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Sabre puts out-of-date practices to the sword

Posted 1 December 2017 · Add Comment

Many African airlines could be more profitable if they brought their commercial departments up to date with modern industry best practices. That was one of the messages from a workshop staged by Sabre and the African Airlines Association (AFRAA). Alan Dron reports.

Too many of Africa’s carriers are still using decades-old practices that are hindering them from achieving profitability, a gathering of 14 of the continent’s airlines heard during a workshop at the AFRAA headquarters in Nairobi, Kenya.
The aim of the session was to look into the root causes of some of the problems faced by many African airlines and to provide the participants with industry-best practices on how they should be thinking about their commercial departments, said Gad Wavomba, principal consultant, Africa, Airline Solutions Consulting, who leads Sabre’s consulting initiatives on the continent.
Sabre Airline Solutions offers a range of software, data solutions and consultancy that aims to help airlines market themselves, sell their products and operate more efficiently.
“Over two days, we taught them what are the best practices, what they should, as African carriers, be doing to maximise revenue,” said Wavomba.
For decades now, the airline industry has been talking about Africa’s potential, but that potential has proved frustratingly elusive when it comes to converting it into solid results.
“The potential is definitely still there, it’s just a question of how African airlines capitalise on it. What are African airlines doing differently from carriers like Emirates, Qatar Airways and Turkish that ARE capitalising on Africa?
“The answer is that [the external carriers] have tools that speed to market leveraged partnerships and codeshares that can help them drive traffic. Investing in technology skills and consulting – that’s what’s going to be the route that allows airlines to capitalise on that potential.”
According to Wavomba, it is sometimes the less-glamorous, behind-the-scenes actions that can improve the service an airline offers to its passengers and thus, the amount of profit that it makes: “Instead of initially purchasing large aircraft orders for hundreds of millions of dollars, you might want to invest in consulting services and innovations that support a return on investment on aircraft assets.”
Problems on the continent include some countries that set up airlines merely as a matter of national pride, rather than as a viable economic unit, and others that think an airline can be run like any other type of company.
Just two African carriers – Ethiopian Airlines and Comair/Kulula of South Africa – are profitable out of more than 40 in the continent, said Wavomba. Even the very low fuel prices of 2014-16 had not been enough to move most African carriers’ balance sheets from loss to profit. “Ethiopian has done a great job. It has invested with us over the past 10 years in both technology and implementation consulting.”
“A lot of the carriers are still operating best practices from the 1990s,” said Wavomba. This was even more surprising considering the scale of some of the airlines – reasonably sizeable companies operating more than 20 aircraft.
“Some of the carriers haven’t invested in an airline network forecasting tool. That’s mandatory, because technology out there allows you to look at scenarios of your routes and profitability.
“Instead of simply saying, ‘We should fly from Lusaka to Cotonou’, for example, there’s technology to say whether it’s likely to be profitable, where codeshare benefits might come from, etc.”
Too many African airlines, said Wavomba, opened new routes on the grounds that ‘We know another airline is making a profit on it’, or simply because they felt ‘It’s just important to us’, with no real analysis of the route.
Many of the problems facing African airlines can be fixed with quick hits, said Wavomba. For example, if an airline is not benchmarked or competitive on pricing compared to its competition, that problem can be resolved literally within minutes with the right software. Similarly, improving hubs to optimise network connections is a relatively simple matter of adjusting schedules. When factors such as those are in place, the benefits stretch far beyond an individual airline’s balance sheet. A successful aviation sector drives a country’s overall economic development.
 

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