Awakening Africa's sleeping giant: prospects for business aviation

2nd Middle East Corporate Aviation Summit (MECAS 2013) – Sofitel Dubai Jumeirah Beach, UAE
0© 2013 1BlueHorizon Group - www.1bluehorizon.com All rights reserved1BHG | Aeropodium Conference MECAS 13.06.13
‘JOIN THE DEBATE’
BUSINESS AVIATION PROSPECTS
AWAKENING AFRICA’S SLEEPING GIANT…
June 2013
1BHG, the ‘idea factory’ thinking ahead strategies www.1bluehorizon.com
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The aim of today presentation is to enhance our knowledge about the
African market to be able to assess potential opportunities in Africa
F a c t
‘Aviation can be a vital catalyst for
Africa’s Economic & Social Development’
D i l e m m a s
O Some African Governments are reluctant to cede control to truly autonomous National
Civil Aviation Authorities…
O Can a developing country promote ‘Open Skies’ and still protect its own Airline
Industry? Africa has made some headway in implementing Air Transport liberalization,
but still has much to achieve…
O Full implementation of the Cape Town Treaty that gives Aircraft Lessors and Lenders
the ability to repossess their assets worldwide in the event of default with Aircraft
Collateral Assurance, 60 Day Repossession and Governments Support…
O Lack of fixed-base operator (FBO) to ease business aviation operations (crucial matter
of attractiveness) and maintenance, repair and overhaul (MRO) facilities…
EVENT: The African Business Aviation Association (AfBAA) Regional Symposium next September in Marrakech (Morocco) will debate the future of business aviation, discuss different
business models, enhance the knowledge about the African market, and learn about the regional infrastructure development, and network with leading experts as well as
business aircraft operators. (Thursday, 26 September, 2013 to Friday, 27 September, 2013)

Awakening Africa's sleeping giant is still to be considered as developing
economies region (continent) with a few exceptions
 Advanced Economies
– Post-industrial
countries characterized
by high per-capita
income, highly
competitive industries,
and well-developed
commercial
infrastructure.
 Emerging Markets –
Former developing
economies that have
achieved substantial
industrialization,
modernization, and
rapid economic growth
since the 1980s.
 Developing Economies
– Low-income
countries characterized
by limited
industrialization and
stagnant economies.

Awakening Africa's sleeping giant potential is tremendous with the travel
within Africa increasing by 30% in the last ten years
 Opportunities:
– Economy forecast to grow to $2.6 trillion in 2020 from $1.6 trillion in 2008
– Growth in: mining, agriculture, development of ports, roads, and other
infrastructure
– From 2000 to 2010, foreign direct investment increased six fold to $58.56
billion
– Large & Growing Population
 Challenges:
– Poverty
– Mainly Small & Weak National Economies
– Low Per Capita Income
– Political Instability & Conflicts in Several Countries
– Africa ranks low on World Bank’s Ease of Doing Business survey
 Aviation sector baseline:
– Little Disposable Income for Air Travel & Tourism, etc.
– Africa is an underserved market where tickets sell at higher fares compared to
other markets (Government-Regulated)
– Traffic is increasing due to more entrepreneurs doing business abroad
– Gradual improvements to Africa’s aviation infrastructure
Source: © 1BlueHorizon Group Research & Analysis

Developing business within the awakening Africa's sleeping giant might be
very challenging and required a long term investment commitment
 Political instability
 Looking to take immediate profit (upfront…)
 Weak Intellectual Property protection
 Bureaucracy and lack of transparency
 Dual economy / contrasts
 Accessing capital
 Partner availability and qualifications
 Finding the right physical resources (office space, utilities, etc.)
 Understanding local consumers
 Understanding and working with Family Conglomerates
Source: © 1BlueHorizon Group Research & Analysis

Africa’s Aviation Industry: Challenges and Opportunities
 The performance of the African aviation industry is still lagging
behind those of the rest of the world. Nonetheless, demand for air
transport has increased steadily over the past years with passenger
numbers and freight traffic growing by 45% and 80%, respectively.
Over the period 2010-2015, Africa will be the third fastest growing
region in the world in terms of international traffic with an average
growth rate of 6.1% compared to the global average of 5.8%.
 This trend is expected to continue in the coming years due to a
number of factors, notably robust economic growth, demographic
boom, increasing urbanization, and emergence of the middle
class. Air transportation plays a vital role in the country’s growth
process by accelerating convergence of goods and persons.
5.8
7.9
6.9
6.1 5.8
5 4.9
0
2
4
6
8
10
Global Middle
East
Asia
Pacific
Africa Latin
America
Europe North
America
Aviation industry growth (2010 ‐ 2015)
 Growth in air transportation has directly maps into economic growth due to spillover effects through creation of
direct and indirect jobs in the industry and other auxiliary sectors such as tourism and other service
sectors.
 Expansion in air transportation creates market opportunities for local entrepreneurs by creating regional and global
economic centers. In 2010, the aviation industry in Africa supported about 7 million jobs (including 257,000 direct
jobs) through the impact on travel and tourism which translated into USD67.8 billion of the continent’s GDP.
Forecasts indicate that the aviation industry’s impact on African economies is set to grow. Over the next 20 years,
implied job creation by the industry is projected at 1 million.
 Africa can maintain the growth of its aviation industry if more and more people can afford to pay for the cost of
air travel. Currently, only 10% of Africans travel by air but given the current rate of economic growth and
emergence of the middle class, there be high demand for services linked to air transportation.

Challenges: The rapid expansion in Africa’s aviation industry is hampered by
a number of factors
 The main constraints the industry is facing are :
- poor record of safety and security;
- lack of adequate resources and infrastructure;
- distance and limited connectivity;
- lack of regulation and government actions.
 These constraints add to competition and high operating
costs resulting from surging oil prices. Addressing these
challenges could significantly unlock the industry’s potential
for future growth.
 A recent report on 24 African States sponsored by the African Union, the African Development Bank,
the Development Bank of Southern Africa, the Infrastructure Consortium for Africa, NEPAD and the
World Bank ‘estimates that US$93 billion are needed annually over the next decade, more than twice
what was previously thought’, to fund infrastructure and other development. A substantial amount of
this would be required in the capital-intensive aviation industry, therefore it is critical that African
countries invest in those infrastructures...
 The industry is still not the top priority of African governments. More, some African governments are
still reluctant to open their skies fearing foreign competition could undercut national airlines.
Source: : The Wall Street Journal June 2nd 2013, 1BlueHorizon Group Research & Analysis

Opportunities: Nowhere is the potential for aviation greater than on the
continent of Africa
 Nowhere is the potential for aviation greater than on the continent of Africa – the home
to a billion people spread across 20% of the world’s land mass.
 Air travel is essential to the prosperity of Africa as it opens up opportunities that did not
exist before. Fostering the African aviation industry may be one of the driving forces of
regional integration on the continent.
 Better connected African countries and regions through a viable air transport industry
could be the catalyst that can boost intra-African business, trade, tourism as well as
cultural exchange.
 Developing the aviation industry may also represent an opportunity to mitigate chronic
transport problems faced by the 16 landlocked African countries.
 World class safety is possible in Africa and various organizations support their
commitment to achieving it by 2015. It will also be a time to remind governments of the
many challenges that stand between African aviation today and its potential to drive
growth and development – from high costs and taxes, to inadequate infrastructure and
unreliable fuel supply…
 Without any doubt, Africa is a sleeping giant awakening too slowly…
Source: 1BlueHorizon Group Analysis

General aviation services provider are already active to awake Africa's
sleeping giant – transforming marketing events to results might take time
ExecuJet Promotes Futuristic Jet Travel to World
Cup VIPs for VIPs and sporting personalities passing
through its FBO in Cape Town, South Africa
Vista Jet promoting their services to Government
representatives during a road show in various
African countries, here in Kinshasa (DRC) early 2013
(Illustrative)

Indisputably the role of business aviation in Africa's economy will grow in
the coming years as GDP and other parameters improve
Drivers of Business Aviation in Africa…
Business aviation has been defined as that part of general aviation that focuses on the business use
of aircraft. This excludes regular scheduled airlines and military operations. The raison d'être of
business aviation is ‘the need for fast, flexible, safe, secure and cost-effective access to
destinations across the country and around the world’. Perhaps, one of the major drivers of
business aviation in Africa is, or ought to be flexibility. Business aviation in Africa has continued to
grow even though figures may not readily available. However, the African air transport industry is
poised for growth of averagely 5.5% in the years to come and many believe this growth should also be
felt on the business aviation side of the industry in the same proportion, if not more. While there are
many factors expected to drive the growth of business aviation in Africa, there exists a number of
challenges the sub-sector must wriggle itself out of in order to bring its immense benefits to
communities and organizations in Africa.
… with administrative and regulatory bottlenecks to be considered
Where political and economic situations do allow business aviation to thrive, administrative delays by
Civil Aviation Authorities in Africa in processing of flight permits are a major threat to developing
African business aviation market. A source at one of the leading fixed based operators in Africa notes
that on average CAAs in Africa require 72 hours to process permits. Business aviation is based
on speed and flexibility and a 3-day period to process a permit for a business trip does harm to
business aviation.

Africa's need for business aviation is expected to increase correspondingly as
long as Africa's resources keep attracting investments
Implementing FBOs in those
countries is highly advisable
As example, the Chinese way…
Source: Chinese investment offers in Africa (2010), 1BlueHorizon Group Research & Analysis

SHOUKRAN - THANK YOU
LEONARD FAVRE
Partner, Group Managing Director
1BlueHorizon Group
P.O. Box 34154 M +971 50 6164007 (U.A.E.)
Abu Dhabi M +41 79 2080256 (Switzerland)
United Arab Emirates leof007
leo@1bluehorizon.com
www.1bluehorizon.com
Abu Dhabi | Bern | Madrid | Montreal | Paris
Any clarifications or questions regarding this document should be addressed to:
OEM Pilatus launches a new jet that aims at Africa, presented as
‘the world's first super versatile jet’. The new PC-24 not only has the
ability to use short runways but can also land on unpaved surfaces
and will have a cargo door fitted as standard.
‘The PC-24 is the first business jet to have the ability to use very
short runways, paved or unpaved, and a cargo door as standard’
said Pilatus chairman Oscar Schwenk.
Even Africa's giant is still sleeping, the future is definitely bright for business
aviation in Africa – B e r e a d y t o la n d in A f r ica…

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January 2013
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Wataniya Airways - Chairman Mr. Abdulsalam Al
Bahar with Mrs Ghaida Abdul Latif, vice chairman –
director general & CEO of Syrian Arab Airlines.
Flydubai - CEO Mr. Ghaith Al Ghaith
Gulf Air - Ex CEO Samer Majali
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Representative in the Western Region (al Gharbia)
of Abu Dhabi Emirate
Democratic Republic in Congo (Transport)
AerospaceOne Company in India
Jet Green in Pakistan
Ababeel Air in Libya
His Highness Sheikh Ahmed Bin Saeed Al
Maktoum, President of the Dubai Civil Aviation
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Note: Detailed references upon request
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