Did everyone just forget about Africa?

Sub-Saharan African economies are expected to grow five percent this year following similar growth rates last year
By Anil Bhoyrul
Mon 29 Oct 2012 10:04 AM

I used to dread flying back to Slovenia for Christmas every year to visit the in-laws. Don’t get me wrong — bizarrely I get on with all of them. It was just the thought of having to fly Turkish Airlines (THY).

Four years ago, when I started making the marathon journey from Dubai to Istanbul to Ljubljana, not a trip went by without drama. Istanbul’s main airport was chaos, each flight was always delayed, connections were missed, and just for good measure, the service standards on Turkish Airlines were, in my opinion, appalling.

Four years on, and I can’t find fault with anything about the airline — delays have disappeared, the planes look brand new and the service is fabulous. As my colleague Massoud Derhally’s interview with Turkish Airlines CEO Temel Kotil in this week’s issue shows, the airline is also in pretty decent financial shape.

The airline carried 18 million passengers in the first six months of the year, about 20 percent more from the same period a year earlier. Its passenger load factor in the period was 75.2 percent and it posted a net profit of 193.1 million lira ($105m) in the second quarter compared with a 170 million lira loss in the same period a year earlier. Today Turkish Airlines is the third-largest airline in Europe by passenger traffic and has 1,000 flights a day, a number it seeks to double over the next ten years. The carrier currently flies to 203 destinations and has a fleet of 200 aircraft.

Two things are striking about the growth. One is that unlike many of the big guns that are chasing (and waiting) for deliveries of the A380, Turkish Airlines is mostly made up of narrow-body jets — and it’s likely to make new plane orders within the next eighteen months.

More interesting, though, is Kotil’s focus on Africa — again, while rivals are targeting South America and Asia, Kotil is looking south, and plans to increase his destinations to the continent from 24 to 34.

 “I need just 100 passengers from Kinshasa to Istanbul to make a profit,” Kotil  tells us, adding, “Other airlines need 200. So Istanbul will be the capital of the airline business.”

THY also has a presence in Mogadishu, the capital of war-torn Somalia.

“It looks maybe strange but Somalia is an underserved country...We love it, we’re making good profit from Mogadishu,” he adds.

Sub-Saharan African economies are expected to grow five percent this year following similar growth rates last year and 2010, according to the International Monetary Fund. The region’s economies are expected to accelerate to 5.7 percent next year. As Kotil explains: “Africa is the future, after 100 years Africa will be the most important continent on earth. We need to fly to every major city in Africa. Airlines in Africa are also coming out. After five to ten years Africa will have nice small airlines to mid-sized airlines... In the near future we will become the most important player in Africa.”

He’s not alone. Aramex boss Fadi Ghandour’s  statement last week showed a decent eleven percent rise in third-quarter profits, thanks in part to its South African operations. Just over a year ago, Emaar chairman Mohamed Alabbar told this magazine about his plans to create a $1bn mining empire in Africa, through his new venture Africa Middle East Resources (AMER).

As he explained at the time: “Call it unstable, call it risky, call it whatever you want to call it. If it’s unstable or it’s risky don’t go there. Why should you bother? Well I like to bother, I’m spending a lot of time there. Is it easy? No way, it’s not easy. But I know what can be done.”

The likes of Fadi Ghandour, Mohamed Alabbar and Temil Kotil are however, the exception to the rule. The rest of the pack could do worse than take a leaf out of their books.

Anil Bhoyrul is the Editorial Director of Arabian Business.

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