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What's holding back African airlines?

By Richard Quest, CNN
June 14, 2013 -- Updated 1119 GMT (1919 HKT)
STORY HIGHLIGHTS
  • African airlines looking to code-share agreements to improve network
  • Only 3% of global air travel is from Africa
  • More international airlines fly to and from African than African airlines

(CNN) -- Africa has the second largest population of any continent but only accounts for 3% of global air traffic.

The reasons for taking such a small share of the aviation market have been the same for decades: poor infrastructure, stalled liberalization, high taxes and fuel charges.

It also struggles with a lack of routes linking cities, a lack of regular flights flying them and a lack of profitable airlines competing.

However with the GDP of sub-Saharan countries expected to grow almost 6% this year, according to the World Bank, there is still the belief that aviation can really take-off.

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"The infrastructuure is improving, which was one of the key issues," says Alexandre de Juniac, CEO of Air France.

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"Airports, air traffic control, civil aviation regulations everywhere, they are improving, there are many programs coming from international organizations and there is an enormous need for air traffic coming directly from the economic growth."

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The need for improved air travel across the continent is clear to many in the industry, where there are glaring gaps between growing economic centers. A flight between Cape Town in South Africa and Lagos, Nigeria, the second fastest growing city in Africa, should take six hours. Yet with no direct flights, the cheapest option via the Middle East takes up to 25 hours while the faster, yet more expensive routes within Africa still take ten hours.

Often governments have been blamed for protecting their national carriers and refusing to deregulate the industry and open up the skies to greater competition. While South Africa has a number of liberalization agreements, its government agrees that more needs to be done

"There is a number of constraints in different countries, with regard to policies, with regards to the regulatory environment... but in terms of the decisions themselves, we have taken the right ones," says Malusi Gigaba, South Africa's minister for public enterprise.

"Of course, you already have more foreign airlines flying in Africa than African airlines.... but we would like to see even greater cooperation between these African airlines."

Kenyan Airways is one airline that is taking note. It recently suggested a merger with other local aviation big-hitters, South African Airways and Ethiopian Airways.

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"We can't go on the way we have, we have got to start consolidating," says Titus Naikuni. "We've all been talking to each other. I don't know if you call it a merger or whatever, (but it is) to avoid a situation where we're running two aircraft side by side at 50% capacity."

If there's a criticism, it is that it is creating less competition on a continent that is crying out for more. The real winners so far have been international carriers, particularly from the Middle East, that now make up almost 60% of intercontinental traffic to and from Africa.

Etihad Airways has routes from Abu Dhabi to major cities in Nigeria, South Africa, Kenya and North African countries and then partners with domestic airlines to reach second and third tier cities.

"What we are doing is complementing each others networks...they can take us into 26 points in Africa they we'll never touch," says James Hogan, CEO of Etihad Airways.

The greatest test to come then is if the quality of the air links outside the major hubs match the international routes. That will prove if African aviation can ever truly live up to its potential.

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