With a more challenging market environment and growth levels moderated, Changi must find ways to woo African airlines to ply the S'pore route.
AFRICA and Asia will no doubt see an increase in air passenger traffic in the years ahead, as the growth worldwide hits a projected 7.3 billion by 2034. Africa's numbers will grow by 4.7 per cent, with an extra 177 million passengers a year for a total market of 294 million.
However, compared to other regions and by virtue of its size, Africa's share of the passenger aviation market is minimal. The Asia-Pacific, on the other hand, will see an extra 1.8 billion annual passengers by 2034, with an overall market size of 2.9 billion. These figures are for routes to, from and within the Asia-Pacific and will include routes to Africa.
One concern is passenger connectivity from Singapore to Africa. Currently, there are direct flights from Singapore to only Mauritius, Johannesburg and Cape Town. All other flights to Africa involve connections, stopovers, codeshares and the use of alliances. Why are there such limited flights to Africa from Singapore and vice versa? What are the implications for the airline industry, business, tourism, trade and investment in Singapore? What can be done or is being done to increase the number of flights and African destinations from Singapore?
Singapore is a megahub in the Asia-Pacific. It ranked 23 out of 50 on the OAG Megahub Index 2015 for airports with the highest rate of connectivity. Singapore also has the most liberal aviation policy in South-east Asia with air service agreements with more than 130 countries and territories, including over 60 open-skies agreements. In Africa, Singapore has air service agreements with a number of countries, such as Kenya, Zimbabwe, Sierra Leone, South Africa, Mauritius and Ethiopia. Nevertheless, connectivity to airports in Africa is limited. Why is this so?
First, there is a lack of demand. There aren't too many travellers from Africa to Singapore. In August 2015, out of 1.137 million international visitor arrivals (IVAs) to Singapore, Africa as a region accounted for the least with 5,044.
Mauritius and South Africa have direct flights to and from Singapore. Air Mauritius flies once a week from Changi Airport to Mauritius via Kuala Lumpur. Singapore Airlines (SIA) and South African Airlines have codeshare non-stop flights to South Africa six days a week. In May 2014, SIA suspended its flights to Cairo due to overall weak demand.
In Africa, South Africa (with 1,994) and Mauritius (with 568) also had the highest IVAs to Singapore in August 2015. The relatively high number of visitors from South Africa may be due to its popularity as a tourist destination among Singaporeans, strong business ties and availability of direct flights to it. Should one take these two countries out of the picture, the situation for Africa looks even more dismal!
African transit and transfer passengers via Singapore are also limited. From 2008-09 to 2014-15, there was a total drop of 108,000 passengers from Singapore to West Asia and Africa. A report on non-stop capacity seats for flights from Asia to Africa for a one-week period in October 2014 showed that Bangkok provided 12,624 seats compared to Singapore's 4,116.
Secondly, competition in the global aviation industry is fierce and there are many challenges. One source of competition concerns regional hubs as global gateways. In South-east Asia, Singapore, Malaysia and Thailand were traditionally known as global gateways in the Asia-Pacific. The question is, can Singapore emerge as the global gateway for the Africa-Asia aviation market?
Changi's connectivity to Africa comprises 10 countries and 15 city links. However, not many African airlines serve Changi. An attempt by Ethiopian Airlines to operate a direct one-stop service between Addis Ababa and Singapore was suspended in August 2014 due to low traffic.
Currently, in South-east Asia, Bangkok has more African carriers with direct flights to Africa, including Kenya Airways, EgyptAir, Ethiopian Airlines and Air Madagascar.
With a more challenging market environment and growth levels moderated significantly since the 2008-09 financial crisis, Changi must find ways to woo African airlines to ply the Singapore route. One way might be to promote travel between Africa and Singapore by using the Singapore Tourism Board and suitable partners from Africa to disperse information about travel and tourism experiences to or via Singapore.
Gulf-based carriers and hubs are also relevant competitors. Between 2002 and 2008, Emirates, Qatar Airways and Etihad Airways increased their seat capacity for Africa from 0.6 million to 2.9 million.
Although African airlines have grown their passenger numbers to the Asian market, there is still great potential for growth. However, the limited number of direct flights by African airlines from Singapore will impact the share of the African aviation market Singapore can benefit from.
Trade volumes between Africa and Asia are expected to reach US$1.5 trillion by 2020. Investment flows into Africa are also on the increase - for example, Singapore company Pavilion Energy's US$1.28 billion investment into Tanzania's gas sector in 2013. Limited connectivity has an obvious negative impact on the ease of access to and from Singapore for investors. This increase in trade and investment will therefore lead to increased air travel as a result of, among others, the growth in wealth, middle class and recreational needs.
Limited connectivity will also have an impact on Africa's contributions to the travel and tourism industry. Singapore sees tourism as a key strategy for growth, which contributes to economic development through job creation, foreign exchange earnings, government revenues and infrastructure development. In 2014, tourism receipts for Singapore amounted to S$23.6 billion.
South-east Asia has seen the most significant growth in international arrivals due to the region's competitiveness, its rich natural capital and the rise of the middle class. There could be rather more visitors to Singapore, particularly from Africa, although price competitiveness and the lack of direct flights may be an issue.
Africa should be able to triple the size of its tourism industry by 2020 if proper efforts are made to ensure the safety and security of visitors. Some 77.3 million tourists are expected by 2020, up from 27.8 million in 2000. From this projection, an increase in travel from Asia to Africa is expected. In order for Singapore to capitalise on this, its connectivity to Africa needs to be improved drastically.
What can be done?
The aviation industry, specifically the airlines and Changi Airport Group (CAG), should build on their strategies to attract customers and grow market share. SIA should continue building its global network through new services and new partnerships. Changi should continue its cost relief and incentives schemes for its airline partners, and promote travel to and through Singapore. Incentives to lower cost for airlines, boost passenger traffic and improve operational efficiency, are useful and attractive for directing traffic to Changi.
There should be more publicity and awareness in African countries with a strong tourism industry, such as the Seychelles, Kenya, Morocco and Ethiopia. Relevant players in the aviation industry - airlines, travel agents, tourism boards, and media agents - can all help with publicity. African airlines with established markets in South-east Asia, such as Ethiopian Airlines, Kenya Airways and South African Airways, should all be targeted.
So far, the focus has been on Southern and East Africa. Nigeria, Africa's most populous country and largest economy, presents a huge untapped market for the Singapore aviation industry to penetrate. It should also partner other relevant stakeholders to strengthen air connectivity throughout Africa.
CAG faces many challenges in expanding its network to Africa. A solution seems to lie in getting reputable African airlines to operate a direct non-stop or one-stop service to African cities. Another solution requires revamping ways of promoting travel to and/or through Singapore, especially in African cities with a focus on tourism. A closer look at these two suggestions might go a long way in connecting Singapore and Africa through travel.
Published in: The Business Times, 19 December 2015