NAIROBI: Uganda Airlines has taken to the skies once more after almost two decades out of action, but flies into a crowded aviation market in Africa where carriers have the weakest finances and emptiest planes of any region in the world.
The state carrier launched commercial flights on Wednesday, its first since it was liquidated in 2001, aiming to take a slice of the East African aviation business that is dominated by Ethiopian Airlines, the continent's success story.
Uganda is the latest African government to pour money into national flag carriers; Tanzania and Senegal are also resurrecting their airlines, while the likes of Rwanda, Ivory Coast and Togo are expanding theirs.
But such efforts have been hampered by high business costs as well as protectionism, which has impeded a continental open-skies agreement - something industry experts say is vital for the success of African carriers in a tough market.
The African market is forecast to grow almost 5% a year over the next two decades in terms of passengers, faster than mature markets, according to the International Air Transport Association (IATA). However, this is from a low base and most state-owned flag carriers in the region are losing money.
While the global aviation industry is on track to make a profit of $28 billion, African airlines are projected to make combined losses of $100 million this year, IATA said in June.
Uganda Airlines, like some of its rivals, aims to attract more domestic travellers to help it buck the gloomy continental trend. Around 2 million passengers per year travel through Entebbe, Uganda's main airport. Around 70% are Ugandans, said the carrier's CEO Ephraim Bagenda.
"All those currently travel on foreign airlines," he told Reuters. "We want part of that cake."
Last year, it looked like Africa was making progress on an open-skies agreement - the Single African Air Transport Market - to let airlines decide how frequently they fly between cities and which aircraft they use.
A total of 28 countries have signed up, accounting for 75-80% of African air traffic. Uganda is considering signing, Works and Transport Minister Monica Azuba Ntege said.
However, so far only 10 signatories - including Cape Verde, Ghana, Togo, Ethiopia and Nigeria - have begun changing their own laws to implement the deal and open up their markets, said Raphael Kuuchi, Vice President for Africa at IATA.
The patchy efforts undermine the agreement and hobble direct connections within Africa, say analysts. Some airlines, including from countries that have signed up, oppose the open-skies deal because they fear bigger competitors.
"The most subsidised airlines and the biggest ones are going to take the biggest market share because they (are) able to afford it," Kenya Airways CEO Sebastian Mikosz told an investor briefing on Tuesday. "They are going to kill the smaller national airlines which are just starting because they will have no way to defend themselves."
Ethiopian Airlines, sub-Saharan Africa's only successful large state-owned airline, has bucked the regional trend and has been expanding fast, thanks in part to having secured key traffic rights in two ways.
First, it signed bilateral agreements with nearly all African countries in the 1970s, activating them as needed, said Kuuchi. The airline flew to parts of the continent served by few other carriers and leveraged that goodwill to open up markets.
"Governments were willing to give them additional rights, and travel rights, once you give them out, it's very difficult to retract," he added.
More recently, Ethiopian has been helping other countries launch their own carriers and taking a stake. That has created regional continental hubs in Togo, Malawi and Chad where it can pick up and feed traffic into its main hub in Addis Ababa, cementing its dominance and rivalling Gulf carriers.
Now governments are hoarding travel rights to protect their own airlines, so African carriers are struggling to set up hubs vital to winning international travellers, said Girma Wake, former CEO of Ethiopian Airlines.
"Instead of flying point-to-point everywhere, if they can collect traffic from the low-traffic areas and bring them to major hubs and carry them from those major hubs, you will be in a better position," he told Reuters.
African aviation accounted for only 2.1% of the global market in 2018, with 92 million passenger journeys flown, and non-African airlines including Emirates and Turkish Airlines account for around 80% of traffic in and out of the continent, IATA said.
African airlines are also struggling to improve load factors - percentage of seats filled - from the world's lowest regional level of 71% in 2018, compared with 81.2% globally, according to IATA.
Emirates builds traffic through its global Dubai hub, an advantage most African airlines don't have - except Ethiopian Airlines.
As well as protectionism, high fuel and taxation hurt African carriers.
In Europe, a passenger can travel 1.5 hours for less than $100 all-inclusive. In Africa, passenger taxes alone range from $40 to $150 per passenger, African Airlines Association Secretary General Abderahmane Berthe told Reuters.
"Many governments are levying taxes on aviation and not reinvesting these collected amounts in aviation," he said.
Governments often see air transport as a luxury that can sustain high taxes, said Air Tanzania managing director Ladislaus Matindi.
Fuel is also taxed heavily and must often be trucked in, an expensive operation. Fuel makes up about a quarter of operating costs globally but reaches 30-40% in Africa, Berthe said.
Uganda Airlines, founded by former dictator Idi Amin in 1976, was liquidated in 2001 after years of unprofitability during a push to privatise state firms.
Other African state carriers have been crippled by government interference, such as insisting on routes to unprofitable but politically important destinations.
Ghana Airways, which ceased operations in 2005, used to fly between Accra and Las Palmas, mainly because of the friendship between the leaders of the two countries, IATA's Kuuchi said.
Uganda Airlines CEO Bagenda insisted his company would be free from any political interference.
"Government policy in Uganda is eyes on, hands off," he said.
Crowded African skies get even busier with Uganda Air’s return
Crowded African skies get even busier with Uganda Air’s return
- Continent lacks Dubai-style hub as Emirates and Turkish Airlines dominate routes
Saudi aviation industry likely to create 35,000 new jobs by 2030
RIYADH: Saudi Arabia unveiled its first “State of Aviation” report, highlighting the sector’s contributions to the Kingdom’s economic growth, as industry leaders gathered for the Future Aviation Forum.
Speaking at the opening ceremony of the three-day event in Riyadh, Saudi Minister of Transport and Logistic Services Saleh Al-Jasser emphasized the unprecedented importance of aviation.
Saudi Arabia’s aviation sector contributed $21 billion to the Kingdom’s gross domestic product in 2023 while generating an additional $32.2 billion in tourism receipts, positively impacting other key areas of the economy.
“This transformation is one that we invite the world to share. We seek private sector partners with expertise to help us achieve our ambition,” said Al-Jasser.
The minister also reflected on the progress made in the aviation industry over the past two years and how industry leaders collaborated to overcome a major crisis by addressing global challenges and unlocking new opportunities.
This collaboration led to the introduction of new global policies, the announcement of nearly $3 billion in aviation deals, the signing of the Riyadh Aviation Declaration, and the commencement of a new golden age for aviation.
The State of Aviation report by GACA revealed that the Kingdom’s aviation sector contributed $53 billion to the economy and supported approximately 958,000 jobs nationwide.
Furthermore, the regulator introduced its General Aviation Roadmap during the forum, aiming to foster the development of Saudi Arabia’s business jet and private industry.
With targeted investments in six specialized general aviation airports and other initiatives, the roadmap projects the sector’s contribution to GDP to reach around $2 billion and the creation of 35,000 new jobs by 2030.
Al-Jasser shared three brief points, emphasizing the importance of aviation in driving global growth and well-being, highlighting the enormous opportunities being created in Saudi Arabia for everyone, and noting how this week reflects Saudi Arabia’s commitment to the global aviation industry.
“Globally, aviation traffic numbers have passed pre-pandemic levels, with air cargo fueling 80 percent of the world’s commerce needs,” he continued.
Outlining the achievements and developments in Saudi Arabia’s civil aviation sector since 2022, Al-Jasser noted that the Kingdom recorded 111 million passengers last year and announced a comprehensive economic policy for the civil aviation sector.
He stated that the Kingdom confirmed the order of hundreds of aircraft through the existing Saudi carrier and launched the Riyadh King Salman International Airport master plan to support more than 100 million passengers by 2030.
The minister added: “We also opened Riyadh Integrated Special Logistics Zone, securing a leading global investor and AviLease, a global aircraft leasing company, and established Riyadh Air to connect Riyadh.”
During the keynote address, Abdulaziz Al-Duailej, president of the General Authority of Civil Aviation, underscored the importance of this forum and its role in enhancing connectivity.
“We’ve gone from almost zero flights to almost 37 million flights last year. this is unprecedented and also proves the resilience and strength of the global aviation industry,” Al-Duailej said.
He also underscored examples of challenges, including what he pressed on the most, manufacturing and supply chain disruption.
“The aviation industry globally is facing a serious shortage of manufacturing capabilities and challenges in the whole value chain of the process. This is an area where we need to focus on,” said the GACA president.
He added: “Also, environmental sustainability is a very important element and objective, as we all agreed to protect our mother nature, we all agreed on specific targets on net zero carbon emission. Nonetheless, we agree on what and on why, but we have issues around how.”
Commenting on the significant growth in Saudi Arabia’s aviation sector, he also mentioned that in 2023 the number of passengers reached a record 112 million, up from 88 million in 2022, marking a 27 percent year-on-year increase.
The first quarter of the current year has already seen an additional 20 percent increase in passenger numbers.
In terms of connectivity, the number of direct international destinations from the Kingdom rose to 148, marking a 47 percent increase from 2019 when there were 99 direct destinations.
“In cargo, we’ve not done as well as we anticipated, but we still have about 6 percent growth in air cargo, reaching about a million, and hopefully on the way to reaching 4.5 million,” Al-Duailej said.
The GACA chief said: “Aviation is a major economic enabler. I don’t think other national strategies will achieve their expected targets if we do not succeed in aviation.”
He further discussed Saudi Arabia’s expansion and development plans for airports, revealing that the current capacity of Saudi airports, set at 120 million passengers, is poised to exceed 300 million.
“We are already working on the current terminals and expanding King Salman’s and King Khaled airports from the current 30+ million, and by the end of 2025, we will reach 54 million and on the way to reaching 100+ million by 2030,” Al-Duailej said.
He added: “King Abdulaziz Airport in Jeddah, the largest airport in the Kingdom, handled 43 million passengers last year and is expected to reach about 50 million passengers.”
Moreover, Al-Duailej stressed privatization as a key strategy to enhance connectivity.
“We are also working on privatization. Privatization is another important element in achieving this connectivity. The Kingdom has the first successful PPP model in the Middle East region,” he explained.
In 2012, the GACA president added, the Kingdom signed the first concession agreement with the private sector to build the Medinah airport in the West, and by 2015, the airport started with 8 million passengers fully financed and funded and operated by the private sector.
He also stated that three weeks ago, an agreement was signed to expand an existing concession with the same company that originally held it.
This expansion will greatly increase the capacity from 8 million to about 17 million by 2028, more than doubling the current capacity.
During the third panel session, Al-Jasser further explained the collaborative effort with partners and the private sector in Saudi Arabia.
“The marine sector is highly privatized, where we signed concession agreements in our two main ports with the private sector to invest more than SR17 billion, to build new infrastructure to cater for growth,” the minister said.
Al-Jasser noted that the expansion plans for King Salman Airport are progressing well, and the airport is expected to handle 100 million passengers by 2030.
Additionally, the ministry is managing the transition period leading up to this goal by building more terminals and expanding existing ones to accommodate the increased passenger capacity before 2030.
Riyadh’s grade A office renting grew by 5% in Q1 2024: report
RIYADH: Saudi Arabia’s prime office rental space saw a 5 percent growth in transactions in the first quarter of 2024 compared to the previous period, according to an industry report.
As per the global real estate services provider Savills analysis, Riyadh achieved an occupancy rate of 98 percent in early 2024, with rents increasing by 20 percent year on year.
“Despite healthy demand, a significant decrease in the number of office rent transactions was recorded in the first quarter, with Ejar data indicating a 27 percent drop in transactions quarter on quarter due to the limited availability of office spaces,” Amjad Saif, head of transactional services at Savills Saudi Arabia, said.
“However, Grade A offices witnessed an increase in rents by 5 percent compared to the last quarter, owing to the buoyant demand for quality assets amid their limited supply,” Saif added.
The report also highlighted that 74 percent of Savills’ inquiries originated from overseas, with an impressive 37 percent coming specifically from US corporations.
“Riyadh is experiencing a remarkable surge in corporate interest, with over 180 foreign companies surpassing the initial target of 160 choosing to establish their regional headquarters in the city,” Ramzi Darwish, head of Saudi Arabia at Savills Middle East, said.
“This growing confidence reflects the robust potential of the Saudi capital, fueled by the country’s strategic economic diversification plan. Prominent entities such as Franklin Templeton and Allen & Overy have recently set up their regional bases in the capital Riyadh,” he added.
The report also indicated that the Business Parks and the King Abdullah Financial District are experiencing significant interest, with 75 percent of transactions involving relocations to these areas.
To address demand concerns, over 420,000 sq. m of new Grade A office space is expected by year-end, providing tenants with greater flexibility and helping to stabilize rental prices, the analysis stated.
Significant leasing activity was observed in the first quarter of 2024, with legal services leading the way, followed by engineering, manufacturing, and information technology sectors.
Additionally, technology, media, telecommunications, banking, and financial services, as well as insurance companies, dominated occupier inquiries, reflecting diverse industry interests.
Saudi Arabia on the verge of launching trials for outer space tourism
RIYADH: Saudi Arabia is on the verge of launching an initiative in space tourism, according to a top official.
The CEO of the Saudi Space Agency, Mohammed Al-Tamimi, discussed the expanding role of spaceports and satellite deployment on the opening day of the 2024 Future Aviation Forum in Riyadh.
The first day of the event showcased significant developments in tourism, aviation, and space exploration. Key figures from various sectors emphasized the rapid growth and strategic initiatives driving the industry forward.
“Within a window of 60 days from now, there will be an announcement to do some trials here in Saudi Arabia about space tourism,” Al-Tamimi revealed.
He also projected a significant increase in satellite launches, with expectations to send “36,000 satellites over the coming six years,” tripling the current number.
“Right now, we have more than 10,000 active commercial civil aviation airports. When it comes to spaceports, more than 20-22 are active in 12 different countries,” Al-Tamimi said.
Saudi Arabia’s Tourism Minister Ahmed Al-Khateeb said “over 330 million people are employed in the tourism sector worldwide, or one out of every 10 workers.”
He also celebrated the Middle East’s post-pandemic tourism surge, led by Saudi Arabia, which saw a “remarkable 22 percent growth compared to 2019.”
Al-Khateeb attributed this success to value-driven travel options, shorter trips, and closer destinations.
He praised the new e-visa system that enables travelers from 66 countries, representing over 80 percent of the global travel market, to visit Saudi Arabia easily.
In November 2023, the Gulf Cooperation Council approved the unified tourist visa, which will launch by 2025. Secretary-General Jassim Mohammed Al-Budaiwi announced it during the 40th meeting of the GCC interior ministers in Muscat, Oman.
Similar to the Schengen scheme, this visa will allow tourists to travel across all six GCC member states.
The senior vice president of Boeing Co. and president of Boeing Global, Brendan Nelson AO, addressed the importance of transparency and integrity in the aviation industry.
“It’s important that you are authentic, that you’re transparent, that you are open and honest with your customers, your investors, certainly with the flying public,” Nelson stated.
In January this year, an Alaska Airlines Boeing 737 Max 9 experienced a fuselage rupture shortly after takeoff at an altitude of 4.8 km above Oregon.
Nelson also discussed Boeing’s strategic decision to slow down production to stabilize supply chains despite the high commercial cost.
“We expect that we’ll have supply chain issues well through to the end of this year, possibly into early next year,” he said.
Nelson emphasized Boeing’s commitment to sustainable aviation fuel, noting that currently, only “0.2 percent of global aviation fuel demand is being met by SAF.”
He highlighted the aerospace manufacturer’s partnership with Saudi Arabia in various projects, including a joint venture with Saudi Arabia Military Industries and collaborations on aerospace-grade materials and advanced resins.
Tony Douglas, CEO of Riyadh Air, outlined the ambitious goals of the new airline, which is to become a major international carrier.
“We’re going to connect to way over 100 different destinations by 2030,” Douglas announced, aiming to achieve in five years what took Qatar Airways over 20.
He highlighted Riyadh Air’s advantage of starting without legacy systems, enabling a modern and technologically advanced approach.
Douglas also shared updates on the airline’s progress, including the hiring of top-rated pilots and employees. A cabin crew fashion reveal is scheduled for the Paris Fashion Show next month, and a digital proposition unveiling is in October.
The 2024 Future Aviation Forum continues to highlight the dynamic advancements and strategic collaborations shaping the future of aviation and space exploration in Saudi Arabia and beyond.
Egypt’s Suez Canal Economic Zone secures $3.2bn in project contracts: chairman
RIYADH: Egypt’s Suez Canal Economic Zone secured 144 projects worth $3.2 billion between July 2023 and April 2024, down from $4.9 billion recorded during July 2022 to May 2023.
This comes amidst ongoing attacks in the Red Sea since October, leading to significant global economic disruption, particularly affecting container shipping traffic and global trade.
This is evident in a 50 percent drop in Suez Canal trade in the first two months of 2024 compared to the previous year, and a 32 percent decrease in trade through the Panama Canal, as reported by the International Monetary Fund in a March blog post.
In a statement issued by the Egyptian Cabinet, Walid Gamal El-Din, chairman of the General Authority for the Suez Canal Economic Zone, revealed that out of the 144 projects in its industrial zones and ports, 67 have obtained final approvals, while 77 have received initial approvals.
He added that more than 25,000 direct and indirect job opportunities will be created upon the completion and operation of these projects.
This reflects the authority’s ongoing efforts and activities despite the negative impact of regional developments on port revenues.
It also aligns with the entity’s mission to attract businesses from around the region by offering easy access to local markets and talent.
Furthermore, the chairman disclosed that the implementation rates of investment projects within the industrial zones reached 77 percent, while those in ports reached 71 percent.
Regarding Chinese investments in the special economic zone TEDA, El-Din explained that there are 42 existing projects, with an additional 12 projects under construction awaiting operating licenses. Additionally, 40 projects are currently in the process of completing procedures to obtain building licenses.
On green hydrogen projects, the chairman highlighted that between January and April, 12 framework agreements and six memorandums of understanding were signed, with an additional MoU set to be signed soon.
Furthermore, El-Din provided insights into the development work progress in the authority’s ports, noting a 94 percent implementation rate in Ain Sokhna Port, 86 percent in East Port Said Port, and 93.8 percent in West Port Said Port.
Additionally, he mentioned a 73.7 percent implementation rate in Al-Arish Port and 75 percent in the West Qantara West zone.
Moreover, the chairman reviewed the ship bunkering operations and marine services at the authority’s ports. He noted that the body implemented the first ship bunkering operation with green fuel in East Port Said Port in August 2023.
He also highlighted that the development work of the East Ismaili Zone has reached 100 percent implementation of some works.
About 15 percent of world shipping traffic transits via the Suez Canal, the shortest shipping route between Europe and Asia. The Suez Canal is also an important source of foreign currency for Egypt.
Boeing focuses on quality management enhancement amidst safety concerns, says top official
RIYADH: Aerospace giant Boeing is enhancing its quality management system to meet regulatory standards, ensuring passenger safety, a top official told Arab News.
Speaking on the sidelines of the Future Aviation Forum in Riyadh, Omar Arakat, vice president of commercial sales and marketing of Boeing in the Middle East and Africa, said that the company is putting “a lot of emphasis” to meet the safety standards proposed by regulators.
The US plane maker is revamping its management in response to increasing pressure from airlines, regulators, and investors as it faces a deepening crisis following a mid-air panel blowout on a 737 MAX plane in January.
An Alaska Airlines Boeing 737-9 MAX experienced a mid-cabin exit door panel blowout shortly after takeoff, triggering multiple investigations, including one by the Federal Aviation Administration in the US.
When asked about safety developments, Arakat said: “I’m assuming you are referring to the quality issues that have made headlines, and I assure you that Boeing’s number one priority is safety and quality. We are doing a lot of plans to strengthen our quality management system.”
He added: “We’re also sharing with our customers all the steps that were taken to make sure that they feel the comfort that Boeing is doing the right thing.”
Detailing Boeing’s initiatives to enhance safety standards, Arakat added that the company is directly engaging with its suppliers and increasing involvement by inspecting various stages in the aircraft production cycle.
He expressed his enthusiasm about the progress in Saudi Arabia’s aviation sector during the discussion.
“We are very optimistic, and we are very excited about what is going on in Saudi Arabia in general, and specifically within the aviation sector. There is a lot of commitment by the leadership of Saudi Arabia to support aviation, and they recognize it as one of the most important pillars of developing infrastructure and moving forward,” said Arakat.
He added: “If you look at the mandates of Vision 2030, it really indicates that aviation has a very bright future because it sets some very real targets that the Kingdom is very serious about achieving. We are very proud to be part of that.”
The executive further noted that Boeing’s relationship with Saudi Arabia spans over seven decades, during which the company has delivered over 240 aircraft to airlines operating in the Kingdom.
Last year, Riyadh Air, owned by the Public Investment Fund, announced ordering up to 72 Boeing 787-9 Dreamliner airplanes in a significant deal. This included 39 confirmed aircraft and an option for an additional 33 wide-body 787-9 Dreamliners, reflecting Saudi Arabia’s ambitions to establish itself as a prominent player in global aviation.
National carriers collectively announced plans to purchase up to 121 787 Dreamliners, marking one of Boeing’s largest commercial orders by value.
