‘J O I N T H E D E B A T E ’ Awakening Africa's sleeping ... · Africa’s Aviation Industry: Challenges and Opportunities The performance of the African aviation industry is

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‘ J O I N T H E D E B A T E ’

2nd Middle East Corporate Aviation Summit (MECAS 2013) – Sofitel Dubai Jumeirah Beach, UAE

Awakening Africa's sleeping giant: prospects for business aviation

‘Awakening Africa's sleeping giant: prospects for business aviation’ 0Dubai (U.A.E.)

June 13th, 2013Your hands-on partners to Create 1B l u e H o r i zo n www.1bluehorizon.com

June 2013


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 sSome African Governments are reluctant to cede control to truly autonomous National Civil

Aviation Authorities…


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Aviation Authorities…

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…

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…

Lack of fixed-base operator (FBO) to ease business aviation operations (crucial matter of

attractiveness) and maintenance, repair and overhaul (MRO) facilities…


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


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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


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– 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 infrastructureSource: Research & Analysis 1 B l u e H o r i z o n


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


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� Partner availability and qualifications

� Finding the right physical resources (office space, utilities, etc.)

� Understanding local consumers

� Understanding and working with Family Conglomerates


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

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4

6

8

10

Global Middle

East

Asia

Pacific

Africa Latin

America

Europe North

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Aviation industry growth (2010 - 2015)


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a vital role in the country’s growth process by accelerating convergence of

goods and persons.

East Pacific America America

� 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.


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potential for future growth.

Source: The Wall Street Journal June 2nd 2013, Research & Analysis 1 B l u e H o r i z o n

� 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.


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


June 13th, 2013

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…


General aviation services provider are already active to awake Africa's sleeping giant – transforming marketing events to results might take time

Vista Jet promoting their services to Government

representatives during a road show in various African

countries, here in Kinshasa (DRC) early 2013

(Illustrative)


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ExecuJet Promotes Futuristic Jet Travel to World Cup VIPs

for VIPs and sporting personalities passing through its

FBO in Cape Town, South Africa


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


June 13th, 2013

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

As example, the Chinese way…


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Source: Chinese investment offers in Africa (2010), Research & Analysis 1 B l u e H o r i z o n

Implementing FBOs in those

countries is highly advisable


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 l a n d i n A f r i c a …

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


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SHOUKRAN - THANK YOU

have the ability to use very short

runways, paved or unpaved, and a

cargo door as standard’ said Pilatus

chairman Oscar Schwenk.

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)


An introduction to 1 B l u e H o r i z o n

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An introduction to 1 B l u e H o r i z o n


‘Big Four’Law firm

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Source: © 1 B l u e H o r i z o n Industries

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1 B l u e H o r i zo n Aviation core competencies lie in Airlines, General Aviation, Airports, Aerospace and Defense

� Do you need help starting a new venture?

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In today’s Aviation & Aerospace business environment, the margin of error is thin;

clients need and expect seasoned advisors. With their respective disciplines,

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Airlines Air Cargo Corporate Jet Airports MRO GCAA



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Office

According to recent

studies, 68% of projects do not

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The PMO strives to introduce

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Providing innovative solutions, hands-on and knowledge transfer are our difference to maximized value creation continuously ahead of strategies

Operational

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quite simple: Whereas

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term assignment of a proven

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manager to manage a period of

1 B l u e H o r i z o n senior personnel assists - ahead of strategies - stakeholders and management of companies in a variety of sectors who are faced with operating challenges, support of a project management office and/or requesting senior executive interim management support.

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If you want a feasibility study or

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Airlines (Legacy carrier, Low Cost Carrier, Cargo)Airlines (Legacy carrier, Low Cost Carrier, Cargo) General AviationGeneral Aviation

Aerospace & DefenseAerospace & Defense

Family conglomeratesFamily conglomerates

Energy - Shipping - UtilitiesEnergy - Shipping - Utilities

References(details upon request)

Some references about our customers and those of our experts were we facilitate critical dialogue and support 1 B l u e H o r i zo n creation


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4 Public sector / Economic developmentPublic sector / Economic development

Partners network - Aviation

Source: 1 B l u e H o r i z o n & Experts references


‘Ahead of ‘Ahead of ‘Ahead of ‘Ahead of strategies…’strategies…’strategies…’strategies…’

Leonard Favre Managing Director at 1 B l u e H o r i z o n Dubai & [email protected]+971 506164007 (U.A.E.)+41 79 2080256 (Switzerland)

� 20+ years of professional experience in assisting stakeholders and management of companies in a variety of sectors who are faced with operating challenges, both as management advisor and in senior executive roles (sectors including aviation, aerospace & defense, ports, energy, public sector and family conglomerates -mostly in the Middle East)

� Expert in strategy & organization, cost reduction, restructuring and operational improvement, due diligence screenings, mergers & acquisitions, disinvestment, financial advisory, PMO, economic development (clusters) and interim management

� Fluent in French, English and German with good command of Italian and beginner Arabic

� Education: MBA in Management from INSEAD & IDHEAP


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Note: References upon request

� Education: MBA in Management from INSEAD & IDHEAP

Professional background

� Director by AlixPartners , restructuring and operational revitalization – Interim Management

� President & CEO advisor and Vice-President Strategy and Business Development for Maximus Air (Cargo Airline) in Abu Dhabi

� Director Investments promotion and PR for a Regional Economic development agency based in Abu Dhabi

� Senior Associate by Booz Allen Hamilton for 5 years -mostly in the Middle East

� CEO of a Swiss Economic development agency

� CFO of the Swiss Ministry of Defense

� Regular contributor to conferences and forums and his vision of airline industry is always a valuable and knowledgeable input.

M a n a g e m e n t - S t r a t e g y


Contact:

Leonard Favre

Managing Director

Email: [email protected]

1 B l u e H o r i z o n - Ltd.

P.O. Box 487232

Dubai, United Arab Emirates

M: +971 50 6164 007 (U.A.E.)

M: +41 79 2080 256 (Switzerland)

S: leof007

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‘J O I N T H E D E B A T E ’ Awakening Africa's sleeping ... · Africa’s Aviation Industry: Challenges and Opportunities The performance of the African aviation industry is

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