African Airlines Join Forces to Fight Competition

The regional operators Djibouti-based Daallo Airlines and Kenyan carrier Jubba Airways have profited independently for years in one of the world's toughest markets, competing on routes to war-torn Somalia that most others have avoided. Yet as the guns have fallen silent, a new danger has forced their hand as foreign airlines look to serve the local market.

The two largest carriers in the East African nation of Somalia are to join forces to create the African Airways Alliance and are looking for other African operators to join the group to enhance their efficiency against growing competition. 

The regional operators Djibouti-based Daallo Airlines and Kenyan carrier Jubba Airways have profited independently for years in one of the world's toughest markets, competing on routes to war-torn Somalia that most others have avoided. Yet as the guns have fallen silent, a new danger has forced their hand as foreign airlines look to serve the local market.

"The odds are against us, but that is the reason we are making a merger," Mohamed Yassin, chief executive officer of Daallo Airlines, told Reuters in an interview this week promoting the new alliance. "We are not sitting back. We are trying to put our forces together ... to face the new challenges."

The new African Airways Alliance, formally launched on February 19, 2015, is a new umbrella structure to be owned equally by the two airlines.  Although both will retain their independent brands they will more closely cooperate and maximise synergies to enhance efficiency and reduce costs.

Daallo Airlines, a UAE-owned but Djibouti-based carrier now in its 25th year of operation, has been a long standing operator into the Somalia market during its recent conflicts.  Jubba Airways, a relative newcomer with 17 years flying experience, was originally formed by Somali expatriates in Canada with a base in Mogadishu, but is now headquartered in the Kenyan capital, Nairobi.

Although together, Daallo and Jubba only carried around 250,000 passengers in 2014 they have provided lifeline links in Somalia during the past few years and despite being based abroad describe the country as a home market.

As part of the alliance agreement the two airlines will pool their fleets together and use equipment suited to individual routes in their networks.  This will comprise two Airbus A321s leased from French carrier Air Méditerranée, a Boeing 737-300 and a BAe 146-200 which is currently used for charter services.  The airlines will also induct two ATR turboprop aircraft by the middle of the year for use on domestic services.

According to the Reuters report the revised business arrangement will enable the two carriers to grow their combined networks from 13 to 21 destinations through 2015.  New destinations under evaluation are said to include Addis Ababa in Ethiopia, Entebbe in Uganda, locations in Yemen and into Europe.


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