A diamond in the rough?
What happened to the good old days when life was simpler and everybody just happily went about their business and cargo holds were easy to fill and yields were satisfying? Maybe it was just that reacurring dream. Certainly the events of the last couple of months are enough to make even the most rational amongst […]
April 1, 2011
By Donald Urquhart
What happened to the good old days when life was simpler and everybody just happily went about their business and cargo holds were easy to fill and yields were satisfying? Maybe it was just that reacurring dream. Certainly the events of the last couple of months are enough to make even the most rational amongst us wonder what indeed the world is coming to. The continuing cycle of unrest rippling across North Africa and the Middle East, and the potential nuclear disaster unleashed by the devastating earthquake and tsunami in Japan are clearly two scenarios that will not be resolved anytime soon. Already their impact is being felt on global supply chains and hence air cargo, as well as passenger travel. Then of course there’s the ‘euro-lethargy’ that has put nearly every European economy, except for Germany, in slow motion. This could easily get a lot worse with Portugal teetering on the financial brink. And of course, everyone’s favourite – oil. At the time of writing this, oil prices have crept up to US$108 a barrel – not a good sign for the aviation industry that had just only found its feet again after the last big crisis. It’s no wonder there was a palatable sense of optimism and dare I say, enthusiasm, at the recent Africa air cargo event in Nairobi. With foreign investment finally increasing to a nice steady flow from the trickle of the last few decades – much of it Chinese, which likely provokes unease in some quarters – many of the vast continent’s economies are finally headed in the right direction. In particular infrastructure, telecoms and minerals are leading the way alongside more traditional oil and gas sector. But while there was clearly much enthusiasm for the market that Africa is now, in certain locales, and surely will be in others very soon, there was a wise tempering of this sentiment. As pointed out by speakers at the conference there are many, many challenges to operating in the African market. With 53 countries comprising the vast continent it means 53 distinct cultures, but perhaps more importantly, 53 different sets of air rights, customs regimes, airport regulations, import and export requirements, and so on. It appears there is really only one common denominator across the continent – what is rather politely called ‘royalties’ – AKA, ‘bribes’. And so with its innumerable ‘challenges’ including, but not exclusive to market access issues, corruption, protectionism, currency repatriation, high fuel prices, political instability, power outages, inadequate security and safety procedures…the list seems endless. To be fair, some of the 53 countries are better, or worse, than others. But while this certainly takes a bit of the shine off this African air cargo gem, it didn’t appear to completely dampen the enthusiasm for this emerging cargo market. As one keen observer of the African market commented: “Africa has its own rhythm, has its own rules, has its own phase of things – you can do very good business in Africa, but there are challenges.Â¡Â± Indeed.