Africa, the next frontier for Gulf airlines

Reuters/Tiksa Negeri

Middle East airports, commonly viewed as the global centrepoint of aviation, have positioned themselves as high-quality, “one stop to anywhere” hubs. 

For many, the perception is that they rely on high volumes of traffic between North America, Europe, the Indian subcontinent and Asia. But we frequently forget about Africa and the importance of connecting to some of the hardest-to-reach and most poorly served capital cities. 

Africa accounts for only 3 percent of global capacity and has struggled to sustain long-term airline operations – with the notable exception of Ethiopian Airways – but the continent is a potentially lucrative long-term opportunity.

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Historically, the connectivity of Africa’s aviation network has been thwarted by political interference, remittance issues (airlines not being able to get the funds owed to them out of countries that do not have dollars) and restrictive tit-for-tat bilateral policies. Travelling within the continent can frequently involve a side-trip to Paris or Frankfurt to make a connection back to Africa. 

Nevertheless, Africa is a continent of traders and small entrepreneurs travelling to make a living. How do these business people find their way around the planet? Via the Middle East, of course.

Non-stop scheduled services between Africa and Asia are characterised by a combination of vanity routes and those operated with at least a side portion of political interest. Air Tanzania’s once-weekly service to Guangzhou can be ascribed more to vanity than commercial sense. At the very least, leaving a full crew in Guangzhou for a week is inordinately expensive.

In the opposite direction, many of the non-stop services offered by Chinese airlines to the continent have a historic link to a state visit in one direction or the other – and occasionally to commercial interests.

The notable exception is the successful Ethiopian Airlines network, which serves 13 destinations with around 330 flights a month. It effectively competes with and, in some cases, outperforms the major Middle East carriers. 

Ethiopian’s network connects the whole of Africa to the Middle East, Europe and Asia. For many countries, it provides the only regular point of connectivity on the continent. Many other airlines have tried and sadly failed. Still, I believe if a carrier can survive in Africa, then the opportunities for cash are certainly there. 

With limited direct services, the natural gateways between Africa and Asia are via the Middle East. In the past year, the volumes of revenue generated have been immense. South East Asia leads the market, with $530 million of revenue flowing to and from Africa over the course of the year. 

Guangzhou is the main gateway

In North East Asia, China is the major market, with Guangzhou the main gateway, underpinned by daily Egypt Air and Ethiopian services. No Chinese-based carrier operates from Guangzhou to Africa, which may say something about the market’s wider attractiveness. 

As a comparator, $3.2 billion of revenue flows from Western Europe via the Middle East to Asia, so Africa is a market of considerable interest to locally based network carriers. 

Not surprisingly, because it seems always to be the winner, Dubai is the principal connecting point between Asia and Africa. The top five capture 97 percent of all revenues flowing via the Middle East. Dubai is the clear market leader, with a 53 percent share. 

Its Emirati rival does not do as well, with Jeddah ranking ahead of Abu Dhabi. In the coming years, the planned development of Saudia could lead to an increased revenue share for the kingdom. Much of the Jeddah traffic combines a pilgrimage with a trip to visit friends, family or business contacts. 

Egypt is the largest revenue market in Africa, with $322 million of revenue for December 2022 to November 2023. South Africa is in second spot, followed by Nigeria.

The success of any network carrier and its hub is based on broad connectivity. Reliance on a specific flow of connecting traffic leaves an airline vulnerable to competitive pricing, so ideally a 360-degree network of connectivity is in place. 

Africa is an important part of the connectivity story for every major hub in the Middle East. It creates a balance against other markets. The continent may sometimes be forgotten in wider discussions around aviation, but for every Middle East airline and airport, being connected to Africa is crucial.

John Grant is a partner at the UK consultancy Midas Aviation