By Tito Mwangi
Globally, the aviation industry has benefited from strategic alliances that have allowed multiple airlines to benefit in areas like operations, economies of scale, and wider route networks while maintaining their independence as individual companies.
An airline alliance is a contract between a number of airlines to share available resources such as staff, planes, and equipment.
Key alliances and their impact
Some very notable alliances that exist and their impact so far include; The Star alliance which was founded in 1997 and operates from Frankfurt with well over 18,000 flights per day with a strong fleet of 4,500 carrying 800 million passengers a year. The alliance is made up of 21 global airlines.
One world Alliance was established in 1919 in New York, the alliance has a strong fleet of 3500 carrying 500 million passengers a year across the globe comprising of 1300 daily flights of its 13 members airlines.
Sky team operates 16,000 daily departures with 20 members and was founded in 2000.
However, even as the number of operations and passengers continue to grow impressively, one consistent emergence is the ease of connectivity across continents and countries.
The Star Alliance, for instance serves more than 1,330 airports in 192 countries, while the SkyTeam alliance brings together 20 carriers from five continents with a cargo alliance operation which includes ten carriers. The third-largest global alliance, Oneworld serves about 1,000 airports in more than 158 countries.
A proposed African Airlines Alliance envisages more connectivity within the African continent which in-turn means more intra-African trade targeting a 2.2% growth in the world aviation traffic. As an alliance, the partner airlines would also benefit from synergies in areas like maintenance, knowledge sharing and training while they will also have an edge in procurement activities.
Africa as a continent must not be afraid of free trade or intra-regional trade; if well executed the continental free trade area in Africa will open up $ 3.3 trillion market. In the long run such an alliance stands to positively influence the eventual removal of existing restrictions in forms of high taxes and visa requirements between member airlines ensuring there is more intra-continental trade and access to larger markets for African goods and services. Meaning every country would have an opportunity to grow its economy by this engagement.
In the case of the East African market, the genesis of aviation industry was born out of the establishment of the East African Airways in 1946 that was run by Kenya, Tanzania, and Uganda. This would later lead to the creation of East Africa Airways (EAA). However the regional airline was dissolved in 1977 amid deteriorating relations and unbalanced business practices among the three countries, paving the way for the formation of national-owned airlines by the three States – Kenya Airways, Air Tanzania and Air Uganda. Other countries like Rwanda, Ethiopia and Burundi would later join the East Africa Bloc with their own airlines.
A Tanzanian proverb; “two ants do not fail to pull a grasshopper” and the Congolese adage “a single bracelet does not jingle” remind us of the importance of such partnerships. Nowhere are these pearls of African wisdom more relevant than in the East African aviation industry.
An efficient East African air transport network would have a positive effect on increasing tourism, mining, manufacturing, agribusiness and other sectors which would in turn benefit local communities through increased employment opportunities, supply of raw materials, and so forth. Accordingly, it would facilitate international trade and make business travel easier and more accessible with less input in terms of capital expenses that have had several of the East African airlines on their death beds. Such benefits would spread widely at little to no cost (high scalability). The East Africa air transport alliance through liberalization of the industry, would be vital in enabling sustainable markets for farmers’ and local fishermen’s fresh produce at tourist hotels, camps or for export, hence becoming a major factor of production and therefore increase in GDP.
However, amid the evident and unexploited opportunities of such an alliance, the sector faces a number of challenges raging from mistrust and undue competition among member nations, poor infrastructure, high ticket prices, poor connectivity and lack of liberalization. Airport infrastructure in most countries is outdated and cannot effectively serve the growing passengers or cargo volumes.
The challenges if overcome do present a great opportunity for the East African community airlines like, Kenya Airways, Uganda airlines, Tanzania airlines, Air Rwanda, Ethiopian Air and others to offer their customers easy access to more destinations in a fast, convenient and affordable manner as well as strengthening of trade integration in the region.
It is time for airlines to look outside for new relationships by asking the fundamental question “What can we do together?”
Alliances allow for sharing of resources, expertise and staff in order to garner new business and markets on little to very no capital investments. Simply put, they allow for member airlines to do more, reach more and gain more on shared resources.