AVIATION 2018 - ‘Securing Strategy for Africa's Success’

Freight: Why Africa's cargo carriers should be embracing change and growing the freight markets

By Sanjeev S. Gadhia CEO – Astral Aviation Who we are – What we do

- All- which is based at JKIA, and operational for 18 years. - Designated a National Carrier - Cargo by MoT -

- SCHEDULED FREIGHTER EX NAIROBI v Europe > London Stansted & Liege v Intra-Africa > (Dar, Mwanza, Zanzibar), (), ( & Hargeisa), S (), (Pemba & Nampula), (Moroni) - Fleet is Fokker 27 (6t), DC9F (15t), B727F (23t) & B747-400F (110t) - Interlines with 6 African Airlines in addition to 16 Airlines from Europe, Middle East & Asia. - Member of AFRAA, TIACA, KEPSA, KNCCI, KAAO & WCA. - Voted Best African All Cargo Airline in 2017, 2015, 2013 and 2011.

Growth of air transport

8000 250 World World SARS Freight

7000 recession attack 200 6000 Tonne 9/11 terrorist Kilometres - 5000 (billion)

Asian crisis Asian 150 - Kilometres

(billion) 4000 Gulf war war Passenger

- 100

3000 Oil +3.8% crisis

Iran growth rate vs. 2015 205 billion FTK 2000 +7.2% 50 Revenue growth rate vs. 2015 1000 7.1 trillion RPK 0 - 1944 1946 1948 1950 1952 1954 1956 1958 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

Source: ICAO Annual Report of the Council Scheduled commercial traffic 5 Total (international and domestic) services Share of Freight Tonne - Kilometres by region in 2016

22.7% 19.6%

39.2% 14.1%

2.8%

1.6%

Source: ICAO 6 Ranking of African Airports Total Freight Traffic, 2016

The region continues to grow: Total freight traffic, 2016 in tonnes + 0.1% in all-cargo and mail movements Cairo (CAI) 314,274 +1.6% Johannesburg (JNB) 307,536 - 1.6% + 0.2% in total freight traffic Nairobi (NBO) 231,259 - 4.9% + 7.1% in total mail (ADD) 211,543 + 4.0% Lagos (LOS) 175,640 + 4.5% Casablanca (CMN) 63,762 + 5.5% The top 15 African airports: Entebbe (EBB) 58,984 + 8.3% - 1.0% in all-cargo and mail movements (FIH) 57,512 - 8.4% (ACC) 47,075 - 6.9% + 0.6% in total freight traffic (ALG) 38,363 + 4.6% (DKR) 36,837 + 4.1% + 8.2% in total mail (TUN) 27,405 + 12.2% Saint-Denis (RUN) 26,588 + 1.2% ü The share of the top 15 airports in Africa - 2.7% (ABJ) 20,041 total freight is 89% + 8.8% (BZV) 17,969 ü The share of top 15 airports in world total - 50,000 100,000 150,000 200,000 250,000 300,000 freight is 1.7% ü For 2016 the ranking welcomes: Maya- In 2016: Maya, International Airport of Brazzaville • The total freight moved in worldwide airports grew up: 3.7% • The total freight moved through the African airports reached 1.8 million tonnes. Source: ICAO & ACI conjoint airport traffic form Airline Traffic rankings in 2016

Total Scheduled Freight Tonne-Kilometres (FTK)

Ethiopian Airlines 1,490.4 + 21.3%

SAA 741.8 - 14.4% Air 336.1 - 4.5% Positive growth rates were the trend in 2016 231.0 + 0.5% Air 156.4 - 7.3% • The world grew up + 3.7% in total FTK Stabo Air 79.1 0% • Africa region grew up + 2.8% in total FTK

Royal Air Maroc 52.0 + 1.3% • The 98% of FTK performed by African TAAG 43.6 - 5.2% airlines is in international services 27.8 + 67% • The top 15 African airlines +3.0% in total

Comair Ltd 23.3 - 1.7% FTK Allied Air 21.9 - • The share of the top 15 airlines in Africa 2.3% total FTK is 97.9% Air Algerie 21.6 - 1.4% • The share of top 15 airlines in world total Air 21.1 - 30% FTK is 1.1% Air 20.1 + 4.6%

Air 12.0 - 53.3% 0 200 400 600 800 1,000 1,200 1,400

Source: ICAO Air Transport Reporting Form A Volume of world Value of world international international cargo shipment cargo shipment

Aviation Surface modes Aviation

One third of the value of world $6.4 trillion trade is shipped by air Surface modes

9 Source: Air Transport Action Group (ATAG), 2014 INTRA AFRICA NETWORK

Ø Existing Intra-African Hubs Ø : Nairobi & Addis Ababa. Ø : Johannesburg. Ø West Africa: Lagos. Ø North Africa: Casablanca & Cairo. Ø Airlines operating on the Intra African Network Ø East Africa: Astral, Ethiopian Cargo & Kenya Airways Cargo Ø South Africa: SAA Cargo. Ø West Africa: Allied Air & DHL Aviation. Ø North Africa: Egyptair Cargo & . FREIGHTERS ON INTRA AFRICAN NETWORK

Ø Astral Aviation B747-400F / B727F / DC9F / F27F Ø Cargo B777-200LRF / B757-260F / B737-800F Ø Kenya Airways Cargo B737-300F Ø SAA Cargo B737-300F Ø Allied Air Cargo MD-11F / B737-400F Ø DHL Aviation C208, ATR42/72, B737-400F Ø Egyptair Cargo A300F / A330-200F / B737-800F Ø Royal Air Maroc B737F / B767F POSITIVE STEPS – LIBERALIZATION :

Creation of “Single African Air Transport Market” in 2018 by 23 African countries will improve market access, connectivity and new traffic. POSITIVE STEPS : REGIONAL TRADE

Creation of Continental Free Trade Area (CFTA) between 44 African countries will boost regional trade and enable significant growth in the air-cargo sector. POSITIVE STEPS - GROWTH

Ø Aviation Sector Positive Growth in the African Aviation sector and emergence of new airlines / fleet. Ø Infrastructure: Development of airport infrastructure / PPP’s Ø Middle Class: Growth in the Middle Class population (300M / 35%) and role of e-commerce and mobile pay. Ø Lobbying: AU, AFCAC, AFRAA, ICAO & IATA Conclusion

Ø INTRA-AFRICA sector has the highest growth rate (10-15%pa) and offers immense opportunities for African airlines. Ø HUB’s of Johannesburg, Nairobi, Addis Ababa, Lagos and Cairo offer good opportunities and connectivity to their domiciled airlines. Ø CHALLENGES do exist for African airlines however the OPPORTUNITIES of further liberalization (SAATM) and increase in regional trade (CFTA) will boost the intra-African sector. Ø AFRICAN AIRLINES will need to invest in more freighters and expand into new regional markets, as the intra African sector will offer better yields and profitability. THANK YOU