Sky’s the limit: Plans to become a regional aviation centre underpin growth

Like many West African aviation sectors, Côte d’Ivoire’s air transport links suffered over the past decade, seeing a decline in passenger traffic and airlines serving Abidjan. However, the sector is poised for a comeback. With its quality infrastructure, Abidjan’s Felix Houphouet-Boigny International Airport has the potential to serve as a centre for the West and Central Africa region, although it is facing competition from Lagos, Accra, Lomé and Dakar, all of which are in the midst of facility expansions and new airline launches. To strengthen the country’s position, the Ministry of Transport has backed the launching of the new national carrier and a large-scale real estate development project, Aerocite.

NEW CARRIER: The creation of a new flag carrier, Air Côte d’Ivoire, is perhaps the most prominent part of the country’s strategy. In 2011, Côte d’Ivoire was forced to shut down its national airline, Air Ivoire, which had mounting debts of CFA38bn (€57m). Like many other operators in West Africa, Air Ivoire was beset by structural operational and financial problems, such as high operating costs (handling fees and fuel) and low demand. The problem was compounded by the political crisis and the collapse of several national flag carriers, including those of Ghana, Nigeria and Senegal, resulting in lower air traffic to Abidjan.

With intra-African traffic decreasing by the late 2000s, flights from Abidjan to other cities dropped from 45 in 2001 to 30 in 2007. Mindful of the failures of Air Ivoire, the government launched the new national carrier, Air Côte d’Ivoire, in 2012 with the backing of Air France and the Aga Khan Fund for Economic Development. After analysing the business model of Air Ivoire, the new national carrier developed a different approach that emphasised direct flights to underserved West and Central Africa. West Africa represents 67% of demand for international seats to Côte d’Ivoire and Europe contributes 19%. As of May 2012, Central and West Africa accounted for 20,308 seats and Western Europe 5690.

REGIONAL FOCUS: While the majority of airlines serving the region have multiple stops in order to assure commercially viable volumes of passengers, Air Côte d’Ivoire will instead offer direct flights, in coordination with Celestair Group, the majority shareholder in Air Burkina. After signing a partnership deal with Air Côte d’Ivoire, Celestair Group will no longer operate flights to Central Africa (Douala, Libreville, Brazzaville, Pointe Noire) and retain their network neighbouring destinations, such as Cotonou, Lomé and Accra, which acted as feeder flights to Libreville, Douala and Brazzaville.

TAG TEAM: Air Burkina will now pass through Abidjan, which will then service these cities by direct flights. Air Burkina will also pick up passengers from Niamey in addition to their flights out of Burkina Faso, bringing them to Abidjan for onward travel to Central Africa where they join the passengers Air Côte d’Ivoire brings from Dakar, Bamako and Conakry. Air Côte d’Ivoire will thus reach the critical number of passengers to fill its planes for Central Africa-bound direct flights. From its partnership with Celestair, the airline will also benefit from codesharing and pooling resources.

By October 2013, Air Côte d’Ivoire is also looking to add three destinations – Lagos, Monrovia and Freetown – in partnership with Nigerian airline Arik Air on top of its current 12 destinations out of Abidjan. To build Abidjan as a hub, the airline aims to expand quickly, climbing to 20 destinations by 2014 and 25 by 2015. Air Côte d’Ivoire expects that its total passenger numbers from its international and domestic networks will reach 350,000 in 2013. By its eighth year of operation (in 2020), it seeks to grow to 800,000 passengers.

FLEET: The other critical component of the airline’s expansion strategy is obtaining an adequate-sized fleet. Its initial fleet includes two Airbus A319s, which were previously operated by Air France through a lease from Macquarie Bank, and a leased Embraer 170. Each Airbus A319 has 12 business-class seats and 96 economy-class seats. Air France is also providing technical expertise to Air Côte d’Ivoire. In 2013 the carrier leased an additional Airbus A319. The fleet increase follows an economic principle in the airline industry which says that an airline can effectively compete on the cost side, if it can base its synergies on a fleet of seven to 10 aircraft. Air Côte d’Ivoire’s development plan therefore foresees a fleet of eight planes by 2015.

DOMESTIC DESTINATIONS: Because Air Ivoire – now closed – saw high demand for domestic flights in the late 1990s, Air Côte d’Ivoire plans to build a strong domestic network. Destinations will ultimately include all the major regional cities: Yamoussoukro, San Pédro, Bouake, Daloa, Man, Odienne, Korhogo, Bondoukou and Bouna. On certain days it will run two daily flights to San Pédro and Yamoussoukro given their economic and political importance and to allow the passengers the option of a same-day return. The concept will be extended to other destinations as soon as feasible.

In building its domestic network, Air Côte d’Ivoire seeks to target business travellers visiting regional cities for the day. Poor infrastructure at regional airports has caused Air Côte d’Ivoire delays in launching, but it expects to offer flights to major regional cities by November 2013. René Decurey, Air Côte d’Ivoire’s managing director, told OBG that Abidjan is an ideal hub. “Côte d’Ivoire represents about 40% of the region’s total GDP and has an above-average purchasing power. It is also centrally located between West and Central Africa at two and a half hours from Dakar and two hours and 10 minutes from Libreville.”

The authorities are looking abroad to address security concerns. The director-general of the Autorité Nationale de l’Aviation Civile (ANAC), Sinaly Silué, told OBG, “The government’s objective is to get the airport certified by the US’s Transportation Security Administration (TSA), as it has higher demands than even the International Civil Aviation Organisation.” This requires prior classification of the Ivoirian civil aviation administration by the Federal Aviation Administration.

CHALLENGES: However, high costs at Abidjan airport, which is one of the most expensive of the region, pose an obstacle to its ambitions to become a hub. Handling costs are high, given little competition in provision of services. While the airport’s infrastructure does not need major renovations in the short to medium term, facilities and services will require upgrades to pull in the level of passenger traffic befitting a hub. An increase in the number of airlines flying into Abidjan and an expansion of Air Côte d’Ivoire’s fleet will necessitate spending to on infrastructure, which is not yet able to handle the traffic volumes anticipated. The airport expects to see over 1m passengers in 2013 – the first time it will do so since 1999. Upcoming expansions include the addition of A380 aircraft from Air France in 2014 and the renovation of the baggage delivery zone.

AEROCITE PROJECT: Complementing the launch of Air Côte d’Ivoire, Aeria, the airport concessionaire, is building a large-scale real estate development project that will be situated on 3700 ha next to the airport. With the backing of the Ministry of Transport and the presidency, the Aerocite project will be a mixed-use development with commercial space, business centres, hotels and residential units. Aerocite aims to create facilities and amenities that attract passenger traffic to Abidjan. With a total estimated cost of CFA700bn (€1.05bn), the project will provide 30,000 direct jobs.

Aeria, which is investing CFA125bn (€187m) into the project, will recuperate its construction costs by levying entry fees for securing space within the development, which could amount to CFA60,000 (€90) per sq metre. Provided that Aerocite attracts companies to sign lease agreements, Aeria could make as much as CFA5bn (€7.5m) in annual revenues from the development.

BUILDING UP: Aerocite has seen the most interest thus far from hotels. Dakar-based Onomo has already opened its airport hotel, and the Radisson Blu will commence construction work in mid-2013. Five other hotel projects are also in the works, including one from South African hospitality group Legacy. Aeria has also entered into talks with logistics firms Bolloré and Movis about setting up offices in the development. Ivoirian and Nigerian investors have also expressed interest in developing high-income residential housing units on the land. The first 300-ha tranche is set be developed in September 2013 and take over two years to complete.

The launch of Côte d’Ivoire’s national carrier and the development of Aerocite are complementary projects that build on Abidjan’s attractiveness as a hub. Decurey told OBG, “Aerocite does not have value if you lack a national carrier dedicated to developing a network which allows people from different countries of the region to meet in a single place: Abidjan.”

In another development, the Abidjan airport awarded a $30m contract to Arab Contractors to expand and upgrade cargo facilities. Backed by funding from the Islamic Development Bank, a new terminal, aerobridges and parking lots will be constructed, and the apron and access roads renovated. Upon completion, the terminal’s capacity will increase from 11,000 sq metres to 26,000 sq metres. These projects, coupled with Abidjan Port’s pending TSA clearance in 2013, bode well for stimulating the growth of Côte d’Ivoire’s aviation sector, providing additional knock-on effects for the country’s wider economy in the short to medium term.