Africa Report

Though it is mostly known for undertaking construction and mining projects in Africa, China is now branching into other ventures, including the aviation industry.

Using $50 million in start-up capital, the new airline, known as Africa World Airline (AWA), is a joint venture between Ghana's Social Security and National Insurance Trust (SSNIT), Strategic African Securities, China-Africa Development Fund (CADFund) and Hainan Airlines of China. This marks the first aviation investment made by a Chinese enterprise in Africa. The airline, which began its operation with two Embraer ERJ-145 jets each with 50-seat capacity, offers domestic flights to Kumasi and Tamale in Ashanti and the Northern Region of Ghana. It will also fly to West African cities including Ouagadougou, Abidjan, Lagos, Abuja, Port Harcout, Dakar and Banjul, and the airline hopes to add international routes by 2017.

Hainan Airlines, China's fourth largest carrier and a Skytrax five-star award winner, launched its operation in Ghana at the end of September.

With seven bases in Beijing, Xi'an, Taiyuan, Urumqi, Guangzhou, Lanzhou, Dalian and Shenzhen, as well as an extensive network, connecting Asia, Europe, America and Africa, and flying almost 500 domestic and international routes to more than 90 cities, Hainan Airlines is bound to cause a stir in Ghana.

Competitive edge

"We pledge our commitment to making Accra the hub of the aviation industry in the sub-region," said Togbe Afede XIV, the paramount chief of the Asogli Traditional Area in the Volta Region of Ghana, CEO of Strategic African Securities (SAS) and one of the founders of AWA. "Gone are the days when someone traveling from Accra to Burkina Faso would have to transit through France."

But AWA is not going to be alone in the domestic aviation business in Ghana. Four domestic airlines are already operating in the country. These include Starbow, Fly 540, Citylink and Antrak, which offer an average of 20 domestic flights throughout Africa. The oldest airline in Ghana is Citylink, which operates a small fleet consisting of Fokker 100 and Saab 340 aircraft. Antrak Air operates only one ATR42-300, while Starbow Airlines operates domestic services with a fleet of four BAe 146s, but with plans to expand internationally and acquire larger narrow bodied planes. Fly 540, a Kenyan airline, has a small operation in Ghana, but is set to expand, restructure, re-fleet and rebrand into FastJet, following an investment from easyJet's founder Stelios Haji-Ioannou.

Owusu Fianko, the managing director of the Ghana Airport Company, welcomed the introduction of the airline and said it would spark healthy competition in the aviation industry in Ghana, benefiting passengers in Ghana and the West African sub-region by giving them more options.

AWA has pledged to make its fares affordable to travelers. But competitors are saying that lowering their costs will amount to compromising the safety of passengers. The aviation market in Ghana and Africa is promising, however, and local aviation analysts believe that if AWA manages its company well, it has great prospects.

According to statistics from the Ghana Civil Aviation Authority, the number of passengers at the Kotoka International Airport increased by 29 percent in 2011. This figure is expected to rise to 35 percent by the end of 2012. Projections from the Ghana Airport Company show that air passenger traffic is expected to hit 6 million by 2015. This represents an expected increase of more than 200 percent over the total passenger volume of 1.8 million recorded in 2011.

The discovery of oil off of Ghana's coast has also boosted the aviation industry, as many investors are expected to visit the country in the future. The Ghanaian Government encourages private entrepreneurship and has set policies to facilitate their operations. In this vein, the government has pledged support for AWA, knowing that the proliferation of the aviation industry in Ghana will create more business and jobs for local people. Selby Twumasi-Ankrah, an official from the Ministry of Transport, noted that after AWA arrived in Ghana, the ministry initiated policies to liberalize the aviation sector, and that this will ultimately improve air transport in the country. The short period of 18 months between being awarded its air carrier license and carrying its first load of passengers is an indication of the commitment of Ghana's authorities.

Lucrative market

Hainan Airlines is not oblivious to the opportunities that exist in Africa and has told Air Transport World magazine that the main motivation for its investment was the "big market demand for air transport in Ghana and other parts of West Africa triggered by the backwardness of ground traffic." Boeing Commercial Airplanes projected that the world's second-most populous continent, Africa, will require an additional 900 aircraft, 14,500 pilots and 16,200 maintenance technicians over the next 20 years. J. Miguel Santos, Boeing's Director of Sales for Africa, pointed out to Business Day magazine that a growing middle class in the continent is presenting an opportunity for regional low-cost airlines in Africa.

Hainan Airline's new business move is helping China raise its profile in Africa outside of mining and construction. According to Li Jiaxiang, head of the Civil Aviation Administration of China (CAAC), this is the first time any Chinese enterprise has bankrolled Africa's aviation industry. "The agreement echoes Hainan Airline's game plan of expanding its presence in Africa and South America," said Li. Li said the airline would do a lot to improve connections with West and East Africa, which previously had inadequate flight connections.

Air Commodore Kwame Mamphey, Director General of the Ghana Civil Aviation Authority (GCAA), said the airline had met all the rigorous processes and procedures needed to operate commercial flights in the country. Mamphey did caution that the GCAA would continue to monitor the activities of the airline to ensure that it met all safety regulations. Safety, the GCAA boss stated, was paramount to the industry, and he pledged that the authority would live up to its mandate to solidify Ghana's development in the aviation sector. Chi Jianxin, CEO of CADFund Ghana, said he was hopeful that the fund would "stimulate Ghana's economic growth."

(Reporting from Ghana)

Africa Report