Another Ghanaian start-up Africa World Airlines secures investment from Hainan Airlines’ parent
In the wake of the 2010 demise of Ghana International Airlines, and consequently to the improving economy together with the support of pro-business government, Ghana’s air travel market is experiencing a baby-boom of start-up carriers. Latest news come from Africa World Airlines (AWA), a little-known start-up which managed to secure investment and know-how from Chinese fourth largest carrier Hainan Airlines’ parent. The airline is currently awaiting Air Operators’ Certificate (AOC) and plans to launch operations on 21 September with a fleet of two Embraer regional jets.
It was only a few days ago that I heard about AWA and it seems that is what the carrier wanted. It on purpose avoided being mentioned by the media outlets up until recently in case things go wrong with investors and management. But the airline now managed to secure both. The most notable investor is Chinese HNA Group, parent company of Hainan Airlines. HNA Group is a Haikou and Beijing-based conglomerate with interests in finance and logistics, but especially aviation. It holds stakes in various carriers in Greater China region, so AWA is its first investment in passenger airline outside of the region.
HNA Group is reportedly a controlling stakeholder, but did not disclose the sum it invested in the new airline nor the number of shares it holds. AWA’s senior management will mostly come from HNA Group, ensuring that AWA is properly manged with proven experts. But the group’s investment is not a standalone, it comes in the form of a joint venture singed on 13 February together with China – Africa Development Fund (China’s largest Private Equity fund focusing on African Investments), SAS Finance Group (Ghanaian integrated investment bank) and the Social Security and National Insurance Trust (manages Ghana’s national social security pension scheme). Reportedly, total investment in the airline stands at $50 million. AWA was founded in late-2010 by Ghana’s Togbe Afede XIV, a king of eastern Ghana’s Asogli state and now AWA’s chairman.
Perhaps a bit surprisingly, the new airline plans to launch operations as soon as 21 September out of Ghana’s capital city Accra. HNA Group will for start provide 2 Embraer 145 regional jets sourced from its Tianjin Airlines subsidiary on reportedly cheap leases. From its hub in Ghana’s capital Accra, the airline will initially launch operations to domestic destinations Kumasi, Tamale and Takoradi, which are all relatively large cities for the country. The airline will acquire more aircraft and gradually expand to regional destinations such as Ouagadougou, Abidjan, Lagos, Abuja, Port Harcourt, Conakry, Dakar and Banjul, but also Johannesburg Harare, Entebbe and Luanda. These regional routes will be served by larger aircraft, most likely Airbus A320 or Boeing 737, and in five years time the carrier hopes to also expand on routes outside of Africa.
B-3081 Embraer Emb.145 Grand China ExpressAWA will implement a hub-and-spoke network model, but the carrier intends to operate as an LCC. The choice of hub-and-spoke model is not surprising as the airline’s executives point out that connectivity in the region is very low. It is not at all uncommon for passengers to transit in Europe before returning back to Africa – sometimes even overflying their departure city – which is much more expensive and time consuming than a non-stop or more convinient one-stop alternative would be. And while domestic routes are already well-served and short, bad road infrastracture means that there is plenty demand.
Currently the oldest airline in Ghana is CiTylinK which operates a small fleet consisting of Fokker 100 and Saab 340 aircraft for schedualed passenger operations since 2003. Antrak Air was launched in 2003 and currently operates only one ATR42-300. Starbow Airlines launched operations in secand half of 2011 and now operates domestic services with a fleet of four BAe 146s, but plans to expand internationally and acquire larger narrowbodies. Fly540, a Kenyan airline, has a small operation in Ghana, but is set to expand, restructure, refleet and rebrand into FastJet following an investment from easyJet’s founder Stelios Haji-Ioannou.
Thanks to very high yields and lots of unserved destinations, it is hard to imagine that the new airline will not be a succsess, even if poliical instability and harsh natural environment are taken into account. The market is booming thanks to population’s rising disposable income and stronger trade links. Ghana’s government, the airline points out, was also very supportive with its business oriented attitude. AWA received its Air Carrier Licence only around 15 months ago, but hopes to welcome its first passengers already in September after it receives AOC.