German airline, Lufthansa Group, is upbeat on the move by Rwanda to establish a new and modern airport in Bugesera District saying that it will speed up growth of the aviation industry and opportunities for players such as themselves.
The airline serves Rwanda through its subsidiary, Brussels airlines and also provides services to the national carrier through Lufthansa Technic and Lufthansa Systems.
The New Times’ Collins Mwai spoke to the Group’s Chairman and Chief Executive Carsten Spohr on several subjects, including the proposed airport, experience in the regional market as well as plans for the East African Region.
Rwanda is building a $1.3 billion airport in Bugesera District that will have a capacity of 7M in the first phase and 14M in the second. Will this change your involvement in the local market?
Infrastructure is a key issue in Africa, globally and we welcome the move to build a new airport in Rwanda as it will enable us to expand our activities in Rwanda and Africa. It is also a symbol of the modernization and progress of this country. We are proud to have worked here for 75 years and look forward to continuing working here.
What’s your business ties with RwandAir?
We are proud that RwandAir has been a partner and client of Lufthansa Group, Lufthansa Technik (involved in maintenance and repair of aircraft) and Lufthansa Systems (information technology service provider for the aviation industry).
The agreement to liberalise the African airspace has been taking what seems like forever to actualize. How would it impact the industry from your viewpoint?
As a European, I look at Africa with huge respect in regard to the dynamic development we see in the continent in our industry and beyond. The fastest-growing market for Lufthansa Group is Africa with 10 per cent growth in recent years. The economic growth on the continent can be maintained if aviation can continue to grow with the Africa airline industry itself being active participants.
For example in East to West Traffic in Africa has been lacking for both International Airlines and African airlines. The important thing would be to open up the airspace and traffic agreements. We have seen in Europe, Asia and America, when the airspace has been liberalized, the industry has grown significantly.
What are the main challenges that have seen tickets and flights in Africa remain expensive and few intra-Africa connections?
We have received much support as Lufthansa on the African continent over the years. We own Brussels Airlines which has been serving Rwanda for about 75 years. We also have plans in the coming years.
Some of the bottlenecks that we have been experiencing in Africa has been infrastructure. For Rwanda, we have good news about the new airport that is coming up which will expand the possibilities of what we can do together. This is what we need and we can have more intra-Africa traffic and movement such as East to West Traffic.
Speaking of infrastructure, International Air Transport Association (IATA) statistics show that out of 320 international airports in Africa, 10 airports in 7 countries account for about 50 per cent traffic and revenues. What’s your view experience as one operating on the continent in regards to infrastructure?
Infrastructure challenges are some of the key challenges we have operating across the world and in Africa too. African countries also need sufficient infrastructure on the ground including safety features, then the hubs will emerge with additional infrastructure to support more complex operations.
Any African country that wants to put itself on the map in aviation needs to have at least an airport and infrastructure that is efficient to support the trends.
Will Lufthansa Group be looking to invest in airport infrastructure as is becoming a trend among major airlines?
We have been doing this but we are focusing on Europe. But nevertheless, we try to build up the African aviation industries through services we avail to airlines on the continent. We have subsidiaries such as Lufthansa Technik, Lufthansa Systems and Lufthansa Consulting which is involved in building airlines and airports across the world.
There have been reports of protectionist tendencies in some African countries where countries make it too expensive for foreign airlines to fly into their countries. Is competition a justifiable excuse for this?
We are also experiencing some infrastructure costs that are hard to understand. The fear behind it is that there are monopolies behind it that are serving to raise prices and fees to decrease competition for the local airlines. From Europe, we have learnt that whenever there is a local monopoly, you need strong regulatory control over the fees and if there is competition, it will take care of itself. The regulatory approval of fees and fees structure is important.
Even Lufthansa is too small to be successful alone. We have over the years built a group of 12 airlines and part of our commercial success come from our ability to group up. I believe that the airlines in this part of the world need to find ways to work together as opposed to against each other.
As one who runs a profitable airline, what makes an airline profitable?
It’s very easy to make an airline profitable. You need a good product at a low cost. Working on your quality and working on your cost structure is important regardless of whether your airline is large or small. Some of the costs are outside airline management such as infrastructure costs. When an airline has the right partners, it's key for the small airlines to scale for maintenance, commerce, training among others.
Carsten Spohr. Courtesy
Lufthansa officials during an interview with the New Times. Courtesy.Follow https://twitter.com/ByCollinsMwai