his appointment in April, 2008.

Capt. Tawfik replaced Eng. Atef Abd Elhamid as Chairman of EgyptAir Group. Until his appointment, Capt. Tawfik was the Chairman and Chief Executive Officer of EgyptAir Tourism and Duty Free Shops Company.

146th Executive Committee Meeting in Cairo, Egypt

Emissions such as by this aircraft pose a risk to the environment.

Special Report

cont. from pg 3 AFRAA CARBON EMISSIONS POLICY

Some EXC Members & AFRAA Team after 146th meeting in Cairo, Egypt


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For years, professional and highly skilled employees trained on the meagre resources of airlines and civil aviation authorities have been migrating outside the continent to greener pastures. However, until recently, the rate of employees that were leaving, though damaging, has been manageable to some extent. Airlines and civil aviation authorities have struggled to replace some of the losses through their normal training and hiring processes.

Traffic Growth The main driver for demand

The significant growth in air traffic in recent years particularly in Asia and the Middle East, however, has fuelled an exodus of professional and skilled employees from African airlines and civil aviation authorities to these regions.

The Middle East is one of the fastest growing areas for passenger and cargo, registering in 2006, a growth rate of 15.4% and 16.1% respectively. The Civil Aviation Authority of China (CAAC) estimates 11,000 additional pilots will be required by 2010 and another 18,000 by 2015. In Asia and the Middle East, based on known aircraft orders, the Centre for Asia Pacific Aviation (CAPA) analysis suggests a need for 154,000 employees across the region over the next decade, including 10,200 pilots, 36,000 cabin crew, 26,800 maintenance engineers and 38,500 ground handlers. The huge manpower short fall cannot be fully addressed, at least in the short term, with the existing training capacity globally. IATA report indicates that there will be a short fall of about 3300- 3500 pilots per year between the demand and the present training capacity can accommodate.

Contributing Factors

In addition to the strong traffic growth, which is the main driving force behind the high demand, several factors facilitate the loss of professional and skilled manpower of African carriers.

Job insecurity resulting from constant changes of senior management and uncertainty created by heavy government involvement in the day to day affairs of the airlines are some of the contributing

factors. The endless and protracted privatisation and restructuring

LOSS OF SKILLED MANPOWER A Crisis in the Making-Tewodros Tamrat

processes that have become the hallmark of carriers across the continent have added fuel to the sense of insecurity and frustration pushing professional and skilled employees to seek jobs outside their own country and the continent.

On top of this, many African carriers have not been able to offer a package that is competitive or at least provide adequate incentives to encourage employees to stay. This in some cases is due to the precarious financial situation of many of the airlines. Others have been hindered by the fact that being closely controlled by their

governments, they lack the flexibility to adjust their salary scale to reflect changes in the market.

Additionally, with increasing opening up of the economies of many countries, airline jobs in African airlines have lost some of their glamour. The indirect benefits such as access to foreign currency and importation of foreign goods which airline employees traditionally used to benefit from no longer exist or have been reduced substantially. Despite this, many airlines have not found ways of rebalancing the packages they offer to ensure that employment in the airlines remains attractive.

Another contributing factor is poaching by foreign airlines. Some airlines, particularly those from the Gulf as well as the Asia Pacific, use poaching as a strategy to supplement their manpower requirement instead of training the required manpower to cater for their anticipated growth needs. Utilizing the services of highly skilled

and aggressive agencies and assisted by regulatory and policy environment in their countries such as, exemptions from income taxes, duty free privileges and selective immigration policies, which are geared towards encouraging the importation of skilled manpower, these agencies have been able to recruit and take away the best and the most experienced pilots and technicians from African carriers.

The Adverse Effect

The significant upward increase in the loss of professional and skilled manpower especially pilots and aircraft technicians has reached a point where it is causing disruption of air transport services and forcing some airlines to scale down operations and/or put on hold their plans for expansion. More worryingly, the current effort for a safer African sky could be greatly jeopardised, due to the shortage of well trained and experienced aviation personnel in critical safety areas. This will affect the capacity of many countries to effectively shoulder their safety oversight responsibilities. Airlines may also be forced to make do with relatively less experienced pilots as the shortage becomes acute. The situation will get worse as traffic growth continues and airlines increase their capacity to meet demand.

Meeting the Challenges

Considering the serious adverse effect that continued loss of highly skilled manpower has on their operation, growth and ultimately viability, African airlines need to put in place a comprehensive strategy that minimize such losses and mitigate its impact. Such strategy should take into account the global, regional and national dimension of brain drain as well as the specific situation of the individual airline concerned. The strategy may include among others, blocking strategy, retention incentives, end payment schemes, tax exposure reduction schemes, adequate notice and cost recovery agreements. These are but a few examples. However, airlines need to be careful not to violate local and international law in implementing their strategies

African governments also cannot afford to ignore this great challenge facing the air transport industry, which if not properly addressed may have disastrous effects on African carriers and civil aviation. Unless

Pilots in the cockpit of an aircraft

Feature


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Feature

they individually and collectively together with the industry take concrete and urgent actions to stem the flight of trained manpower from the industry, the already fragile air transport industry may suffer a great setback.

Governments need to take urgent regulatory and policy measures that encourage and support the retention of skilled manpower in the continent while discouraging poaching. They should also put diplomatic and political pressure through the Regional Economic Communities (RECs) and the AU on recipient countries to desist from deliberately poaching skilled aviation manpower from African airlines and other critical sectors and remove policies and regulations that encourage such poaching.

Enhancing Training Capacity

African airlines and governments, individually and collectively, need to work together to enhance the training capacity of existing training institutions as well as

establish new ones. Like all adversities the current and anticipated manpower shortage offers great opportunities for the continent to train manpower not only for its own needs, but also cater to the needs of airlines outside the region thereby opening up job opportunities for many Africans. This requires concerted effort, and collaboration between the industry, governments, regional organizations and financial institutions. Countries of airlines who are currently engaged in poaching could also team up with the continent in this endeavour.

Many African airlines, such as Ethiopian Airlines, EgyptAir, Royal Air Maroc, South African Airways, Kenya Airways among others have training facilities and offer training that is of high quality and meets international standards. African carriers need to partner with these airlines and take advantage of their facilities to ensure a steady supply of trained manpower at a reasonable cost.

These facilities are however, not adequate to meet the growing demand within the continent. There is therefore an urgent need to strengthen and expand their capacity. To do so funding will be required. Financial institutions such the ADB are well advised to step in and extend financing facilities to airlines and civil aviation authorities to assist them enhance their existing training facilities as well as the establishment of new ones. There is also great opportunity for private sector participation in this area.

However increased training alone particularly in the short term does not address the problem fully as employees that leave as a result of poaching or otherwise are the most senior and experienced pilots and technicians. Robust and proactive employee retention programs coupled with measures that discourage poachers must also be put in place.

The African Airlines Association at its 39th AGA made an urgent appeal to all major stakeholders to address this critical challenge faced by the industry. We hope all, particularly African governments, will positively respond to the airlines call to action.

A Team of Nasair Cabin Crew. Professionals such as these, pilots, Engineers and Administrators are fleeing the continent for greener pastures elsewhere.


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The various air disasters we have witnessed on the continent clearly point to a need for aviation stakeholders to have

an emergency response plan that meets international standards. As the regulatory regimes continue to come up with stringent requirements in this field, it is crucial that operators deal with the experts and be prepared for the worst. In a situation of disaster our clientele expects us to show case tested professionalism. More importantly, a major disaster should not signal the death knell of our organisations.

For this reason, AFRAA, in collaboration with Kenyon, a leading world organisation in emergency planning and response management, held a workshop for airlines and other stakeholders of the aviation industry on 14 15 July 2008 in Nairobi. The workshop is in response to inadequate responses following a number of accidents on the continent. The workshop was well attended by 36 participants from 14 airlines and other stakeholders of the industry.

Major Areas Covered

An emergency is destabilizing by its nature and represents a threat to the future of an airline. The workshop was an important forum for the sharing of ideas and expertise particularly in the critical area of family and survivor assistance following an airline disaster.

EMERGENCY PLANNING AND RESPONSE MANAGEMENT-By Dr Elijah Chingosho

Among the areas covered during the workshop were as follows:

The need for an emergency response plans as well the aviation disaster response planning industry standards. Also covered were modalities of setting the goals of successful response plan The regulations pertaining to family assistance and survivor issues including ICAO stipulations particularly the Montreal Convention, European Regulations and regulations in certain countries Producing Emergency Procedures Manual including the drawing up of the emergency procedure organisation and the roles and job descriptions of post holders. The command structure of an airline emergency response organisation including the command centre responsibilities Accident investigation and technical support Airport response including accident station responsibilities and airport response family and survivor assistance Family assistance (manifests, call centres and notification) and family assistance site response. Family assistance briefings, events and services and special assistance teams Media relations and corporate response issues. Insurance, legal and finance issues The required exercises, drills, crisis leadership and thriving in chaos.

Kenyon and AFRAA Partnership

Following the successful workshop, AFRAA and Kenyon have already opened discussions on coming up with a partnership arrangement which will enable airlines to benefit from discounts when receiving services from Kenyon. Some two airlines will be holding free courses on handling an emergency following a draw conducted at the end of the workshop and it is planned that more such collaboration will enable African carriers handle disasters better than they have done in the past..

Conclusion

The workshop was very important in highlighting the critical areas that stakeholders need to deal with concerning a possible emergency. The importance of planning, training and exercises and drills and the need to professionally deal with family assistance was highlighted as these issues could determine if an airline could survive an emergency or collapse as has been the case with some carriers on the continent.

The relatively small size of our airlines does not meet the standards for economies of scale and bargaining power in the Industry. We therefore need to cooperate to compensate for our small sizes, achieve economies of scale and optimum costs.Robert Jensen, CEO of Kenyon International

Executives of AFRAA and Kenyon after the Workshop in Nairobi.

Safety & Security


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A


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Safety & Security

The Accounting Treatment of Aircraft Maintenance cost has posed some challenges to Finance Managers, it is

therefore important to review how various Airlines account for this cost and come up with some guidelines.

Airlines normally schedule their maintenance work based on their operating requirements, Fleet disposition, and requirements of aviation regulatory authorities or manufacturers specification.

Types of maintenanceChecks can be classified into the following categories based on the level of service required: A checks These are short cycle engineering checks, component checks

Monthly checks,

Annual Airframe Checks,

C Check is a periodic heavy maintenance check which is required every 6000 hours or 1 year whichever comes earliest

D checks is also a heavy maintenance check where structured checks of airframes is done every 6 years, 16 years or 30,000 hours depending on aircraft type

There are also Engine Checks and Wing Repairs

There is replacement of Life limited parts which depends on useful life of part.

Accounting TreatmentThere are Three Guiding Principals or Standards on the Accounting Treatment of Aircraft Maintenance :

IATA Airline GuidelineIFRSUSGAPP

The IATA airline guideline on the treatment of maintenance cost is in conflict with IFRS - IAS 37. The IATA guideline is also not an accepted accounting guideline. The USGAPP accommodates accruals which is the building up an accrual for maintenance liabilities in advance of the maintenance event. It was recommended that Airlines adopt the IFRS guideline which is the recognized accounting treatment.IFRSIAS 37- Provisions, contingent liabilities

Accounting Treatment of Aircraft Maintenance Cost- Juliet Indetie

Members of the AFRAA Economic and Finance Comittee

and contingent assets, treatment ensues from the matching concept. Provisions are only permitted where there is a current obligation, a current obligation occurs from either a current event or a past event which must have a legal obligation ,current means the prevailing financial year.

Accounting methods used by carries

a) Direct expensing method b) Built-in overhaul method c) Deferral methodd) Accrual method

Airlines should ensure that whichever method they use, they must ensure that they are in line with International Accounting Standards. Maintenance policy adopted should ensure that costs are expensed to the profit and loss account in a manner which fulfils the matching concept. Short cycle maintenance costs, including annual airframe checks, should be expensed as incurred. It may not be wholly appropriate for smaller airlines to adopt such a treatment during the start up phase in order to avoid potentially significant fluctuation in reported results as a result of the incidence of annual checks. In such cases heavy maintenance and engine checks should be expensed on a basis which ensures that the charge to the profit and loss account is evenly matched with the associated revenue.

The approach of expensing heavy maintenance and engine check costs

as incurred is appropriate where there is an even incidence of maintenance expenditure. For other airlines the matching principle will mean adopting either the capitalize and depreciate approach, or the accruals approach.

It is important for the Airlines to ensure adherence to IAS 37 in determining in what circumstances an accruals basis should be employed. If the maintenance agreement gives rise to a present obligation at balance date, it would be permissible to use the accrual method, maintenance obligations under operating leases will also fall into this category but for owned or financed leased aircraft the accruals basis would not be permissible except where there is a contract in place involving non-refundable payments to a maintenance provider (for example a charge per hour flown).

Balance sheet accounting will depend entirely on which approach to accounting for cyclical maintenance is adopted. Where the accruals method is still used, the airlines balance sheet will hold a provision or accrual to reflect the cost charged to the profit and loss but not yet paid. This can be shown either as an accrual or as a provision.

Where the capitalize and depreciate approach is adopted the airline will hold an asset relating to the deferred maintenance expenditure. This should be shown as part of the fixed asset balance to which the maintenance expenditure


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relates, as envisaged under IAS 37. Any initial maintenance incurred to bring the aircraft acquired to serviceable condition should be dealt with as an adjustment to the acquisition cost and amortized over the period until the next maintenance check.

Airlines normally seek to manage their fleet in such a way as to minimize the requirement to carry out additional maintenance at the end of the lease term. However, where there is evidence that additional costs will be incurred, it is recommended that the anticipated cost is provided for on the accruals basis.

In the acquisition of Second hand aircraft the heavy maintenance expenditure is incurred as part of the acquisition of the second hand aircraft such expenditure should be dealt with as part of the asset cost and depreciated.

summaryThe plane should be split into its major components and each component amortized and depreciated over its useful life. This is the alternative to building up provisions and in

the event that a part wears out and needs to be replaced before its useful life, the residual amount should be written off in the current years profit and loss account. It is not a prior period adjustment but a change in estimate. The new part should be amortized and depreciated over the useful life. If the components need constant replacement before the expiry of their useful lives then a review of the policy needs to be carried out on the estimation process i.e. the definition of the useful life.

Maintenance Costs that do not add to the useful life of the asset should be expensed and the default should always be to expense. Provision can not be made for the D_Checks even though the Airline knows the exact period the check needs to be undertaken as the obligation has to be current and if it was a past event there has to be a legal obligation.

In a case where the Aircraft is on lease, payments to the lessors arise from commercial regulations and on going maintenance should be scheduled to avoid incremental return to lessor costs. Where a deposit is

paid for maintenance, the amount should be amortized as a prepayment over the lease term.

Disclosure in the accountsAirlines should, where material, and subject to any further requirements of local law or standard, disclose the following:

. The Accounting Treatment of all Maintenance Expenditure;

. The Nature of Heavy Maintenance Expenditure;

. The Accounting Basis used for different types of Heavy Maintenance;

. The Accounting Treatment of Maintenance Liabilities arising on the acquisition of Second Hand Aircraft;

. Where Significant, the Impact of Return to Lessor Conditions.

. The Rates used in amortizing the Capitalized Maintenance Costs.

Accounting Treatment of Aircraft Maintenance Cost.


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Profile

Capt. Tawfik Assy is the new Chairman and CEO of EgyptAir Holding Company. He took over from Eng. Atef Abd Elhamid on 16th April, 2008.

Prior to his appointment as Chairman and CEO, Capt Tawfik Assy served EgyptAir for over 38 years in various senior management capacities. Before ascending to the helm of the airline he was Chairman and CEO of the EgyptAir Tourism and Duty Free Shops Company, a position he occupied from June 2003 to April 2008. Between 2007 and April 2008, Capt. Tawfik oversaw the development and growth of an air taxi company Smart Airline, as its Chairman.

Capt Tawfik achieved significant successes for the tourism industry in Egypt during his reign as Chairman and CEO. He also redefined and expanded the concept of duty free shopping at all the major Egyptian Airports. Through his innovative leadership, he quadrupled the total revenue of the company in four years.

During EgyptAirs restructuring, Capt. Tawfik was instrumental in the airlines key businesses modernization. He earned credit for his role in the airlines membership of the Star Alliance, IT systems integration and enhancement, safety and quality assurance and environmental initiatives.

Capt. Tawfik joined EgyptAir on December, 1970 as maintenance engineer. Since then, he has worked as a pilot, captain and instructor on B707, Fokker, B737, A320/330//340. Today, he is still a licensed captian on the A330/340. His diverse industry knowledge and experience is attributable to his almost four decades of service in various senior technical and management positions in EgyptAir.

Capt. Tawfik Assy Chairman and CEO

EgyptAir Holding Company

New Chairman and CEO of EgyptAir Group - Capt. Taw k Assy

He is a member of the IATA Board of Governors and also serves on the Executive Committees of the African Airline Association (AFRAA) and the Arab Air Carriers Organization (AACO). Capt. Tawfik holds various academic qualifications including a BSC degree in Electrical Engineering from Alexandria University and a Diploma in Administration Management.

The dynamic and fast growing Libyan carrier, Afriqiyah Airways has announced the appointment of Eng. Rammah Ettir as the new Chief

Executive Officer (CEO). He takes over from Capt. Sabri S. Abdallah who has been elevated to the higher office of Chairman of the Libyan Aviation Holding Company, the parent company of Afriqiyah and other aviation related parastatals of Libya.

Eng. Rammah comes with a wealth of aviation experience having previously held the positions of Planning Manager and Commercial Director in the airline.

Eng. Khaled Swessi has also been appointed Commercial Director of the airline. Prior to his appointment, he was the Sales Manager of Afriqiyah Airways.

Afriqiyah Appoints New CEO & Commercial Director

Eng. Rammah Ettir - CEOAfriqiyah


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Airlines Update

Ethiopian Airlines and ASKY, a newly established airline based in Lome-Togo, signed a Memorandum of

Understanding (MoU) at the Ethiopian Airlines Head Office in Addis Ababa to establish a strategic partnership between the two carriers in the areas of marketing, operations, maintenance, training, financing and management contracts. Mr. Girma Wake, CEO of Ethiopian, and Mr. Gervais Koffi Djondo, ASKYs Chairman of the board signed the MoU in the presence of

Ethiopian and ASKY Airlines Sign MoU on Strategic Partnership

Mr. Christian E. Folly-Kossi, Secretary General of African Airlines Association (AFRAA) and other executives of the two airlines. The MoU includes a detailed roadmap that will culminate in ASKY starting of operations by December, 2008.Mr. Girma revealed that Following Ethiopians successful operations and management of the Addis Ababa Hub, it was now determined to build Lome as the second largest hub in Africa for Ethiopian. This MoU is an important move marking an historic intra-African co-operation in the airline business. The MoU will pave the way for the two carriers to develop a West African hub for the regional and inter-continental routes. The West African region is one of the fastest growing economies in the world due to the prevailing high commodity prices. ASKY is a multinational private airline initiative geared to meet the growing demands for safe, reliable and competitive air transportation services in Central and West Africa. Its equity ownership includes the private multinational ECOBANK and the two major development banks of the region, namely EBID, the Economic Community of West African States, (ECOWAS) Bank of

Investment and Development, and BOAD, West African Development Bank. Ethiopian Airlines will own a 20% stake in the start-up airline. In 1960 Ethiopian, for the first time and single-handedly, pioneered air services to Ghana, thereby cementing the cornerstone for Africas uninterrupted East-West connections. The establishment of a hub in West Africa through the signing of this partnership agreement marks the beginning of yet another milestone in the history of commercial aviation in Africa. It is also a proud testimony of Ethiopians dedication and commitment to its customers and Africa.

The Chief Executive Officer of Air Namibia Kosmus Heinrich Egumbo accompanied by his Business Development

Executive, Xavier Masule, paid a working visit to the AFRAA Headquarters in Nairobi on 20th September, 2008 as part of their East African business opportunities exploration tour.

Welcoming the duo, the Secretary General of AFRAA, Christian Folly-Kossi expressed his delight in their visit to AFRAA and wished them fruitful deliberations in their meetings with other business partners and airlines in the sub-region. He briefed them about the current projects being pursued by AFRAA and solicited Air Namibias active participation.

On his part, Mr. Kosmus Heinrich Egumbo thanked the Secretary General and his team of Directors for making time to meet with them.The teams from Air Namibia and AFRAA

Air Namibia CEO visits AFRAA

discussed various value added services and projects that AFRAA could add to its portfolio of services it currently renders to its members. At the end of the meeting, the CEO of Air Namibia reaffirmed his airlines commitment to AFRAA and assured the AFRAA team of the active participation of Air Namibia in all AFRAAs activities.

Air Namibia CEO, Kosmos Egumbo(c) with Secretary General & Directors of Afraa 2nd from Left is Xavier Masule, Business Development Executive of Air Nambia

Mr. Girma Wake, CEO of Ethiopian Airlines

Gervais Koffi Djondo, ASKYs board Chairman


africawings 15

Forum

The 10th SITA and Airline Business Airline IT Trends Survey results were announced by SITA with a call to the industry to reap the full benefits of the internet for cost reductions and ancillary revenues in order to compensate for the soaring cost of fuel.Paul Coby, SITA Chairman, said: Airlines were the first industry to fully automate all parts of their business. The Air Transport Industry has now become the worlds first truly web-enabled industry. IT enabled airlines to make both major savings and improve customer service after 9/11. But in these challenging times with oil at over $130 a barrel, there is now an even more urgent need to deploy technology to serve airline customers, save costs and to equip airline staff with effective technology to do their jobs better. Among the record 121 airlines responding to this years survey, the online sales average is only 24% with their own website. This varies from 43% in North America to just under 10% in Africa and the Middle East. A very important source of revenues is clearly being lost to those airlines not using web selling at a time when everyone in the industry needs to maximize returns on their

FIGHT OIL PRICE RISE WITH E-COMMERCE - SAYS SITA

IT spend. Selling online has already massively helped to drive down distribution costs, saving airlines in the region of $2 billion.Coby added the adoption of the new generation Web 2.0 technology can deliver greater sales and greater savings across the industry, and better returns from the $11bn invested annually.Francesco Violante, SITA CEO, said: The price of fuel is providing the economic incentive for the airlines to tap further into ancillary revenues by acting not as traditional airlines but e-commerce companies offering every type of service to their global consumer market of 2.3 billion passengers SITA CEO, Francesco Violante

African Wings is a Pan-African journal on air transport. It is dedicated to the dissemination of reliable and accurate

African aviation developments and communicating the African Airlines Associations (AFRAA) positions and views on topical global air transport issues that affect the African aviation

industry.

It is published quarterly by AFRAA and circulated widely to airlines, industry partners, aviation service providers, airports, civil aviation authorities,

regional and sub-regional air transport organisations, government institutions,

universities, tour operators, hotels, among others.

To advertise in Africa Wings, please contact the Commer-cial Department of AFRAA on

+254 20 2320144/2320148 or [email protected].

ADVERTISE IN AFRICA WINGS

21%.Self-Service Adoption Airlines are forecasting that while only 1% of passengers use mobile phones for check-in today, this will rise to 6% next year by which time more than half of airlines will offer the service. This forecast suggests an evolution of self-service to mobile devices.The following airline self-service initiatives are already in place: web check-in, 56%; mobile phone check-in, 21%; self-boarding kiosks, 21%; online trip-change service, 25%; and lost baggage self-service, 12%.Passenger Security 85% of the airlines responding to this years survey now provide passenger data to the worlds governments, up 4% from last year. Of those providing data, 73% provide to less than five governments and the remaining 26% to six governments or more.

Onboard Technology The majority of airlines expect to have deployed at least one of these services onboard aircraft within a three to four year time frame: SMS via mobile phone; GPRS for Blackberry; Voice calls via mobile phone; Internet access via laptop; email access via laptop; and IM via laptop. More than half of respondents indicate they are planning to charge for these services or to finance them through advertising.

using state of the art technologies such as Web 2.0 and Travel 2.0 applications. This can greatly help to withstand predicted airline losses of $2.3 billion this year .He pointed to the example of Ryanair which now sells 98% of its tickets online and gains over 17% of its revenues online from ancillary sources while for many established airlines the figure is less than 5%. Since the first Airline IT Trends survey in 1999, airlines have invested around $100 billion in IT and communications. As a percentage of revenues the average airline IT spend is now 2.2%. At the industry level, this equates to around $11 billion this year which represents an increase of 5% on last year. This increase is seen as recognition that IT plays a strategic role, generating revenue as well as helping deliver cost reductions and customer service improvements through self-service and smoother passenger management.Other key highlights from the surveyManagement and Strategic IssuesThe main drivers for IT investment cited by survey respondents were reducing costs, 62%; improving customer service, 54%; enabling new market offerings and revenue opportunities, 45%; and improving workforce productivity, 40%.Top investment areas included passenger processing and services, 63%; aircraft management /operations, 44%; passenger security, 34%; and employee security,


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africawings 17

Special Report

The Rwanda Civil Aviation Authority (CAA) and SITA have announced the introduction of digital-based data link services at Kigali International Airport which will eliminate total reliance on voice communications for digitally equipped aircraft.

The Digital-ATIS (Air Traffic Information System) system and an air-ground data link service will be in place by years end and is in line with ICAOs (International Civil Aviation Organization) Comprehensive Regional Implementation Plan for Aviation Safety in Africa agreed at the last ICAO General Assembly in September 2007.

Joshua Mbaraga, General Director, Rwanda CAA, said: The Digital-ATIS system to be installed at Kigali International Airport will enable data link equipped aircraft to receive ATIS information via SITAs AIRCOM VHF and satellite data link service so that the information will be displayed on cockpit screens or printed on cockpit printers.

SITA AND RWANDA TAKE THE FIRST DIGITAL STEP TOWARDS IMPROVING AVIATION SAFETY IN AFRICA

This will obviate the need for pilots to tune into dedicated voice ATIS frequencies in the approach phase and having to write down what can be often lengthy messages during the critical phases of the approach. In addition to the obvious safety benefit of avoiding mistakes in listening to the traditional voice ATIS broadcasts in the approach phase, the Digital-ATIS service for Kigali International Airport can be accessed from almost anywhere in the globe due to SITA AIRCOMs global coverage which allows information to be picked up anywhere en route.

He added: The Rwanda Civil Aviation Authority fully recognizes the safety and efficiency benefits that data link technology can bring to air navigation service delivery and D-ATIS is just the first element of our plans to implement ICAO recommendations.

SITA delivers air/ground and ground/ground data communications services across Africa to support airline and air navigation service provider requirements and has almost completed the migration to IP service availability across the continent.

Akhil Sharma, SITA Director, Air Traffic Management, said: SITA is committed to supporting air navigation infrastructure improvements across the African continent in line with ICAOs airspace safety plan strategy. We applaud the Rwanda Civil Aviation Authoritys initiative and foresight to implement D-ATIS and are confident that the service will deliver safety and efficiency benefits as increasing numbers of data link equipped aircraft start to serve Kigali International Airport.

SITA which is owned by the air transport community operates over 1,000 VHF data radios across the globe and delivers a satellite service via two Ground Earth Stations that provide access to INMARSAT geostationary satellites; the combined service is used on a daily basis by over 6,000 aircraft, over 180 airlines and 40 air navigation service providers around the world.

A Sectional view of Kigali International Airport


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THE FUTURE OF TRAVEL AGENCIES-by Raphael Kuuchi

The liberalization of the airline industry, growing competition, falling yields and high operating costs over the years have forced airlines to rethink their business model and takes step to reduce costs.

In the process, travel agencies that historically have played an important role in the airline product distribution and sales have become a casualty. Airlines in the last two decades have either reduced agents commission or eliminated it altogether to minimizing travel intermediaries cost component on their overall costs.

While some airlines have terminated travel agents commission entirely others have adopted the less painful practice of gradually reducing the commission paid to agents. What is certain though, is that, in the long-run, airlines will stop paying agencies commission for their role in facilitating the passenger travel process. Will that be the end of the travel agency business? Will this industry mutate and make itself even more relevant to its customers?

In North America and Europe, where the practice of reducing or eliminating agency commission started earlier, same travel agencies have changed their business model from commission-based order taking entities to service fee-based travel management businesses.

The end of commissionBy cutting agents commission, airlines reduce their dependence on travel agencies as a distribution channel. This has become possible because of the wide spread availability and use of the internet to distribute airlines products. Besides the lower cost of internet distribution, travel information which hitherto was in the possession of airlines and travel agents is now readily available on the web and accessible to everyone. Today, airlines do not fear that travel agents will boycott the distribution of their product since alternatives are available through the airlines offices and the internet.

According to a survey conducted by Amadeus, 34% of travel agencies consider reduced revenue from commission as their biggest challenge. In fact, the decision by airlines to reduce or eliminate commission has compelled many travel agencies to use technology and web-based sales systems to stay in business.

Growing independence of airlinesConfronted with ever increasing operating costs and losses, airlines are forced to cut distribution expenses in different areas. The strategies being pursued are aimed at:

reducing GDSs fees bypass established distribution chains by developing own websites (disintermediation) reducing or removing commission paid to travel agencies empowering passengers to perform their own travel transactions

The decision to cut/eliminate travel agencies commission does not imply that airlines agents are no longer relevant. Instead, it is aimed at reducing airlines sales and distribution costs and decreasing

their dependence on this channel of distribution.

The role of the internetThe internet has completely transformed travel distribution and sales. It has enabled airlines to directly reach potential customers through their websites and thereby cut back on the commission paid. It has also enabled control of the market by airlines.

As the internet is more and more being used as the main travel planning resource, online travel agencies are competing head-on with traditional GDS based travel agencies. Many travelers are using the internet to make informed travel decisions and purchases. According to Forester Research, 40% of European travelers, book their trips online while 27% buy from offline points of sale.

The internet has also facilitated easy access to more information by travel consumers and therefore given them greater opportunity to make informed travel choices. The success of travel agents in the future will depend on their ability to react to customer expectations and meet the needs of the new generation of sophisticated dotcom consumers.

The internet as a source of abundant information can complicate decision making. In fact, too much information can be confusing for customers. The more travelers have access to information (prices, travel suppliers policies, types of packages, etc), the more they will need advice and assistance to make a choice. The boom of the internet and easy access to information could therefore be to the advantage of the travel agent who are best placed to avail the right information and give unbiased consultancy. The competitive advantage of the travel agent of the future lies in its ability to provide expertise and experience consultancy to meet the diverse and sometimes complicated needs of travelers.

Adopting to the changing travel environmentThe evolving travel product distribution and sales regime presents some threats but also enormous opportunities to travel agencies. While many travel agencies especially in Africa are unsure how to adopt to the changing environment, their counterparts elsewhere are mutating to a fee-based model to meet the needs of the customers and remain relevant.As commissions are cut, it is important that travel agencies maximize every other revenue opportunity available to them. This means a shift away from dependence on airlines commission to a fee-based service delivery to their clients. It has been noted that, some travel agents do not feel comfortable charging their clients service fees for a number of reasons.Firstly, they fear customers may refuse to pay and divert business to their competitors. Secondly, travel agents find it difficult to process and collect service fees (no basis for calculating the fees). There is also the issue of staff resistance or unwillingness to levy a fee for their service because it is new. Staff are not sure how to implement the service fees model.

Feature

cont. to pg 20


africawings 19

Airlines Update

Virgin Nigeria is best airline in West Africa

Virgin Nigeria Airways Limited emerged the Best Airline in West Africa at the 2008 Africa Travel Awards organized by the Africa Travel Quarterly.

The awards are a key highlight of the annual Akwaaba Travel Market, instituted to celebrate outstanding contributions of recipients to the development of tourism and the travel industry in West Africa and beyond.

Whilst receiving the award in her office, the Head Corporate Communications of the airline, Mrs. Nkiru Olumide-Ojo, thanked the organizers for their consistent efforts at recognizing organizations that are building a credible image for Africa, especially the sub-region, as a tourism destination.Olumide-Ojo reiterated that Virgin Nigeria remains committed to its vision of building a world class airline

Virgin Nigeria Dorcas Oketch(L) & Nkiru Olumide-Ojo(C) receiving the plaque.

based in Nigeria. Our dream is to provide a seamless network that aids transportation across West Africa and beyond. Winning yet another prestigious award has further convinced all of us at Virgin Nigeria that we are on the right path in raising the bar of performance.

Virgin Nigeria has in the last one month raised standards in the domestic and regional travel patterns through the introduction of its E-190 jet that has individual In-Flight Entertainment (IFE) system the first in the sub-region

The company is currently rolling out an aggressive route plan in the region targeted at opening trade relationships between Nigeria and other nations as well as consolidating on existing route networks.

The Chairman of the Libyan Aviation Holding Company and former Chairman and CEO of Afriqiyah, Capt. Sabri S. Abdallah has been honoured with the African Aviation Award for 2007. The Award was in recognition of his outstanding service and contribution to the development of African aviation. The African Aviation Award is one of the most prestigious in civil aviation circles.

The award was conferred on Capt. Sabri during the 17th Maintenance Repair and Overhaul (MRO) conference held in Cairo, Egypt earlier this year. The MRO conferences are organized by the African Aviation Magazine.

Capt. Sabri Wins African Aviation Award

Capt. Sabri S. Abdallah-Chairman of Libyan Aviation Holding Company


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Feature

Some travel agents have changed their business

model from commission-based order taking

entities to service fee-based travel management

businesses.

In practice, corporate clients find it easier to accept service fees because they are aware of the need for travel agents to manage their travel budget. They also appreciate the value of a professional travel management company. However, such corporate clients tend to expect high standards of service, necessitating excellent staff training and investments in top level technology.

Elsewhere the loss of commission has forced some small and medium size agencies to consolidate in order to deliver the sophisticated services demanded and to better leverage competitive fares and incentive deals from airlines.

In response to the loss of business on leisure travelers and point-to-point clients who book directly through the internet, agencies are finding it necessary to educate their staff on the value they deliver in terms of finding the best fares and saving clients valuable time. The result of such training has been more professional, confident and skilled sales force. Such skilled workforce then focuses on delivering the sort of products and services consumers find difficult to locate and book on the web.

Increasingly, agents are spending less time on low-margin fares and more time on complex travel itineraries, holiday packages and group travel. Some travel agents have even specialized in specific products and destinations, thus developing niches that gives them competitive advantage.

The loss of commission has also encouraged agents to increase sales of non-air products such as cruise and hotel booking and car rental. Through their own e-commerce sites, where they pose competitive deals and discounts, some travel agents have been able to attract consumers.

Service feesService fees charged by travel agencies can vary considerably but often they relate to the complexity of the transaction. An agent may apply fees to each stage of the booking process such as charging for constructing an itinerary and quote, initial ticketing, issuing refunds, reissue, name or itinerary change. In addition, fees can also be charged for ticketing rail journeys, hotel and car rental reservations. In a service fees environment, time is money and the travel agent charges clients for the time spend on processing their travel request.

In calculating and collecting service fees, travel agents should avoid doing it manually. They should invest in service management solutions to automate the process.

Justifying service feesResearch has proven that many customers are willing to pay a fee for an agent to help them plan a trip. In fact, the most important service travel agents could provide for a fee is getting the lowest ticket prices according to the research.

Travel Agents must however make sure that the service fees they charge are reasonable, given the time and effort required to deliver the service. Most customers will be willing to pay for the convenience of

having a professional complete their travel arrangements but not at an outrageous cost.

Agents must also ensure that they possess a high level of knowledge and excellent research skills. This requires good training and the ability to access relevant information for travel decision making.

Communicating service feesGood communication is important in ensuring that your charges are accepted by the clients. Therefore agents must always notify clients of service fees upfront. It is a good idea to create detailed descriptions of every service the agency provides and the associated charges. Communicate these clearly to the client before service delivery.

Travel agents will need to emphasize to their clients that they offer professional travel management services using well-trained professionals who are dedicated to providing outstanding service and delivering a great travel experience while minimizing client costs. Where practicable, agencies should list all services and charges on a simple contract,

which customers are requested to sign before transactions are undertaken.

Supporting technology Travel solution providers such as Galileo, Amedeus and Sabre offer suites of solutions designed to help travel agents move to a service fee pricing model.

These solutions use a single interface, saving time, increasing efficiency, improving accuracy and supporting back-end accounting and reporting. The system automatically calculates the fees and mark-ups applicable to the booking.

Equipped with pre-loaded service fees rules, the system can be customized to calculate services fees taking into consideration the specific peculiarities of the agency or fees build-up. The benefits of using a fee manager system include:

- Time saving, efficiency and increased productivity- Reduce errors and loss of income and- Enhance customer confidence that fees are calculated correctly

ConclusionTravel agents have found declining commission, a major challenge to their survival and growth. This is compelling agents to rise up to the challenge by reengineering their businesses and broadening their revenue base, by focusing on new markets and services. Among others, agencies are moving away from order taking and ticketing to providing professional travel management services for a fee. There is a conscious shift by forward-looking agents from the traditional commission-revenue model to a service-fee revenue model. This means that, travel agents that embrace change will emerge stronger and be better placed to benefit from the changes in the travel and tourism industry.

African travel agents should overcome their hesitation to charge service fees and adopt the business model that will sustain their revenue streams in the future. Experience elsewhere has shown that charging service fees does not result in significant loss of clients. If the service-fees model is effectively implemented, it will result in increased customer loyalty and satisfaction. But the change will require investments in staff training, new technology systems and the adoption of cost efficient service fee management systems to meet the business needs and customer expectations.

THE FUTURE OF TRAVEL AGENCIEScont. from pg 18


africawings 21


22 africawings

Feature

The 14th Aviation & Allied Business Leadership Conference was held in Johannesburg, South Africa from 25-26 August 2008 under

the theme: Aviation in Africa: Changing Times, Changing Strategies. The theme and timing of this years conference could not have been more appropriate, as they coincided with the period in aviation history characterised by unprecedented high oil price, global credit crunch and the anticipated impact on liquidity and air travel.

Against the background of many aviation challenges, the 14th leadership conference sought to refocus strategies of the industry in Africa towards sustainability and viability of the business. The conference encouraged airlines and other industry players in Africa to embrace innovations in order to grow their businesses bearing in mind the global harmonization of regulations and standards by the EU an USA and their potential consequences for Africa.

The conference urged the continental aviation bodies; AFRAA, AFCAC, ACI-Africa and the African Union Commission for Infrastructure & Energy to pioneer the change the industry need to respond to global challenges. The meeting noted AUs close working relationship with the African Minister of responsible for civil aviation which is gradually leading to harmonized roles in aviation, and called for support in addressing the manpower shortage and funding needs of AFCAC to enable it live up to its responsibilities as the Executing Agency of the Yamoussoukro Decision.

African Aviation:Changing with the Times- by Raphael Kuuchi

Addressing the conference, the Minister for Transport of Kenya, Hon. Amb. Chirau Ali Mwakwere, noted the shift in political support to air transport liberalization in Africa and said, We need to do more to achieve the aspirations of our people and to improve integration across the continent. I believe that the best way to do this is to have individual states liberalise the air transport sectors within their respective regions.

In this regard, I wish to state that within the East African Community (comprising of Kenya, Tanzania, Uganda, Rwanda and Burundi) we have begun to align our Bilateral Air Services agreements to conform with the provisions of the YD. We are confident that we shall have a liberal air transport market in East Africa by January 2009.

For airlines and airports, the conference highlighted capacity building and retention as needing top priority attention and called for functionally innovative measures to arrest the deteriorating trend. Courting private sector management and funding according to the Nigerian Minister, Mrs. Diezani Alison-Madueke, could be a better way of enhancing the capacity and capabilities of airports as government funding is largely inadequate.

New generation aircraft provide maximum efficiencies low maintenance costs, low fuel burn and environmental friendliness and therefore African States must embrace the Cape Town Convention to facilitate fleet modernize at competitive cost. Already, a number of airlines are braving the odds and investing in new equipment. The 14th leadership conference called on States to

support airlines by adopting the Cape Town Convention and Protocols to ease aircraft acquisition cost.

The conference considered the low application of IT in aviation in Africa and recommended that in view of the overwhelming benefits IT brings to airlines, airports and their customers, significant resources should be channeled into upgrading and adapting technology based solutions to improve Africas competitiveness. The conference further urged airlines and airports to make e-ticketing, e-freight, CUSS and other aviation technology-based solutions an integral part of their operations so as to remain competitive and meet global standards.

As in previous conferences, the 14th Aviation & Allied Leadership conference also provided a forum for intercontinental bonding. The federal Aviation Authority (FAA) signed a MoU with the Ghana Civil Aviation Authority to enhance cooperation and collaboration of the two entities. Besides, South African Civil Aviation Authority also offered to support other African CAAs that need help to project aviation safety in Africa.

It emerged that the poor safety record in Africa may have been grossly exaggerated in recent times inspite of significant improvements have been attained. The conference noted that most of the fatal accidents that occurred in the last two years involved largely airlines from other continents. African aviation accidents are in most cases traceable to strive-ridden countries where safety oversight has been hampered by lack of skilled manpower and resources. The conference noted that most scheduled regional and intercontinental carriers of Africa such as Afriqiyah, Air Mauritius, Air Seychelles, Air Senegal, Ethiopian Airlines, Kenya Airways, Precision Air, Royal Air Maroc, South African Airways and Virgin Nigeria strictly adhere to international safety standards and boast of safety records equal to or better than any reputable airline anywhere in the world.

Though consensus was not reached on this issue, participants were agreed that the safety rating in peaceful regions and countries in Africa is far better than what is portrayed by global statistics.

The final resolutions of the conference noted the existing gaps that must be closed to facilitate air transport development in Africa. They also called for innovative strategies in such areas as safety, cost management, environmental sustainability, and capacity building among others.

Capt. Boyo(L) and some distinguished guests during the opening session of the 14th leadership Conference in johannesburg.


africawings 23

The national carrier of Mozambique, Linhas Aereas de Mocambique (LAM) has gained a foothold in the tightly

contested aviation market in Africa. The airline is one of Africas finest and prides itself in commercial agreements with international partners such as TAP Portugal, South African Airways, KLM and Kenya Airways through code sharing agreements on various regional and intercontinental routes.

In terms of performance, revenue and safety, LAM is among the best and most reliable airlines in Africa. LAM experienced its fastest successive growth in the last three years, notwithstanding the stiff competition on the routes it operates. The success attained by the airline over the years is aptly captured in its slogan Sempre a Subir, loosely translated Always Climbing higher.

The sterling performance of LAM is credited to Africas longest serving airline Chief Executive Officer, Jos Viegas, who has been at the helm of LAM for the past 21 years.

Under the leadership of Jos Viegas, LAM recorded tremendous achievements in the areas of safety, security, traffic growth, profitability and positioning of the airline as an international brand. Under the reign of Viegas, the airline attained the ISO9001:2000 Certification in 2006. LAM also achieved IOSA certification in

LAM Mozambique: A Giant in the Making

September 2008 thanks to the dedication and commitment to safety by Viegas and his able team. In the last two years, independent customer satisfaction survey rating of LAM has shown improvement from 76% in 2007 to 82% in the first half of 2008. Similarly, the airline boasts of the best punctuality rating in Africa.

To keep up with global developments in the industry, the airline has embarked on a number of initiatives to modernise its equipment, systems and processes. Since 2007, LAM complied with the requirements for E-ticketing and has been issuing electronic tickets. It has also revamped and upgraded its Departure Control System (DCS) to support automated check-in. 99.6% of all LAM tickets are currently electronic tickets resulting in significant financial savings to the airline and efficiency gains to passengers.

In the view of Viegas, LAM focus is modernisation-oriented; to exploit new technologies to support business development, particularly the use of web platforms. The airline is at the final phase of implementing its online booking engine which will enable passengers to buy tickets and transact other travel related business using the internet.

In September 2008, LAM met all the rigorous safety audit requirements of the IATA Operations Safety Audit (IOSA) and was registered as an IOSA certified carrier. In appreciation of the amount of effort that LAM put in to attain the IOSA registration, the Regional Vice President of IATA, Lance Brogden, noted at the certificate handing over ceremony in Maputo that the audit thoroughly scrutinise to the smallest detail; from technical to staff rating and LAM made it with flying colours.

LAM is one of six airlines within the 15 member Southern African Development Community (SADC) to attain IOSA certification and the only one of all the five Portuguese-speaking African countries to achieve this global safety recognition.

The IOSA certificate handling over ceremony was attended by important aviation personalities including Mozambique Transport and Communications Minister, Paulo Zucula and the Secretary General of the African Airlines Association (AFRAA), Christian Folly-Kossi.In anticipation of future traffic growth, LAM is investing in new, modern and fuel efficient aircraft. Our objective is to replace the larger aircraft in our fleet with newer ones, thus enabling us to increase frequencies, open new routes, and better serve our customers says CEO, Jos Viegas. The airline will invest over U$100 million in the acquisition of three Bombardier Q400 Turbo and three Embraer 190 aircraft and training of technical staff. Deliveries of the new aircraft will start at the end of this year with final delivery expected in 2010.

On receipt of the new aircraft, LAM plans to expand its domestic and regional network to other destinations in Africa and offer a superior product through improved customer service, reliability and overall efficient service delivery. Already, the airline plans to launch new services to Launda from Maputo beginning next January. Operations will initially be done using a Boeing B737-200 which will be replaced by Embraer 190 in mid 2009. After 27 years of providing safe, reliable and convenient air transport services, LAM believes that a client is a friend um cliente, um amigo. And this belief fits perfectly with its new image as a modern airline poised to exceed the expectations of its customers.

LAM is a joint venture between the government of Mozambique, which owns 89% and the airlines 677 strong workforce 11%. Through modernisation of its equipment, systems and resources, LAM intends to achieve technology driven competitiveness and become the leading airline within the Southern African Development Community (SADC).

Jos Viegas- CEO LAM Mozambique


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africawings 25

At last, a comprehensive solution to the lack or inadequacy of aviation statistics in Africa seems to be in sight following

the conclusion of an Aviation Statistics Workshop in Addis Ababa, Ethiopia recently. The 3-day AFRAA/ICAO sponsored workshop was hosted by Ethiopian Airlines and facilitated by experts from AFRAA and ICAO.

The workshop attracted 92 delegates from 22 African countries. Participants were from airlines, airports, civil aviation authorities, air navigation service providers and States departments responsible for Aviation statistics. Also in attendance were representatives from the African Union Commission (AU) and the Economic Commission for Africa.

Aim and content of the workshop

The workshop was aimed at identifying and addressing the challenges of accessing reliable African aviation statistics through the sharing of experience, knowledge, skills and resources necessary to collect, analyze, disseminate and use aviation data.

Through a series of presentations, participants at the workshop were taken through airline economics, role of statistics in improving competitiveness and efficiency, airlines competition and pricing practices, variance and profitability analysis, best practices in aviation data collection and analysis, accidents analysis, trends and probability and air travel demand and factors impacting demand. Participants were also enlightened on how to complete the standardized ICAO aviation data collection sheets, forecasting

AFRAA/ICAO AVIATION STATISTICS WORKSHOP-By Raphael Kuuchi

techniques and aviation incidents reporting systems.

At the opening session of the workshop on 7th October 2008, the Chief Executive Officer of Ethiopian Airlines, Ato Girma Wake decried the lack of reliable aviation data for planning and decision making and urged participants to cease the opportunities offered by the workshop to improve their internal data mobilization.

On his part, the Chief, Regional Integration at the ECA, Joseph Atta-Mensah, noted that good statistics constitute the basis for good decision making and helps aviation stakeholders to identify the best courses of action in addressing problems. Statistics also provide a sound basis for the design, management, monitoring and evaluation of national policy framework, said Atta-Mensah. The ECA urged the workshop delegates to come up with concrete solutions on how to collect and use aviation data for the advancement of the African aviation industry.

Role of Aviation in Development

The workshop discussed the role of aviation in the development of the continent. It emerged that aviation contributes significantly to economic development through the movement of people and goods, business, tourism and trade facilitation as well as job creation. Air transport is a driving force in regional integration and development and contributes to mitigating the transport problems faced by landlocked countries, connects Africa to global markets, boost tourism and trade and enhance the movement of people and

investment across boarders. according to the Secretary General of AFRAA, Christian Folly-Kossi.

Underscoring the importance of aviation, the Secretary General of AFRAA further observed that there are principally three pillars of development in any country or continent; Transport, Energy and Telecommunications. In the peculiar situation of Africa where air transport infrastructure is better developed compared to the other modes, if it is given the necessary support air transport could be the catalyst for trade, business, jobs creation and integration.

Misrepresentation of Africa Aviation

Among the numerous disadvantages of not having reliable statistics is the fact that Africa aviation is often negatively represented at the global stage. The continent is portrayed as having the highest accidents rates and the EU has blacklisted many African airlines from flying into its air space for that reason.

But in fairness to African aviation says Folly-Kossi, most of the accidents in Africa involve domestic carriers with no international operations whatsoever. These accident prone airlines are largely located in countries emerging from war or political instability. In fact, the safety record of the African intercontinental airlines is comparable if not better than the global average.

Better statistics in the future

To effectively respond to the negative portrayal of African aviation, the workshop concluded with a resolve to work assiduously towards improving aviation statistics collection, analysis and dissemination. Participant undertook to mobilize data from their respective organizations collate them and submit to their States for onward submission to ICAO.

It is the hope of AFRAA that this ground breaking workshop will serve to improve the quality and quantity of data in its data base to assist the industry in decision making.

Group photo of Statistics Workshop.

Delegates at the StatisticsWorkshop, Addis Ababa.

Forum


26 africawings

In the current challenging operating environment characterized by fierce competition, credit crunch, brain drain, high operating costs

and others, it is tempting to forget the importance of training and human resource development. It is critical that this aspect be given top priority as it is through talented and highly trained people that our organizations will be able to weather the current and future storms. It is therefore important to remind ourselves why human resource development is critical for the survival and viability of our organizations.Training and human resource development is critical in increasing the expertise of employees at all organizational levels. It facilitates the expansion of the horizons of human intellect and an overall character of the people. It also helps in inculcating the culture of team work, team spirit, and inter-team collaborations. It helps to develop a learning culture within the employees. We need to develop a learning culture in our organizations as the rate of change is so rapid that unless we keep up or we are ahead, we lose our competitive edge. Training should facilitate the development of a culture of continuous improvement, customer focus, safety culture and high productivity. Training also facilitates the development of a safety and security culture and a healthy working environment through building self-motivated employees, and relationships which are particularly critical in the aviation industry.

Through training and development, an organization should be able to develop leadership skills, motivation, loyalty, better attitudes, and other aspects that successful workers and managers typically exhibit. Good leaders will ensure that individual goals align with organizational goals. Through effective and relevant training, an organization gets more effective decision making and problem solving capabilities. Training helps in understanding the vision, mission and values of an organization and carrying out its policiesVisionary leadership arising from training and development improves the morale of the workforce, hence their productivity and ultimately profitability of the organization. The current challenges are such that it is not surprising to see people very demoralized and pessimistic about their

Training and Human Resource Development by Dr Elijah Chingosho

future and that of their organizations, which is a recipe for poor performance. Training and development helps to build the upbeat perception and feeling about the organization.

Training and development facilitate the optimal utilization of human resource thereby also helping the employee to achieve the organizational goals as well as their individual goals. Leaders should help employees in attaining personal growth.

In its tireless efforts to strive for high quality service in human resource development, AFRAA will continue to develop the skills of member airlines employees as well as the know-how and expertise of airline managers.

With globalisation, liberalisation, consolidation, partnerships and the like being the current buzz words coupled with breathtaking advances in the electronic field, it has become essential to equip the airline manager with appropriate skills, know-how and expertise to be able to effectively manage the complex challenges which confront the industry.

AFRAA will continue to work closely with the International Airline Training Fund (IATF) to offer courses for free on topical subjects. IATF has a pool of highly qualified instructors whose expertise has

been of immense benefits to participants of member airlines. In this regard, collaboration will continue with the IATF to offer joint programmes. The Association will also organise workshops, seminars and conferences where prominent speakers will be invited to lead discussions on topical issues.

To assist airlines in their restructuring programmes as well as improving their operational efficiency and productivity, AFRAA has a number of highly experienced and capable consultants with proficiency in all areas of airline activities.

The Association also offers customised training on request. This entails offering courses at an airlines base and tailored to its specific needs. This makes the training very competitive especially where an airline is training a large number of its personnel.

The venues for the courses have been carefully selected for ease of accessi

Documents

AFRAA Wings Magazine - Nov 2008, Issue 10