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Somalia

94Arican Business August/September 2015COUNTRYFILE

August/September 2015

As international airlines launch routes in

Somalia, two local carriers are banding

together to stay competitive.

Old rivals becomebrothers in arms

Competitive pressure is there, but alsomore than that its a matter of maturityWe have realised that Africa really needsa different way of playing the game ofcompetition.

Airspace over Somaliahas been considereda no-go area by mostoreign airlines or two

decades, but progress on thesecurity and political fronts isnow prompting a surge in com-mercial flights.

Flydubai, the short-haul af-filiate of Emirates Airline, be-came the latest international

carrier to add Somalia to itsnetwork in March, when itlaunched a four-times weeklyservice to Hargeisa, the capitalo the semi-autonomous repub-lic o Somaliland.

Ethiopian Airlines andurkish Airlines launchedservices to Somaliland andMogadishu respectively in ,gradually upping capacity with

planes as ull as possible. Flightschedules are being timed tooffer complementary, ratherthan cannibalistic, services.And negotiations over the pro-curement of two AR s willbe strengthened by the greaterpurchasing power that a largercompany commands.

Te hunt for economies ofscale has even motivated Yas-

sin to look beyond Daalloshome markets of Somalia andDjibouti. Tese two countries,he notes, are not alone in theiraviation handicap. Several othercentral and east Arican nationsalso suffer from under-devel-oped air transport sectors.

Te objective o this merg-er is to create a bigger alliancefor African carriers. Daallo

and Jubba amembers, bto expand tAfrica, saying Chad acountries becompany wcountries wtional carriservedTest coming rom differe

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will initiallysing on Addpia, Entebbperhaps somonce that cOptimisatinetwork wigradual flefollowed evsumption oflights to Lo

Te airliterest in hyrecovery frdebilitatingcontrary, heis a very, vebeore Soma normal mcommunity

But withsniffing arokets in Ariccompeting them Daaacted decisislice o the pbers is the maviation hisbeen a wise

higher frequencies and largerplanes as demand snowballed.Meanwhile, Qatar Airways isamong the major carriers now

evaluating a route launch.As a litmus test or Somal ias

economic prospects, improvedconnectivity can only be goodnews or the country and its cit-izens. Yet it could be a double-edged sword for local airlinesthat flourished by braving theskies when foreign operatorswere nowhere to be seen.

We were the lifeline of thepeople, says Mohammed Ibra-him Yassin, the chie executiveof Daallo Airlines, founded inDjibouti in , the same yearSomalia slipped into civil war.Tere was a time when therewere no money transfers, notelephones, no postal system we were everything for the

country. We were the link to theoutside world. We transportednot only people, but goods,money, medicine.

ogether with Jubba Airwaysand African Express Airways,Daallo has provided war-wea-ry Somalis an alternative torisky ground transportationthrough years of clan warfare,al-Shabaab threat and foreign

Above: A Flydubai Boeing737-800 its one of threemajor international carriersnow flying to Somalia.

military interventions. Toughthese airlines fleets and routenetworks are modest by globalstandards, they are big enough

to offer connectivity with re-gional hubs such as Nairobiand Dubai acilitating onwardtravel for Somali businesspeo-ple, and opening a sky corridoror the countrys widely spreaddiaspora.

Yassin describes Daallos fi-nancial performance as quitehealthy, noting that the air-line could not have survivedwithout a commercially viablebusiness model. Te govern-ment doesnt have the money,he stresses, when asked if thecompany has ever receivedsubsidies. In Somalia and So-maliland, its the private sectorthat is the major vehicle of theeconomy.

Safety in numbersHowever, as more foreign op-erators enter Somali skies, thenature o the competitive threatthat Daallo faces is changing.All three major internationalcarriers now flying to Somaliaare partly or u lly government-owned. Flydubais big brother,Emirates, is one of three Gulf

carriers accused by US airlineso receiving bn in anti-com-petitive state support. Toughpopular with the travellingpublic, excessively cheap tick-ets could spell the death knellor airlines such as Daallo thatmust stand on their own twoeet without government aid.

Pre-empting this threat, Yas-sin has teamed up with his one-

time rival, Abdullahi Warsame,the managing director o Jubba,to merge operations under theumbrella o a new holding com-pany, Arica Aero Alliance.

Tis would have been un-thinkable years ago whenthe two carriers ought fiercelyfor domestic market share.But today, consolidation nowseems a logical response to an

From a passengers perspec-tive, there will be few obviouschanges at first. Te combinedfleet of two Airbus As, twoBoeing s and one BAe will be repainted with the logoof Africa Aero Alliance, albeitwhile retaining the Jubba andDaallo brands in smaller writ-ing. Both carriers will continueto market their own distinct

travel services.But, behind the scenes, syn-

ergies have been accruing sincest March, when the integrationformally began and a shareswap brought the owners to-gether. Codeshare agreementsnow allow both airlines to selltickets on each others flights,thereby optimising capacitymanagement and keeping the

onslaught by deep-pocketed,well-organised oreign rivals.

Competitive pressure isthere, but also more than t hatits a matter o maturity, Yassinexplains. We have been oper-ating for the last years. We

have realised that Arica reallyneeds a different way of play-ing the game o competitionIts not that easy to finance air-craf in Arica, but by mobilis-ing resources locally among thepeople, by putting our forcestogether, we have an alternativeway. Tis is what we have real-ised afer so long, and thats thereason we are taking th is step.