in Air Transport / Features

Investing in people the key to growth

Posted 27 November 2017 · Add Comment

The Airlines Association of Southern Africa (AASA) will hold its annual gathering in Port Edward, South Africa on October 12-15. AASA CEO, Chris Zweigenthal, shared his thoughts about the event and the year ahead with Victoria Moores.

What do you expect from this year’s AGA?
The theme is ‘building human capital for African airlines’. While our conference could deal with many challenges affecting industry sustainability, we decided to focus on the critical area of skills development, retention and transformation, equipping our aviation personnel to meet future challenges.
In a fast-developing technological environment, including digitization, the African airline industry needs strong leadership and specialist skills to keep pace with its global competitors and build a sustainable future. This assembly will assess the current status of skills in Africa, its challenges and seek solutions to put control of human-capital development in the hands of African airlines.

Have you seen any major changes – regulatory, in terms of the market, or among your members – over the past year?
The airline industry in the southern African region has become more challenging. Cost control remains a concern for airlines and industry growth remains moderate, mainly due to low GDP growth in South Africa. This impacts the rest of the region, with only a third of the airlines being profitable.
Liberalisation of the African skies through the Yamoussoukro Decision/single African aviation market remains a work in progress, with a new target date of the beginning of 2018 being proposed.

What are the prime challenges for southern African airlines right now?
Firstly to achieve profitability and then to maintain it. This includes maintaining a stable cost base – which is largely dollar-based for jet fuel, maintenance, distribution, aircraft purchase and lease costs – and increasing revenues through passenger and yield growth.
While Africa has recorded a significantly improved safety record, particularly for IATA airlines, it is important to maintain focus on improving safety and working together with civil aviation authorities (CAAs) as they exercise their oversight and compliance mandate.

Demand has been stagnating. Do you see any signs of market recovery in 2017-18?
Stagnating demand has been the result of the moderate economic growth outlook for South Africa, affecting the rest of the region. We expect passenger growth of around 3% per annum in South Africa to continue for the next three to five years.
GDP growth forecasts are mixed, with nine of the 20 fastest growing economies situated within Africa. However, low economic growth in large economies such as South Africa and Nigeria negatively affect the growth outlook for the continent as a whole to around 5.5%. It should be far higher, coming off a low base.
AASA foresees that the status quo will largely continue during 2017-18. However, airlines will continue to review their cost bases and look for improved efficiencies to reduce unit costs.

What are you seeing in terms of local airline start-ups and failures?
Many airlines in the region are facing challenges because of the tough, competitive environment. While these challenges remain, I don’t foresee any start-ups, until there is evidence of an economic recovery.
Start-up airlines introduce additional competitive elements and there is no doubt that established airlines will respond to new competitors, should there be a start-up. It is hard to see airlines that are currently in difficulty failing while there continues to be support from their government shareholders.

What is AASA’s strategy? What major projects are you currently working on?
AASA’s mandate is to work with all stakeholders to promote airline industry growth and development, to achieve profitability and sustainability. We represent member airlines in areas of mutual interest and get directly involved in the following major projects, enabling them to concentrate on their core business of running their airlines:
• • User charges: representing airlines in consultations with airport authorities, air traffic service providers, CAAs, weather service providers and ensuring value for money;
• • Active review of policies, legislation and regulations and their impact on the industry;
• • Directly supporting IATA’s environmental programme and promoting awareness of environmental initiatives within the southern African region, focusing on the implementation of the carbon offsetting scheme for international aviation (CORSIA) where applicable and opposing the introduction of regional initiatives like carbon taxes;
• • Working to improve the self-service offering for passengers in local airports; and
• • Supporting initiatives to improve safety and security in the region.

Is there scope for AASA to add new member airlines, or is everyone already involved?
All South African scheduled airlines are members of AASA. There is scope to add additional regional airline members and we are in contact with a number of these.

Do you see any scope for formal tie-ups or mergers with other African associations, or does southern Africa need its own airline body?
AASA is the recognised regional airline association for southern Africa. We support the global initiatives of IATA and work closely with the African Airlines Association (AFRAA). There is a mutual recognition between AFRAA and AASA that our focus areas are different, notwithstanding that there is an overlap of some common membership. Our view is that there is justification for separate airline associations. It is important to maintain good communication between the associations on the respective agendas and to ensure that, where there may be overlap, there is a mutual understanding of respective roles, responsibilities and positions to be taken.

How long have you headed the association? Do you have a favourite memory from your time there so far?
I joined AASA as deputy CEO in February 2002 and was appointed CEO in March 2009. I have really enjoyed my time at AASA and consider it a privilege to have worked across the entire spectrum of the aviation business with so many government, public and private stakeholders.
I think memories of our annual general assemblies stand out, with the privilege of visiting so many destinations in our region and providing our guests with unique and special experiences, while dealing with the important business of the airline industry.
 

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