This article from NYTimes.com has been sent to you by psa188@juno.com. Wanted: An Airline for All of Africa August 4, 2002 By HENRI E. CAUVIN JOHANNESBURG -- Lying around this continent of dilapidated airports on dysfunctional airlines can take much time and patience. Andrew Mthembu, a South African mobile-telephone executive, has little of either. So when Mr. Mthembu, the man leading the expansion of Vodacom, the cellular service provider, contemplates where his company will set up next, one question is never far from his mind: he wonders how often the new area is served by South African Airways, which the Official Airline Guide regards as the most reliable carrier in Africa. He just can't afford the troubles on other African airlines: Unannounced stops that turn a three-hour flight into a dawn-to-dusk excursion. Departure delays that stretch into days. Airline employees who couldn't care less. "If South African doesn't fly there, I'd rather go charter," said Mr. Mthembu, deputy chief executive of Vodacom. Sometimes, he has had to do just that. He and his company's accountants are not the only ones unhappy about it. Even as South African Airways has planted a sweeping footprint across southern Africa, establishing itself as the dominant airline, it knows that the mother lode awaits a bit farther north, in places like Nigeria, Congo and Angola. Rich in oil and diamonds and poor in almost everything else, they are the next frontier for entrepreneurs like Mr. Mthembu, as South Africa sheds its apartheid isolation and positions itself as the economic engine of the poorest continent. What the entrepreneurs need is someone to take them there and back, and Andre Viljoen, the president and chief executive of South African Airways, wants to serve them. "It's a completely untapped market," he said in an interview. It has stayed that way, Mr. Viljoen said, because regulations governing air service remain restrictive. But pressure for change is building. For the last year, South Africa, Senegal, Nigeria and Algeria have been promoting an economic growth plan that they call the New Partnership for Africa's Development. They hope to attract more investment and aid from the developed nations. While highways and rail links are essential pieces of the plan, air transportation is also a priority. For just as cellular telephone service has leapfrogged its copper-wired cousin in places with poor land lines, air travel can often crack open markets faster than trains or trucks. "If you're talking about growth, you need to make links with the global market, and the best way to address that is with air transport links," said Zaza Manitranja Ramandimbiarison, a World Bank official who tracks transportation issues in Africa. The last year has underlined the challenges for the aviation industry in Africa. Air Afrique, a carrier owned by 11 West African governments, stopped flying in January and declared bankruptcy in February. Sabena, the Belgian airline that collapsed last year, had provided a crucial intercontinental link for its former colonies, in particular Congo. Air France, which already had a strong foothold among its former colonies in West Africa, has since expanded service in the region, and British Airways and Virgin Atlantic are said to be earning good returns on their routes from London to Lagos, Nigeria. But such service, principally between African capitals and London or Paris, is scant compared with what Air Afrique had aimed to offer within the continent. SOUTH AFRICAN AIRWAYS, the biggest and best-equipped airline in Africa, is for now the only carrier that could fill that need. From its Johannesburg hub, with a fleet of 60 aircraft, it flies to 20 African destinations outside South Africa and to a dozen overseas. In June, it completed a deal with Airbus for a new fleet to be phased in over 10 years. In July, it reported that profits for the fiscal year ended in March nearly quintupled, to 2.1 billion rand, or about $210 million, from 408 million rand the year earlier. Revenue rose 26 percent, to 13.6 billion rand. Much is riding on whether the airline can expand within Africa. If only it were as simple as flying more planes. Longstanding accords among African governments still limit how often one country's airline can fly to another country. South African Airways, for example, can fly between Johannesburg and Luanda, Angola, three times a week, and TAAG, the state-owned Angolan airline, can do the same. South African Airways, however, wants to fly to Luanda daily. Angola has resisted, fearing that South African Airways' superior service would hurt its airline. Opening the skies could spell the end for more than a few of the continent's state-owned airlines, and few countries have shown any willingness so far to take that risk. In theory, the African countries pledged to deregulate air travel with an agreement in 1999 known as the Yamoussoukro Decision, named for the Ivoirian capital, where it was signed. But there has been little movement since. The agreement would free airlines from many limitations. South African Airways, for example, could increase its flights to Luanda without receiving Angola's permission. The agreement would also allow South African Airways to fly between two other countries, say Nigeria and Angola. Some people hope that the pact may eventually lead to agreements allowing foreign airlines to fly within countries, say from Dar es Salaam to Zanzibar in Tanzania. "Until that gets implemented, growth opportunities will be much slower than they need to be," said Donald S. Garvett, the executive vice president for strategy and planning at South African Airways. It is easy to understand why the airline is so keen on Africa. Flights to other African countries represent about 10 percent of the company's revenue but are more profitable than domestic or intercontinental service. Unlike domestic fares, priced in the rand, and intercontinental fares, which must match those of bigger, stronger global airlines, fares to the rest of Africa are priced in dollars, the de facto currency for much of the continent. Those fares, Mr. Viljoen said, provide "the best yields of all our routes." Over the last few years, the airline's expansion efforts have focused on trying to form partnerships with carriers in East and West Africa and turning their hubs into regional hubs for itself. But none of them - including Entebbe, Uganda; Nairobi, Kenya; Abidjan, Ivory Coast; and Accra, Ghana - have worked out because the airline could not get the control it considered necessary to make the partnerships work. That has left the airline without any feeder network outside southern Africa. It is trying other strategies. In East Africa, it is completing a bid for a stake in Air Tanzania, which is being privatized. If that succeeds, South African Airways would acquire a hub in Dar es Salaam. In West Africa, opportunities for partnerships are more complicated. The airline said that it had not given up on Abidjan or Accra, but that it was now looking to Dakar, Senegal, as another possibility. Nigeria, Africa's most populous country with more than 100 million people, is another possibility, but South African Airways' efforts to establish itself there have been rocky. CONGO was one of the countries crying out for service until late last year, when South African Airways resumed flights to its capital, Kinshasa. No one knew the need better than Vodacom, the cellular phone company, which was preparing to start a Congolese subsidiary. Employees had been shuttling to Kinshasa, and for months, the only regular choice was a once-a-week flight offered by Cameroon Airlines, said Lynn Crouse, Vodacom's travel manager. The flight, scheduled for 2:30 a.m. Wednesdays from Johannesburg, rarely left on time. "It was a nightmare," she said. "Cameroon Airlines is just not a very reliable airline. If the aircraft was not full they just wouldn't depart." Cameroon Airlines conceded problems with the flight and said it planned to use a newly acquired aircraft on that route. Even flying South African Airways does not always free travelers from the whims of weaker carriers. Last November, on a trip back from Accra, Mr. Mthembu found out the hard way. He was booked in business class on flight SA 53, a South African Airways flight serviced by ground crews of Ghana Airways, but he never boarded. "I had confirmed 48 hours before as required, and I came to the airport and this young lady just looked at me and said the plane is full," he said. He protested in vain. He had meetings with visiting government ministers in South Africa the next day, and with only a few flights a week back to Johannesburg, it would be at least a couple of days before South African Airways could rebook him. So he did what most travelers can only dream of doing. He had his company charter a jet to pick him up. The cost was about $30,000. http://www.nytimes.com/2002/08/04/business/yourmoney/04WORL.html?ex=1029470457&ei=1&en=019758508c032bd1 HOW TO ADVERTISE --------------------------------- For information on advertising in e-mail newsletters or other creative advertising opportunities with The New York Times on the Web, please contact onlinesales@nytimes.com or visit our online media kit at http://www.nytimes.com/adinfo For general information about NYTimes.com, write to help@nytimes.com. Copyright 2002 The New York Times Company