Among the world's worst performers, some North African airlines are looking forward to a brighter future

Hilka Birns/CAPE TOWN

WHILE MOST African airlines rank among the world's poorest performers, the north of the continent is home to a clutch of carriers which are generally paying their way, modernising their aircraft fleets and looking towards a more competitive future. Spanning Morocco, Algeria, Tunisia, Libya, Egypt and Sudan, the region is geographically part of Africa, but has strong historic and cultural ties with Europe and the Arab world.

Leading North African carrier EgyptAir ranked 60th in the world last year in turnover terms, with sales of about $1 billion, making it Africa's second largest airline after South African Airways. Royal Air Maroc (RAM) and Tunisair rank next, with sales of around $600 million and $500 million respectively, while Air Algerie, Sudan Airways and Libyan Arab Airlines have been hamstrung by political turmoil and/or international sanctions against their countries. The negative impact that fuel price hikes are having on airlines worldwide is felt in North Africa, amplified by the weakening of local currencies against the dollar. This is affecting bottom lines and has led to cost reductions and restructuring by some airlines.

Tourism and trade

North Africa's airlines enjoy buoyant tourism and trade links with the Middle East and Europe. Some carriers fly further afield, such as RAM, which serves the USA, and EgyptAir, which serves destinations worldwide. RAM, EgyptAir, Tunisair and Air Algerie have alliances with regional, Middle Eastern and European counterparts; RAM and Tunisair, for example, codeshare with Air France, which also has a historical minority share in both airlines.

All North African flag-carriers are either wholly or partially state-owned. There appears to be little pressure to privatise, as the airlines generally generate funds for state coffers. This is the opposite to sub-Saharan Africa where governments are increasingly unable to support airlines in the face of other pressing national needs such as housing, health and education. However, market forces are expected to lead to privatisation in North Africa in the long run: RAM has been considering it, while the Sudanese Government is moving ahead with privatisation plans for its flag carrier.

None of the North African carriers are members of global alliances, although given their dependence on routes into high yield European markets, this has so far not been a major concern.


Liberalisation of African skies is viewed with mixed feelings. There is both scepticism and enthusiasm about the Yamoussoukro Decision of 1999, which calls for open skies over the continent for all African carriers. Observers predict that North African carriers may resist liberalisation. Christian Folly-Kossi, secretary-general of the African Airlines Association (AFRAA), says: "North African carriers generally are comfortable with their bilateral agreements because they share a market with their European counterparts. They are not too keen on liberalisation because the bilaterals work well for them." Despite this, Folly-Kossi reckons some North African players may soon realise the potential of liberalisation. "They may realise that it represents a good opportunity to enlarge their networks by flying south. We may also see more investment from North African airlines in sub-Saharan privatisation programmes, such as RAM's investment in Air Senegal International."

Some analysts believe liberalisation may change North African carriers' schizophrenic relationship with their own continent. North-south air traffic is low as North African airlines follow the call of stronger currencies up north. In RAM's case, France represents 34% of all passenger traffic, the rest of Europe 29%, while Africa and North America are on par at 4%. Services between North African states are only available at low frequencies - in most cases, once or twice a week. It is easier to connect between Casablanca and Tunis through Paris than to take a direct flight between the two North African centres.

But as domestic markets and regional services are deregulated, intra-regional traffic will improve. In a first step, Morocco, Algeria and Tunisia have liberalised their domestic markets and have allowed new entrants into the aviation sector. Algeria has witnessed the emergence of new carriers such as Khalifa Airways, Antinea Airlines, Sahara Airlines, Tassili Airlines and Eco Air, along with Nouvelair in Tunisia and Regional Air Lines in Morocco. The same could happen in other North African states if bilateral rules were to be relaxed.


Multinational alliances were promoted by African organisations long before consolidation and globalisation forced carriers elsewhere to take that route, comments Sassy N'Diaye, the International Air Transport Association's director for government and industry affairs - Africa. In the early 1960s, the tripartite alliance between the Organisation of African Unity (OAU), International Civil Aviation Organisation and Economic Commission for Africa indicated the need for multi-national carriers. "One such idea was Air Maghreb, which may yet come about as a consortium of north-west African airlines," N'Diaye claims. The Maghreb region includes all north-west African states, including Mauritania, Morocco, Algeria, Tunisia and Libya.

Co-operation takes place under the mantles of the Arab Air Carriers Organisation (AACO) and the AFRAA. Sudan and Egypt also participate in the free-trade area newly established between nine states of the Common Market for Eastern and Southern Africa (COMESA).

Under AACO, co-operation traditionally takes place in the form of joint ground handling, fuel purchasing, training, automated reservations and market intelligence. Following an AACO meeting in October, EgyptAir and RAM have formed an alliance with Middle Eastern Airlines (Lebanon), Royal Jordanian and Saudi Arabian Airlines to exchange cross-feeds on long- and medium-haul routes to Africa and Asia. AACO has called on all its members to join the grouping and has agreed to explore commonalities and co-operation opportunities with major global alliances.

Meanwhile, AFRAA is tackling head-on an apparently dwindling North African interest, notably by Tunisair and RAM, which have withdrawn from the organisation. Folly-Kossi - a French-speaking Togo national - has set himself the task of winning back the carriers' support and plans to visit the Maghreb region soon. "I feel somehow that since we speak French as a common language, this might facilitate the re-starting of the co-operation with AFRAA."

Political relations between North and sub-Saharan Africa are improving, says N'Diaye. "When Egypt got kicked-out of the Arab League in the 1970s, only the OAU was there to receive them. They have never forgotten that and Egypt leans heavily on Africa, as does Libya. They are faithful and committed to Africa."

Libya rebuilds

Libya Arab Airlines (LAA) is gradually rebuilding its operations as the country emerges from eight years of isolation. The United Nations Security Council lifted its sanctions in April 1999 after the handing over for trial of two Libyans accused of involvement in the bombing of a PanAm Boeing 747 over Lockerbie, Scotland, in 1988. The USA has maintained its embargo against Libya, which has prevented the delivery of 24 Airbus A320s, A340s and A330s ordered by LAA in 1999. The aircraft are unlikely to be delivered until the USA lifts its ban. The airline reportedly has three 727s, one A310, two A320s, two Fokker F27s and two Fokker F28s.

As LAA re-equips, it is expected to spread its wings southwards in line with Libya's new role as a champion of African unity. "They are not running after profits, but after recognition," says Folly-Kossi. "Libya has enough money to invest in the airline. This is one airline that will prosper as Libya stops being the pariah of the world." Stagnation of the Libyan economy due to the embargo and a drop in the crude oil price has been the impetus of a five-year economic revival plan with strong emphasis on the promotion of tourism. Economic and air traffic ties between Libya and Tunisia are being revived, with Tunisair and LAA this year resuming flights between Tunis and Tripoli, the latter airport bustling again after being closed to international flights for almost a decade. LAA has resumed flights to Saudi Arabia, Egypt, Jordan, Sudan, the UK, Germany, the Netherlands and Greece, while Alitalia, British Airways, Lufthansa, Swissair, Air Malta and Olympic Airways have returned.

Sudan unrest

Sudan Airways faces civil war at home where government forces fight rebels of the Muslim National Democratic Alliance in the north, and the Sudanese People's Liberation Army in the south. The airline says the UN Security Council recently lifted sanctions imposed in 1996 after Sudan refused to hand over the suspects of an assassination attempt on Egyptian President Hosni Mubarak. As in Libya's case, a US ban on spare parts remains in force.

Meanwhile, the Sudanese Government has appointed financial consultants Arthur Andersen and Barrons to prepare Sudan Airways for privatisation, in anticipation of which the airline's fleet is to be rationalised and upgraded over the next few years, says assistant financial director Osama Yousif Hassan.

The carrier flies to 16 destinations in the Gulf, to neighbouring states, plus London and Paris. Its fleet of 14 aircraft comprises three A300-600Rs, two Boeing 737-200s, two Ilyushin IL-18s, one Yakovlev Yak-42D, one F27, one King Air B200, one Raytheon Beech King Air C90 and three Boeing 707 freighters.

Flights to Lagos were inaugurated this year, connecting Nigeria with Saudi Arabia and other Gulf states through Sudan. Further destinations to be introduced include Kuwait, Nairobi, Rome, Frankfurt and Karachi. Sudan Airways also plans to explore COMESA free-trade area opportunities.

Algeria recovers

Air traffic to Algeria appears to be normalising after years of political unrest, which has hindered effective operations. A cluster of new airlines has sprung up to serve domestic destinations, neighbouring countries, southern Europe and the Middle East. After six years of effective embargo following the hijacking of an Air France aircraft in Algiers in 1994, Alitalia resumed flights to the capital in 1999 and Air Algerie introduced its first flight to Milan last June. Air France's return appears to have been delayed by French unions demanding strong security guarantees at Algiers airport.

The new climate is allowing Air Algerie to restructure and modernise itself. It received its first new generation Boeing 737-800 in July this year, kicking-off an ambitious fleet acquisition plan for seven 737-800s and five 737-600s.

Morocco re-equips

RAM last month announced its much-anticipated order for 22 new Boeing types valued at $1.1 billion following intense competition over the past six months between Airbus and Boeing. The latest procurement forms part of RAM's plans to overhaul its fleet between 2003 and 2012. Last year it started phasing out older 737-200s and 727s, replacing them with Next Generation 737-500s, -400s, -800s and 700s.

Partial privatisation of RAM has been postponed for at least two years as net operating profits slumped from $23.5 million in 1997/98 to $13.69 million in 1998/99 because of jet fuel prices and the rising cost of the dollar against the euro, the currency in which RAM earns most of its income. Ownership is shared between the Moroccan Government (92.7%), Air France (4%), Iberia Airlines (1.3%) and private shareholders.

RAM serves 37 countries and 58 destinations in Europe, the Middle East, Africa and North America. It has commercial alliances with Air France, Iberia, Gulf Air, Delta Air Lines, Air Algerie, Air Mauritanie, Libyan Arab Airlines, Regional Air Lines, TAP Air Portugal, Tunisair and EgyptAir. RAM also owns a 51% share in Air Senegal International (the remainder is owned by the Senegalese State), 70% of Amadeus Morocco and 49% of SMES (SNECMA Moroccan Engines Services - owned jointly with Snecma of France).

Tunisia restructures

Tunisair is restructuring by outsourcing services such as catering, ground handling and maintenance. It has also embarked on a $500 million fleet modernisation, which will see the replacement of 11 727-200s by next year with four A320s, an A319 and six 737-600s.

The airline runs an extensive network of scheduled services and charters to Europe and the Middle East, and benefits from strong tourism links with Germany, France and Italy. Business travellers are being wooed with new onboard products, a premium class lounge at Tunis airport and new high-yield business passenger services to Beirut and Amman.

The airline last year forged closer links with Air France, which owns 5.6% of Tunisair. The latter, in turn, owns 40% of regional Tuninter. Although majority state-owned, Tunisair is publicly listed. Its market realisation stood at 282 million dinars ($193 million) in March.

Egypt modernises

As part of its fleet modernisation, EgyptAir has ordered five A318-200s, due for delivery in 2002 to replace 737-200s on domestic and Middle East routes. EgyptAir's streamlined fleet of 38 passenger and three cargo aircraft will in future include 16 A320 family aircraft (A318s, A320s and A321s) plus A340-200s and -600s. The carrier is also the first in the region to operate 777-200s, and also has 747-300s, 767-300s and 737-500s. Although state-owned, EgyptAir is self-financed and has increased its total assets from LE315 million ($84 million) in 1980 to LE11,800 million in 1999, with a liquidity in excess of $3.1 billion. Its network covers 12 domestic and 72 international destinations.

Source: Flight International