Air Transport Sector in Côte d’Ivoire: Overview of Air Côte d’Ivoire

Interview with René Decurey, General Manager of Air Côte d’Ivoire

What is your assessment of the air transport sector? How do you see it in 2014 with regard to its potential or latest trends? What’s your vision in Africa, West Africa and Côte d’Ivoire?

The vision here is quite clear. We have a huge growth in the GDP. Our standards are way above the general standards in Africa. So, as such, development prospects in Côte d’Ivoire are huge. What we need here is to get people to travel more and more. In respect to Africa – West and Central – you have to consider that the potential here is quite limited. 50% of all our routes have a potential of less than 70 passengers a day. So, even with good growth it brings you up to 75 passengers a day, which is still very low, whereas in other parts of Africa, such East Africa, it is ten times higher. So, there is more potential there for a huge growth, but which is still quite limited.

So, what kind of company can address this kind of market?

This kind of market is exactly our strategy. Because when we created Air Côte d’Ivoire, we could have said, “just like in the past, we will plan some routes out of Abidjan, the main routes”, but this wouldn’t have helped to develop the economy here. So, right from the beginning we said, “the only remedy for short single routes is to create a hub in Abidjan.” A real platform where you have all the aircrafts arriving at the same time from different locations, bringing passengers to Abidjan and then an hour and a half later continuing to other destinations. This brings additional potential to the small routes, allowing us to do direct flights out of Abidjan to the main destinations in West and Central Africa.

Now coming to the company, what is the main product you are dealing with? You have to soon launch all the national flights. Can you tell us a little more about that?

Yes, gladly. We have two new aircrafts for domestic services, the Bombardier Q400 with 67 seats, and the New Generation tool. Both are quick and fast aircrafts. We have ordered them, because we believe that the domestic part is more important for the economy of Côte d’Ivoire, because so far, the northern parts or the western parts are isolated. They do not have direct links on a permanent basis. We believe that to restart the domestic services, which were now halted for over 15 years, we cannot do that with old, obsolete aircrafts. We need to really start a modern, reliable, frequent service and this is exactly what we are launching now. We will receive these two new aircrafts from Canada in the second half of October and we will launch our services as of November.

Besides your domestic services, you have also been partnering with different companies such as Kenya Airways or Air Burkina. You mentioned some potential partnership with Arabic Air or Congo Airways. What is your strategy behind it?

As I said before, the key part of our network is the hub in Abidjan. It helps the platform and the economy of Côte d’Ivoire to have more and more aircrafts entering into the hub, to feed the hub by bringing passengers here to connect them to other parts. But, at this stage, we cannot afford to have 20 aircrafts. We have to build it up. This additional aircraft capacity is brought in by our partners. The partnership with Kenya Airways for instance is not effective yet, as it is still in the process of being implemented. But if Kenya Airways was to come into Abidjan and join our hub concept, then instead of turning around to go back to Nairobi, they will fly jointly with us to Monrovia or to Freetown, come back to Abidjan and then go back to Nairobi. Together we can fly from Bamako, from Ouagadougou, from Niamey, from Conakry and so on and so forth. This will help bring Abidjan to the forefront again.

But later when you have the capacity of acquiring new aircraft, would you like to own the carrier?

I think so, partly, at least. The more you grow, the more the hub will attract passengers. I think the additional aircraft capacity, which we definitely plan to bring in, will cover the growth, but we still need our partners to complement the network.

How difficult is it to succeed in getting the contractors? What can you tell them? What is your input there and what is the complexity there?

I think there are two main issues. First of all, you need to have two well-functioning networks. If you do not have a complete network of flights to several destinations, which will serve on a regular, punctual and reliable basis with a good product, you may as well forget the plan, because no one will be interested in partnering with you. The second issue, which is very important, is the certification of the airline. The IOSA certification, the international safety standards, is a certification given by IATA, which is the association of airlines. We are in the final process of achieving this. Our objective is to have the IOSA approval certification by the end of 2014. That’s why we don’t have the deal with the Kenya Airways yet, because we need the certification first. But I am very positive that we will get it by the end of this year.

So then all the ingredients will be ready to go forward with this partnership?

I think so, yes. Definitely.

In order for you to grow, to achieve your objectives, you need to expand yourself, to basically get stronger and think about raising capital and to move from 25 to 65 billion Francs. You have your partners ready. You have Air France, the Goldenrod and also the West African Development Bank (BOAD). How do you want to achieve this growth? What steps need to be taken? What is the incentive for the investors?

I think, first of all, you need to have a reliable and appealing business model. We started a business model in January 2013. We have revised it, because situations are changing. But what is most important at the beginning in an airline is to set up all the rules, to get all the initial fleet and so on. At the beginning, you need very powerful shareholders to accompany the development. Who would be willing to fund an airline in a country, which is just emerging out of a crisis, and which hasn’t proven anything so far? This is quite difficult. Our main shareholder was, and still is, the government of Côte d’Ivoire. I think, initially, the government was quite reluctant, because it’s an expensive affair. But right now, I think that it has changed its position as well, after seeing the positive results. Not yet in terms of finance, but the economic benefit we bring to the country through the hub by attracting more companies into the country by offering reliable services and non-target performances, not only in terms of punctuality, but also in terms of financial needs. When we say “we need so much, we need just that much.” This gives the investors the confidence to say, “well, they said, they would lose so much and they have lost exactly this amount. We can count on them. They have a plan. They respect the plan. So, I think we can partner with the airline.” That’s exactly what happened with BOAD. We had discussions with them a year ago, but it was simply too early. They didn’t want to consider it. Now, one month ago, they decided to become shareholders. I think it is a very positive signal for other shareholders to also join the company.

Can you reveal any information about potential new investors?

We are in discussion with quite a number of new investors. It’s too early to reveal anything, but we are focussing a lot on institutional investors. One name I can reveal is IFC, International Finance Company. We are discussing the business model and I am sure that they would be inclined to enter as soon as we develop our partnership and our business model.

I imagine that for the government it is not only a matter of the development of the country, it is also a matter of national pride. I think it is a matter of pride for the people to have a national carrier. That’s very important for a country.

Definitely. I think if Ivoirians can be proud of the airline, it’s a flag also to give comfort to the regional and international partners and to give confidence to the Ivoirians.

Now let’s look at a recent occurrence: Ebola, which has affected three countries in the region. How is it affecting you? Has it affected you yet? If that problem were to grow, how would you be affected in this case?

Well, actually, we are already affected by that, since we have flights to the Monrovian area, Freetown and Conakry. We had to halt on the 10th of August, because the borders between Côte d’Ivoire and those countries were closed. So we couldn’t transport any more passengers and we had to shut down the flights. These are not primary destinations for Air Côte d’Ivoire. They are important secondary destinations. So there was some negative financial impact, but not too big. However, in three days, we will be restarting the flights, because the government and the President also came to the conclusion that isolating countries was not a good solution. You need to have an air bridge in a controlled way. So we are introducing flights with additional safety measures, additional checks in order to safeguard those flights. And I am happy that we can restart travelling to these destinations. Now, should Ebola affect Côte d’Ivoire or other parts of the region, of course it will be difficult. This means that we would have to, eventually, reduce the number of flights and the fleet. Still, I think if you have a good aircraft, a well-functioning structure, you could also lend these aircrafts to another carrier to operate from other destinations. We are pursuing a plan in this direction on a temporary basis in order not to be badly affected, if we have to reduce the activity here because of Ebola.

What is your vision for the next three years? What would you like to achieve? What would be your competitive advantage if things go well?

In three years’ time, I would like to have a fleet of ten aircrafts, but not the actual ones. I would like to own the new generation aircraft, giving the best product available in the market and not only in the African market, but in the worldwide market. I would like to have the best product at the least cost possible, which means very fuel-efficient. This is why we have to change the fleet into a new generation of aircraft. We should have completed this in three years’ time. If we have a fleet of ten aircrafts, we can serve any point out of Abidjan, with direct flights on a daily basis. And I think this is what the market is looking for – to ease air travel in the region, to reach any point with the best product available in the market, on a daily basis, directly. That is what I would wish to see and we will achieve it, I am sure.

You are confident?

I am confident.

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