Aviation bounces back from pandemic lows

In this wide-ranging interview, Hassan El-Houry, CEO of NAS, discusses opportunities and challenges facing the aviation sector with Omar Ben Yedder.

African Business: Aviation has had a rollercoaster ride these last two years. How is the industry faring?

Hassna El-Houry: Aviation struggled during Covid but the recovery shows that it is an essential and critical part of the economy. Aviation underpins pretty much every other economic activity, from tourism to health care. How did we get the vaccines in and out of Africa? Through aviation, through flights, airports, cargo.

In the countries where we are present, the recovery is at about 90% compared to 2019 levels but I would say across Africa, capacity is in the low 70s range, which shows that it’s uneven. We have, by design, chosen to be present in the more resilient economies and that has paid off.

You’re saying aviation is critical, but would you say that African governments take the aviation sector seriously enough? Reforms seem to be slow.

African governments have been taking aviation more seriously in recent times than they did in the past. In the past, aviation was viewed as an activity that is exclusive to the privileged, and as a result governments imposed hefty taxes on travel.

Governments are realising that this is an activity that is important for everyone and are taking steps, albeit slow ones, to democratise travel.

What more would you like to see from governments and others to support the aviation sector and to help it grow?

On the airline side, open skies are important. You should give all airlines equal access to airports without discrimination. That’s one. Two, reduce taxes and fees, landing fees, parking fees, passenger taxes, all these things. Three, you need better oversight. When the safety and security record of airlines improves, travel increases.

Finally, public–private partnerships, those are absolutely critical. When you’re talking about airport infrastructure, the aviation infrastructure, they are essential.

Have you got any concrete examples of those?

Yes, if you look at Abidjan, the airport is built and managed by a French company. Abidjan is one of the fastest-growing aviation markets in Africa. They’ve used these public–private partnership models in several different projects around the country and this is one of their keys to success.

NAS are operational in Côte d’Ivoire. What activities are you involved in?

We’ve been in Abidjan since 2016, when passenger numbers were in the region of 700,000 a year. Pre-Covid, we were hitting 2m passengers, which shows you that in four years we almost tripled the number of passengers and cargo throughput. The scope of our services in Côte d’Ivoire involves everything from check-in to managing the airport gates, ramp, the pushback of aircraft, cleaning, loading and off-loading bags, loading and off-loading cargo. We also warehouse cargo and deliver other services.

We have about 800 or 900 staff in Côte d’Ivoire and it’s been a phenomenal success story. I must say that the government has been very focused on reform, on economic development, President Ouattara is an incredible leader and it’s under his leadership the country has been able to accomplish amazing things.

You entered into an agreement to acquire BidAir Services in South Africa. Can you tell us about the rationale there and what your plans for the acquisition are?

We acquired BidAir, it’s not just an agreement. We actually closed the deal maybe six months to a year ago. South Africa is one of the largest aviation markets on the African continent, certainly one of the most dynamic and for us, we wanted to be in this strategic market and we wanted to extend the scope of services to our customers.

Many of the airlines that fly to South Africa, we serve in other markets. It’s always been our strategy to serve our existing customers in more and more airports and that just feeds in perfectly. Even before we acquired BidAir we were the largest aviation services company in Africa but it’s hard to say that with confidence if you’re not in South Africa. Now that we are in South

Africa we can say with confidence that we are the largest aviation services company on the continent, and we’re proud to be in South Africa.

You also acquired a company in Kenya. These transactions took place in the middle of global uncertainty but these are long-term investments and you take long-term views of these markets. What is your view in general of these markets? You’re expecting double-digit growth on a year-by-year basis?

Africans make up 12% of the world population but less than 3% of the world’s travellers. Just that gap indicates that there’s a tremendous opportunity for Africans

“Africans make up 12% of the population but less than 3% of the world’s travellers. Just that gap indicates there’s a tremendous opportunity for Africans to travel.”

NAS operates in more than 55 airports across Africa, the Middle East and South Asia.

to travel. The African continent’s aviation market is very uneven, very unequal unfortunately. You have pockets where there’s tremendous resilience, South Africa, Kenya, Uganda, Côte d’Ivoire, Ghana, Senegal, Egypt, Morocco – but then there are markets which are really struggling, Central African Republic, the DRC, Guinea Bissau, Chad, Mali, Mauritania. These are countries where aviation plays far less of a role. However, a lot of these countries that I mentioned, the struggling ones, are landlocked, ironically. Aviation could play a significant part of their economic development but doesn’t.

How does the continent compare with other emerging markets and growth markets that you’re in?

India is in some instances similar to some parts of Africa because over the past 15 years, you’ve seen a huge migration of people from lower income to middle income and as people do that, their desire to travel increases and their ability to travel increases. We are seeing that in Africa too.

In terms of capital expenditure, you mentioned airports. Where specifically would you like to see more capital expenditure?

I would definitely like to see more capital expenditure on the cargo side. Many African countries could have the potential to export a lot more than they do. Some of the reasons for that are related to the infrastructure around the airport. Some airlines are reluctant to load cargo in some African countries because there isn’t the proper screening process before they load the cargo onto the flights. Definitely, I would like to see more on the cargo side, the warehousing side, the cargo handling side – fridges and freezers and all kinds of warehousing infrastructure.

We need to see a complete remodelling of many airports and that’s not just Africa – Europe and the US also should remodel many of their airports. When I say airports I mean the terminal side, the passenger side. These are the two areas where we need more capital expenditure.

What worries you in terms of the aviation sector today. We’ve seen again the rise in the price of oil following the crisis between Russia and Ukraine. Is this a concern for you in terms of the aviation industry?

The fuel price is definitely a concern. Another major concern is a future pandemic, of course that’s a risk. What keeps me up at night right now is manpower. We are short of skilled people in the aviation sector. The reason for that is partly because of the pandemic. A lot of people realised that the hospitality sector and the aviation sector are higher risk than working in other sectors. As we reduced our manpower during the pandemic and many other aviation related companies did the same thing, those people have found jobs in other sectors and are reluctant to come back to aviation. We are struggling to keep up with the rise in flights in terms of our manpower, that’s definitely a concern.

What gives you reason for optimism? Again, Africans form 12% of the world’s population, but only 3% of travellers, that’s huge – and people have realised that aviation is absolutely critical for the world’s economy and supporting it. ■