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Girma Wake, Chairman, RwandAir

Girma Wake, Chairman, RwandAir

» Interview | Thursday, August 7, 2014 • Air News Times
How will a deregulated market in Africa impact RwandAir?

GW: Africa should have been deregulated a long time ago. The impact will be good for RwandAir because RwandAir needs to enter more markets that are not open to it today. It will give it the opportunity of creating a niche market of its own. There are sectors that are under served right now in our continent which can be opened up through liberalization. I  think that will be a good opportunity for RwandAir and for other similar airlines of our continent.

Are you afraid that this new environment will bring more low-cost carriers or do you believe that this model does not fit into the African environment?

GW: I personally believe that low-cost carriers in the African sense will be very difficult to achieve. First, because the cost of fuel in Africa is high, second there are limited  secondary airports in Africa, we all fly from the same airports, and third there are few countries where the traffic density is large enough. If you are paying more for everything, handling, fuelling, overflying etc, how can you be a low cost carrier?

So the question will have to be modified, may be not so much on the low-cost aspect of it but considers the issue of flying smaller airplanes to smaller airports covering smaller destinations bringing passengers to the major hubs. Such a model will probably work but the low-cost model as it works in Europe and America will take some time to develop in most parts of Africa.

RwandAir has already a cooperation agreement, code share agreements, with Ethiopian and Brussels Airlines. How have been the benefits so far?

GW: RwandAir besides being a national carrier has the additional  responsibility of channeling government traffic to different destinations. Through these code share agreements, the airline is able to reach more points. It is an airline that is preparing itself to fly to many destinations in the future: if you do not build the traffic today through this type of cooperation, to start a fresh operation to a destination you are not already selling and serving will not be easy. So I think RwandAir is expanding and improving its market reach through this type of collaboration.

Does this mean that RwandAir plans to expand its code share agreement scheme with other airlines?

GW: Yes, we do. We are discussing with many carriers, some from Africa, some from the Gulf Area, and also with some European carriers.

Do you believe that a cooperation with carriers from the Gulf can also work the other way round and have them feed you aircraft because many Gulf carriers are making their own expansion on their own in the Continent?

GW: This is true but they will also give us a market reach that would not been available without getting into cooperation with those carriers. But generally, the idea for RwandAir is to really get cooperation with as many carriers as possible and mostly with African carriers. And that’s why our focus is in Africa right now.

So we can say that the focus market for RwandAir at the moment is the African continent?

GW: The African continent and connecting our continent with the other continents is our focus for now.

You have huge experience managing many airlines such as Ethiopian Airlines. How does this experience contribute to your post as Chairman of RwandAir?

GW: Although it is up to others to judge my contribution, I can safely say, since I have gone through the good and the bad days of aviation in Africa, I can share my experience with the management and other board members and  add my voice to some of their activities and future plans . I believe it is a mutually rewarding interaction.

Under your guidance Ethiopian Airlines became one of the leading carrier in Africa, this is again your goal for RwandAir too?

GW: I want to see  as many successful airlines as possible in Africa. I believe just one or two carriers can never make African aviation strong. We need to create more. I believe Rwandair has certain positive elements that can help it to  be a great airline: the government system, the central geographical location of the country, the role the country plays in the African economic and social development , the touristic attraction of Rwanda and the ambition and commitment of  the nation to the growth and prosperity of its people will propel  RwandAir to grow. I think RwandAir can be a strong player in the future. It has all the DNA of a good airline.

You just mentioned cooperations of RwandAir with carriers inside and outside Africa, do you believe that RwandAir can be in the future part of an alliance?

GW: An alliance will take time but RwandAir will definitely build its relationship with different carriers, it will build its traffic base and when it reaches a certain volume of traffic, it can go for an alliance. But an alliance at the moment is outside of our plans.

 What type of passenger flies with RwandAir, what is the mix of passengers on board your planes? What is their purpose for flying, business or tourism?

GW: The tourist traffic is growing but still the major traffic is business traffic to Dubai, business traffic to South Africa and West Africa. So far it is mainly  business travellers and government sponsored traffic. But tourist traffic is growing and will grow more.

Have you got any figures about the percentage of business class segment and the total number of business class passenger traffic?

GW: Business class traffic as a percentage of the total traffic is still very low because many business travellers fly economy class. There are not many travelling business class not yet. This will change as the general economy of Africa grows.

The focus of RwandAir is point-to-point traffic or connecting traffic? What is the percentage of connecting passengers? What kind of passengers would you like to have in the next five years?

GW: At the moment about 17% of the traffic is connecting traffic but gradually I believe it will be 50-50. Basically Rwanda as a country is very densely populated ( area wise) but its  population is only 12 million. For Rwandair it is necessary to grow its net work in the region and beyond to  be able to attract connecting  traffic through its hub of Kigali .This job is made easier  by the government of Rwanda becoming the first African country to provide visa on arrival facility to all holders of African passports. The construction of new state of the art airport at Bugesera in the very near future will also add to the attraction of Rwanda’s
Ambition to be the aviation hub of the region. . With the planned growth of RwandAir,the  business traffic from Rwanda and other African countries which is also growing  will have a good alternative airline and airport that can provide above average level of service through the Heart of Africa. The ever increasing number of Tourists roaming the parks and historical sights in our continent will have the opportunity of using one additional African airline that will meet their travel needs..

What are the new routes that you plan to serve in Africa in the next years?

GW: Mainly to central and western Africa and the other expansions that we are considering are the Indian Subcontinent and Europe.

But with Boeing 737s this is not possible.

GW: It could be a two stage approach. We start operation to India using our 737s for now but as we grow the traffic we will introduce wide body operation in our system which will enable us fly to the Far East and Europe in three to four years.

What percentage of your total revenue comes from ancillary and what will be the focus over the next years?

GW: Basically, the ancillary revenue is close to 10-12% of the total traffic revenue but it will grow as more carriers fly here requiring our handling assistance. As we  expand to Europe and Far East- we will start our duty free sales on board;  We will gradually  be starting our own maintenance facility which will save us lots of money ( we are using other maintenance organization today).We will extend that service to third parties at least for the transit checks at stations. So the aucilliary revenue has a good potential to grow.

How important are social media for RwandAir expansion?

GW: This is a country that prides itself on technology, any young person in the country including the head of state tweets to communicate with people. Social  media is  very well used  and is widely accepted. If we can  find ways to channel  bookings through the social media ,we  can  reduce the cost of booking rather than to go through the GDSs. It is a community that lives on technology, therefore, I think it will be the future for RwandAir to go that way.

What are the priorities for the airline as Chairman of RwandAir for the next twenty four months?

GW: The priority for the airline is building capacity in terms of maintenance so we can start our own aircraft maintenance services thus reducing our cost. We also  need to  build capacity in terms of flight operations: many of our pilots are employed from outside, therefore we will have to build capacity so that we  reduce cost and at the same time build the future of the airline. I think this is the first area of focus. The second area of focus is to increase destinations. RwandAir  flys today to  fifteen destinations, we will soon operate to seventeen: to really be competitive, we need more destinations. So the second area of focus is growth of network, which is very important. The way we  connect through our hub of Kigali is good., with our current  schedule there is  one bank  in the morning and  one in the evening, the connection is very good, but we will have to add more and more points to our operation  so expansion with- in Africa, and outside  is the second priority. We want to leverage this central Africa location to establish Rwanda as a hub for trans-Africa and for beyond Africa traffic.
This is a country that produces a lot of items that can be exported so as a national carrier we have the responsibility of supporting the export and import activities of the country. Thus  we are also focusing on that line of business: we will first introduce wide body operation and we will then look into future freighter operation

Does this mean that you plan to have full cargo aircraft in the future or use the belly of the aircraft?

GW: We will start with the belly of the aircraft as we already do, cooperate with other carriers that operate freighters  and gradually build our own all cargo services. At some point having freighters is important because it will improve the international  trade of the country.

Any time schedule?

GW: Probably within four years.

What are your major concerns as an airline?

GW: The major concern is the slow progress in liberalization that we see here in Africa. It is many years since the Yamoussoukro Decision was reached but unfortunately I believe- and now I can see it even more clearly as I see things through RwandAir’s view- that African countries are not  opening up to African carriers as much as they should especially when you are small. This is what you see when you try to grow a smaller company. I think  this is one challenge that has to be handled by the governments. It is a pity to see  that many African countries, for various reasons, seem to be  opening up their routes to non-African carriers than to African carriers creating competition to African carriers, sometimes even allowing fifth freedom traffic between two African countries without granting these freedoms to African carriers. This is something that has to be corrected very soon. Among the  challenges that we face is one of high cost. Rwanda is a land locked country and as a land-locked country and as non-producer of oil it has to import all of its fuel. JetA-1 fuel is very expensive, the government is trying to bring it down to the acceptable level but that puts a lot of pressure on the carrier. RwandAir is  operating to so many countries in Central Africa that have exactly the same problems, thus how to reduce our fuel bill is a challenge.

From your position, as a key leader in Africa, how do you see Africa in ten years from now? Are there any last thoughts you would like to share with Air Transport News readers?

GW: Africa is the future: there is a lot of growth in Africa, GDP growth, population growth, exploitation of oil and minerals, growth of tourism- thanks to its natural beauty. I believe Africa is on the way to be the next “Far East”. Within the next ten years we will see a lot of changes in Africa, probably much more than what we have seen until now. I think African carriers should focus on and be part of that change. Change and progress is there, we cannot stop it but we have to be part of that change.
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