The aircraft ACMI leasing market in Africa has reported unprecedented growth in the first three quarters of the financial year 2022 and is expected to maintain this trend until 2028. Given the ongoing resource investments and tactical adjustments by key operators, the leasing market is likely to bring bigger opportunities for regional airlines to increase operational flexibility, enhance their performance quality metrics, and become more sustainable.
As of now, global key operators have maintained a strong presence in Europe, North America, and the Asia Pacific, but the African ACMI market has remained largely underserved. In terms of product, these operators have acquired over 45% of the total market share in the wide-body segment and 52% in the global air cargo market.
With a ripple effect from other non-aviation sectors, a growing demand for sustainable solutions from leading airlines in the Sub-Saharan African continent, and the prospect of market improvement, ACMI operators should seek key opportunities to cover the emerging needs in this largely underserved market and, at the same time, improve their competitive positions in the global ACMI leasing market.
Remaining flexible, meeting the changing operational and capacity demands, and rapidly adapting to unexpected market instabilities is the linchpin for African airlines to achieve viability moving forward. In reality, only a few regional airlines are currently keen on utilizing ACMI solutions to increase their flexibility and advance toward viability. African airlines should start issuing lease requests for proposals (RFPs) to key global ACMI operators as a strategy to increase flexibility, provide an unrivalled experience for air passengers, and improve their overall competitiveness.
As far as I am concerned, wet-leasing solutions appear to be the most ideal and promising solution for leading African airlines to increase their viability, however they remain the most underutilized solution in the region. ACMI solutions present some significant and sustainable options for airlines in the region. As large and small airlines navigate the 2022 headwinds and align themselves on the path to viability, they face the problem of how to increase their flexibility and match uncertain demand with their operations and aircraft capacity. Under such circumstances, wet-lease airlines provide a go-to option for struggling airlines to achieve reliable and viable performance.
In 2018, Avia Solutions Group subsidiary Avion Express, completed 52,500 block hours, with current forecasts indicating that the company’s productivity in ACMI leasing will increase significantly by the close of 2022 and into 2023. The beauty of working with such ACMI operators is that these companies have a tailored solution for every type of carrier, whether an international airline with a 500-aircraft fleet or a regional turboprop operator with only one aircraft.
As of July 2022, 64.23% of fleets were grounded in West African countries, the highest globally and ahead of Hong Kong, Iran, and Malaysia. It may seem strange or unrealistic that African carriers would consider wet-lease options in such a situation. However, ACMI services still provide a safer bet for these airlines when balanced against the costs of reviving the grounded aircraft and providing recurrent training for pilots who were out of service.
Wet leasing provides a choice between sourcing resources from established ACMI operators or investing resources – in most cases unavailable – without a guarantee that such investments will prevent a system shutdown in the short term or long term.
For established ACMI providers, market intelligence provides an important lever, enabling these companies to know where lease aircraft can be accessed at short notice, considering that these companies have established long-standing relationships with legacy ACMI airlines. This means that African airlines struggling with capacity and other performance issues should consider third-party wet leasing as the most appropriate solution to address their woes and align themselves on the path to stability.
Based on the growing numbers of well-informed customers in the African aviation market, Avia Solutions Group foresees massive demand for wet-leasing services, with more and more airlines outsourcing aircraft, MRO services, provision for spares and tools, and insurance. Our subsidiary companies, including KlasJet, are joining us to expand their service portfolio and add more clients from these underserved regions, Africa being our priority and primary target market for ACMI leasing. In a recent communication by Rita Domkute, CEO of KlasJet, the business aviation carrier announced plans to expand its wide-body fleet by adding five economy class, next-generation Boeing 737s by the close of 2023. Each of these aircraft will bring an additional 189-passenger capacity to the existing fleet, providing opportunities for KlasJet to expand its ACMI operations and extrapolate its industry expertise to new markets like Africa.
As many African airlines may have witnessed in recent years, the aviation business is not immune to unexpected disruptions and the knock-on effects from other industries that typically affect their ability to meet operational demands and achieve viable development. Wet leasing solutions offer a flexible way for struggling African airlines to scale up and expand their market share in aggressive aviation markets dominated by non-African carriers or where existing airlines have become unviable.
