Business News of 2014-03-11

Competition among domestic airlines heats up

Domestic airline operators are being forced by a new wave of competition to cut prices of air fares to entice customers.

The six airlines currently operating in-country airline services to and from the four airports have also introduced new products and services in order to avoid the risk of being pushed out of the burgeoning industry.

Current data on the number of passengers carried by each of the airlines showed that Antrak Air, which dominated the market, is now losing out to new entrants such as Starbow, Fly 540 and African World Airlines (AWA).

Its market share dropped from about 55 per cent in 2011 to 37 per cent last year while that of Starbow, its closest contender, rose from 11 per cent in 2011 to 34 per cent last year.

In terms of passenger numbers, the data, which was compiled and released by the Ghana Airport Company Limited (GACL), showed that while Antrak Air carried some 288,622 passengers last year, Starbow carried 263,405 passengers within the same period, representing a load difference of about 25,217 passengers between the two leading airlines.

As was the case with Starbow, Fly 540 and AWA, which are the two new entrants in the industry, also made some modest gains in passenger numbers within the period, a development that ultimately impacted harshly on Antrak Air.

The data further showed that Fly 540 controlled 18 per cent of the market and that translated to a total passenger load of 139,377 in 2013.

That of AWA was 77,047 passengers, representing 10 per cent of the annual load.

In all, the data showed that about 778,466 people travelled by air in 2013 compared with 547,118 people in 2012 and 181,863 passengers in 2011.

GCAA explains

The Ghana Civil Aviation Authority (GCAA), which regulates the local aviation industry, said the latest development in the domestic segment of the market was encouraging and indicative of the growing interest in domestic airline services by the general public.

"It shows that the industry is growing and that is what we have been working at," the Director General of the GCAA, Air Commodore Kwame Mamphey (retd), said in a telephone interview on March 7.

"It also shows that there is increasing competition among the airlines and that will subsequently benefit the customer," he added.

Market share stats

Although Starbow, which started operations in the country in September 2011, controlled some 41 per cent of the market in the domestic segment in 2012, that enviable figure was mainly as a result of the grounding of Antrak Air's services between May 23 to August 6, 2012, and the complete phasing out of the defunct City Link from the industry in September, the same year.

However, as Antrak Air resumed full operations in mid-August, 2012, through to 2013, its market share rose to some 40 per cent in the middle of last year while that of Starbow edged to 30 per cent only to rise further to 34 per cent as at the close of last year.

Data from the GACL showed that Fly 540, which started operations in November 2011, ended that year with a two per cent market penetration.

That, however, rose to 19 per cent in 2012 only to drop to the current 18 per cent on the back of the heating competition from peers.

Demand for the services of AWA, the latest entrant to the industry, Noordzee Helikopters Vlaaderen (NVH), as well as that of chartered flights is also picking up, the data indicated.

The market shares of the three put together, currently account for over 11 per cent unlike in 2012 when it was less than five per cent.

Players react

The Chief Executive Officer of Starbow, Mr Eric James Antwi, told the paper on March 6 that the current trend in the passenger numbers was a testament to his outfit's commitment to the market and the investments put into operations.

"We have made the comfort of our customers a priority and because of that we got a heavy aircraft which is very comfortable to fly with. We also learn to respond swiftly to situations and all these are making people opt for our services," Mr Antwi said in a telephone interview.

The increasing demand for its services, he said had caused the airline to increase its routes, as well as frequency while looking at adding on to the number of aircraft it currently flies with.

The Commercial Manager of AWA, Mr Appigy Afenu, said the airline was excited about the progress it was making in the industry despite still being in its infancy.

"We are just in our infancy and to make such a gain shows that we are really prepare to go far," Mr Afenu said.

Going forward, he said the airline will focus on growing its routes and passenger numbers while deploring more aircraft into areas where they are needed most.