African airlines are missing out on revenues and development opportunities as they are not taking advantage of the opportunities already open to them and allowing intercontinental airlines to dominate on the Continent.
In a presentation during the Routes Africa Strategy Summit in Tenerife, Canary Islands on the subject of how African carriers can capitalise on travel growth, Gad Wavomba, senior consultant, Sabre Airline Solutions warned that many airlines are failing to benchmark against industry standards and as a result are failing to fulfil their potential.
And even by simply failing to file connect and offline fares they are “getting cheated by codeshare deals” which were negotiated to enhance their connectivity. “It is critical to periodically perform competitive-analysis benchmarking regarding the carrier’s market position in comparison to other airlines,” he added.
Wavomba, a previous air service development professional at Nigerian carrier Arik Air and more recently US LCC Southwest Airlines, presented a five point framework that African carriers should follow for growth capitalisation and to compete effectively. These comprise understanding the competitive landscape, to strategize, connectivity, collaboration and industry best practices.
“Commercial teams should continuously run analysis such as market-share growth, fair-share overviews, top O&Ds per market, revenue per available seat kilometres (RASKs), yield versus market size matrixes and capacity change analysis to under their competitive position,” explained Wavomba.
The impact can be massive according to two case studies the intelligence providers has completed for Chinese carriers. For one, $17.1 million were identified in revenue benefit driven by yield improvement in just six markets through a competitive diagnostic matrix, while another was presented with 50 additional one-stop markets, where an additional one percent passenger share would drive millions of USD revenue improvement annually, with only 5-10 minute flight retimes and little to no cost.
“To succeed Africa’s airlines need to use today and tomorrow’s best practices and not yesterday’s. Having a top-notch proactive commercial team is essential for Africa-based carriers to capture future expected growth and achieve positive performance in an intensely competitive environment,” he concluded.