Ivory's towering ambition

West African aviation was dealt a heavy blow in 2002 when Air Afrique ceased operations and the sub-region lost its only trans-national carrier.

Based in Ivory Coast’s economic capital, Abidjan, the pan-African airline had been launched in 1961 as a joint venture between two French airlines: flag-carrier Air France and the now-defunct Union Aeromaritime de Transport (UAT). Two-thirds of Air Afrique’s capital was held by an alliance of West African states, ensuring strong political support across the sub-region.

Following its demise, regional powerbrokers came together again in 2004 under the auspice of the Economic Community of West African States (ECOWAS) to establish a successor. Their efforts delivered Asky Airlines, the Togo-based carrier part-owned by Ethiopian Airlines.

Air France and Abidjan may, perhaps, have felt sidelined by the move, but they would not be out of the picture for long.

Around the same times that Asky launched, state-owned Air Ivoire was coincidentally taking its last gasps. Rather than bailing out the troubled company, Abidjan allowed its flag-carrier to collapse and instead approached Paris about the launch of a replacement: Air Cote d’Ivoire.

Though both small by global standards, Asky and Air Cote d’Ivoire are now leading the charge to keep West Africa’s 340 million inhabitants connected.

Launched in November 2012, Ivory Coast’s new flag-carrier serves 18 regional and five domestic points from Abidjan with a fleet of six aircraft (three Airbus A319s, one A320 and two Bombardier Dash 8 Q400s). Another two Q400s are on order.

The man in charge of making sure that Air Cote d’Ivoire succeeds where Air Ivoire and Air Afrique failed is Rene Decurey, formerly Meridiana’s vice-president of business development for the Aga Khan Fund for Economic Development (AKFED, a founding shareholder in Air Cote d’Ivoire).

“We have a very, very rigid hub concept,” the chief executive stressed. “All our aircraft depart at around 19.00 [local time] to the east of Abidjan. 

“They overnight there and come back the next morning all together at 11.00. Then at noon they leave for the West African destinations. They all come back at 18.00 and then, one hour later, they leave again to central Africa or east of Abidjan.”

Working the fleet in such a uniform manner has some setbacks. Abidjan’s Port Bouet Airport theoretically operates within capacity – last year’s footfall of 1.3 million was well below the 2 million maximum – but when all the aircraft arrive and depart together it can be a strain. Aircraft utilisation rates on short sectors also suffer: the Q400s are airborne for an average of just six hours a day.

Nonetheless, by synchronising the network and facilitating transit through Abidjan, Air Cote d’Ivoire has rekindled the capital’s historic role as a regional hub. Decurey estimates that 40% of his customers use Port Bouet Airport as a sixth-freedom stopover, beginning and ending their journeys outside of Ivory Coast. 

Among these connecting passengers, almost nine out of 10 travel with Air Cote d’Ivoire on both legs. Although Air France serves Abidjan from Paris Charles de Gaulle Airport, opportunities to swap traffic with the French carrier are limited.

 

 

 

“In summer Air France arrives here at 18.20,” Decurey noted, referring to the daily service operated with a mixture of Boeing 777s and double-decker A380s. “Certain passengers for certain destinations can make the connection. But in winter they arrive at 19.20, when all our flights have already left. This is why we cannot build the hub around Air France’s timetable.”

The other big international player in Abidjan, Emirates Airline, is also of limited use to the Ivorian flag-carrier. Its daily service from Dubai incorporates a fifth-freedom stop in Ghana, snatching 48% of seats in the lucrative Abidjan-Accra market for itself.

With limited long-haul feed on offer, Air Cote d’Ivoire must stand on its own two feet and grow organically if it wishes to gain scale.

And Decurey outlined plans to do just that, promising five new destinations by November 2016: Abuja in Nigeria; Banjul in Gambia; Bangui in Central African Republic; Luanda in Angola; and Nouakchott in Mauritania. The arrival of two more Q400s in December 2015 and March 2016 will facilitate much of this growth.

Confirming that all the necessary bilateral designations are in place, Decurey said the sub-region has become a “liberalised environment” since the signing of the Yamoussoukro Declaration in 1999.

“In west and central Africa all the governments stick to Yamoussoukro, so there’s no issue with traffic rights,” he insisted, striking a more optimistic tone about deregulation than has been voiced elsewhere on the continent. Even in Nigeria – a notoriously bureaucratic market – Air Cote d’Ivoire encountered only a temporary delay due to Abuja’s request for English-language translations of all documents.

Further down the road, the Ivorian flag-carrier wants to replace and up-size its Airbus fleet with fully owned units.

 

 

 

The airline currently wet leases its A320 from South Africa’s Global Aviation, and has operating leases on the A319s with Aviation Capital Group and Macquarie Aerospace. Two of those A319 leases have one-year exit clauses, while the third is due to expire in November 2017. By that time, Decurey said, Air Cote d’Ivoire will have a fully owned fleet of five A319s and four Q400s.

“We have come to the agreement within the board that we should continue with Airbus for our medium-range aircraft,” he confirmed, saying the contract should be signed this year and the first delivery made in 2016.

Asked whether he would consider up-gauging to A320s, Decurey said a final decision would be taken nearer the time but at the moment it seemed unlikely.

“If traffic develops considerably we might look at this, but it’s not a priority. An A320 offers a lot of capacity that you might not be able to fill,” he explained. “The priority here, in this region, is to have A319s. They’re not too big, so they allow us to do enough frequencies per week with the still-quite-low traffic potentials here.”

Wide-bodies are also not in the current business plan. “I do not exclude this in five or six years,” he said. “But first the hub we are developing in Abidjan has to be fully operational before we think about larger aircraft.”

The upcoming acquisitions will be funded by a capital-raising programme, equivalent to around $68 million, which will nearly triple Air Cote d’Ivoire’s share capital upon completion.

Under the new ownership structure, the West African Development Bank (BOAD) will come on-board with an 8% stake, while Ivorian private investors Goldenrod will inject new funds to retain a 15% holding. The Ivorian Government and Air France will dilute their stakes to 57% and 8% respectively (down from 65% and 20%), leaving 12% unaccounted for. AKFED sold its shares in 2013.

Decurey predicted that “private investors or banks or financial institutions” would make up the 12% shortfall. 

BOAD’s investment is noteworthy because of its parallel holding in Asky. But although the Ivorian and Togolese carriers have rival affiliations – Air France is a SkyTeam member, while Ethiopian Airlines is in the Star Alliance – Decurey sees no problem with cooperating locally.

“In our region you have to cooperate in one way or another, because the markets are too small to compete head-on,” he insisted.

Commercial agreements are already in place between the two rivals in destinations such as N’Djamena. Asky presently serves the Chadian capital six-times weekly from Lome, while Air Cote d’Ivoire flies there thrice weekly from Abidjan. Mindful of the low frequencies, the airlines have agreed to carry each other’s customers on return legs.

Looking beyond the sub-region, Decurey is also keen to strengthen ties with Air France and its SkyTeam partners.

 

As well as potentially codesharing on the Paris-Abidjan route, Air Cote d’Ivoire is in the early stages of linking up with Flying Blue, Air France’s frequent-flyer programme. “A big share of passengers coming on the A380 do not fly directly back to France,” the chief executive noted. “If they can fly the local leg with us, and earn and burn Flying Blue miles on our sectors as well, that will be a big advantage.

“We are also aiming at far-reaching cooperation with Kenya Airways. They fly to Abidjan, so we are discussing a comprehensive network structure through both hubs – Nairobi and Abidjan – to cover the whole region.”

As the former home of Air Afrique, Port Bouet Airport is a constant reminder of both the opportunities and the challenges in West African aviation.

Subdued demand levels, the Ebola crisis, and Nigeria’s battle with terrorism are all cause for concern. But with existing load factors above 70% and imminent expansion on the table, Decurey is confident that the airline can achieve break-even in 2017.

And while Air France has been a valued partner, he leaves no doubt about who deserves the lion’s share of credit for Air Cote d’Ivoire's success.

“The Ivorian Government has really supported us all the way. We are accompanied with every step by the government and by the airport,” he concluded. “They don’t see us just as a national carrier. They see us as a developer of the economy.”