Operating and sustaining a national airline in Africa is full of pitfalls and major challenges. There are constant reports of African carriers in financial turmoil. Yet there are notable exceptions, one of them being RwandAir.
This Star Alliance member is the national carrier of Rwanda. It operates domestic and international services to East Africa, Central Africa, West Africa, Southern Africa and the Middle East from its main base at Kigali International Airport in Kigali. The airline began operations on December 1, 2002 as the new national carrier for Rwanda under the name Rwandair Express (having passenger air transportation as the core activity), with a concession to carry out airport ground handling as an ancillary activity at Kigali International airport, Kanombe.
In March 2009, the airline registered a new trademark RwandAir Ltd. which is its current operating name. In June 2009, the airline officially re-branded from Rwandair Express to RwandAir, because the new name implies a large, serious airline, while the "Express" in the former name implies a small regional operation. In May 2010, Rene Janata became the CEO, introducing a frequent flyer program and developing the airline to become a network carrier.
It was however, operating at a loss for a number of years until a major turn-around resulted in much better financial performances year-on-year. Also, at the end of 2014, RwandAir announced that they attained the coveted IATA Operational Safety Audit Certification. With this accolade, the airline joined the elite of global aviation by passing the stringent requirements of a yardstick considered very important by IATA for obvious reasons.
Thembela Dladla, RwandAir country manager for South Africa, says that the airline has made great strides in the past five years. "RwandAir has grown in leaps and bounds in terms of expansion into the continent with a current 17 destinations across Africa and the Middle East. RwandAir has also been able to expand its fleet and [is now] operating the most efficient new generation equipment, for instance the Bombardier Q400, Boeing 737-800 New Generation, as well as the latest delivery of our new Airbus A330s," he says.
He believes that what sets Rwandair apart is the airline’s ability to adapt and listen to its customers.
"RwandAir has a unique selling proposition in term of unmatched service provision both on-board and in terms of other factors, such as our On Time Performance. RwandAir also offers very competitive fares which are matched with outstanding service."
He says that they have identified the biggest growth market over the medium term in Africa.
"Across the entire network we have increased our market share with positive results in markets such as Southern Africa and Nigeria in particular, but there’s still great room for improvement. Improved service offerings from almost all major carriers has resulted in an improved competitive environment which benefits the passenger in the long run."
He says that one of the biggest challenges facing the airline is economic growth and expansion in the face of constant global economic turmoil. "Like most airlines in the world, RwandAir is very reliant on economic growth and prosperity and current economic conditions in some part of the network are posing serious challenges in terms of growth." Also the fact that profit margins traditionally are very low for airlines in general doesn’t help. "Airline overheads are extremely high due to the obvious high cost of equipment like aircraft, aircraft parts and so on, high specialized labour costs i.e. salaries for pilots, commercial staff, jet fuel costs, air navigation costs... and all of these costs are to be matched with available seat revenue and you can imagine how complex the formula can be and how easy it is to miss that profit margin," he says.
Small slice of global pie
The lack of a continental cooperative aviation policy agreement in Africa, widely known globally as an "open sky" policy, adds to the challenge. According to the World Bank, while Africa is home to 12 percent of the world’s population, it still accounts for less than 1 percent of the global air service market. In its study titled Open Skies for Africa: Implementing the Yamoussoukro Decision (YD), the Bank cites the continued restriction of air services over many African countries as one of the key contributing factors to Africa’s apparent inability to capture its fair share of global air traffic.
James Geldenhuys in an article called Widespread Adoption of Open Skies Policies Still Key to Africa’s Economic Growth says: Even a cursory glance at the growth in market share of the air service market by European countries and the United States since adopting the YD in 1999 appears to confirm this deduction. The intention behind the YD was primarily to replace bilateral air usage agreements with open and transparent airspace access for the benefit of all stakeholders in the air service market. The vast majority of countries in Europe and America were quick to sign and implement the YD, and have subsequently derived significant benefits ranging from lower barriers to entry and better price structures due to increased competition, to steadily increasing passenger numbers resulting in sustainable growth and profitability for their commercial aviation industries.
"In contrast, very few African countries have adopted the open skies policies espoused in the YD, and the negative consequence of this has undoubtedly been evidenced in Africa’s inability to grow its share of international and, even, intra-continental commercial air traffic. For many countries in Africa, the short-term solution to this problem has simply been to place restrictions on those competitor airlines, typically by limiting their free use of airspace, thereby enforcing a measure of monopolisation by the national carrier. While this restriction of competition may seem like a logical way of securing the sustainability of a national airline, the opposite is true; since a lack of competition almost always results in unfair consumer practices and the eventual collapse of the monopolistic entity."
Despite this, RwandAir seems to be able to overcome these challenges by understanding that they have to be globally competitive with routes and not fall into the trap of this parochial attitude. Thembela says that the airlines new routes include Mumbai. "With India there are obvious economic and historical links between the sub-continent and the African continent as well as associated benefits in regards to a bullish Indian economy. We also have a new route to Guangzhou in China since China is a major trading partner with most African countries, so it just makes sense."
This is in addition to the 20 global destinations they already fly to including Mombasa, Entebbe, Kilimanjaro, Lusaka, Johannesburg and Dubai. In terms of partnerships, the airline also has codeshare agreements with Air Uganda, Brussels Airlines, Ethiopian Airlines, Turkish Airlines, South African Airways and Proflight Zambia.
RwandAir is one of those beautiful phenomena - a successful, large scale business venture in Africa. The environment in which they operate might be one of the toughest anywhere but they have the right ingredients - integrity, an emphasis on customer service, hiring the right people, a commitment and passion for excellence and solid, long terms business principles. With such a recipe for success, they can only continue on their growth path and keep on making Africa proud.