Chris Zweigenthal: “Hedging in a volatile market is extremely risky”

The liberalisation of air access is often seen as a prerequisite in order to boost air traffic in the African region. The Chief Executive of Airlines Association of Southern Africa (AASA) elaborates on the strategies needed to achieve this aim.

BUSINESSMAG. Global tourism is witnessing positive growth but only 5% of it gets attracted into Africa. What is AASA’s strategy to increase air traffic towards the continent?

The AASA’s principle is that we support the development, growth and liberalisation of airlines and we focus a lot on sustainability and growth. The problem with airlines in Africa right now is that they are largely in a break-even situation.

A lot of these problems are related to the fact that the size of the market is not great as it could be. So they are actually coming from a very low base. One of the problems that we have witnessed during the past recent years is that international airlines have a huge influx into Africa and have grown to a size that African airlines have not been able to reach.

When we look at the trend demonstrated by international statistics, we notice that about 82% of passengers travelling to and outside of Africa are carried by international airlines and the rest by African airlines.

How do we turn around the big number? It is very difficult. AASA wants to get intra-African liberalisation done in such a way that the airlines on the continent exchange rights for themselves in order to facilitate domestic and regional connections. They will then be able to build themselves as sustainable airlines to expand and grow internationally. This is one of the things that we endeavour. AASA as an association is very supportive of the liberalisation process.

BUSINESSMAG. Mauritius aims to become an aviation hub for the region. How viable is this ambition?

The potential is definitely there and efforts have already been undertaken with regards to increasing connectivity to Sou-thern Africa and parts of Eastern Africa as well as Asia and the Gulf region.

Air Mauritius is already star-ting to do that along with its fleet modernisation operations. There is a lot more work to be done and the relationship with Emirates is a big step in this direction. Emirates flying to Mauritius is an example of what is happening in the rest of the African continent.

BUSINESSMAG. What would be your recommendations to improve the health of the aviation sector in Mauritius and by extension, Air Mauritius?

The alignment of strategies and all the partners is essential in matters pertaining to trade, tourism, economic development as well as aviation policy. You would perhaps be looking at greater liberalisation of air access. It is already underway with the gulf carriers and I think that Mauritius will soon be on the right track in terms of opening up the market.

BUSINESSMAG. Do you see Mauritius competing with established hubs like Dubai in the future?

I do not believe it will happen and will be a far reach. I attended a conference in Abu Dhabi two years ago during which the Chief Executive Officer of Etihad mentioned that the Gulf carriers have got only one goal: to make the Gulf region the biggest aviation market in the world. They want to grow it even bigger than China’s aviation market. I don’t even know if Mauritius needs to get to that point. It’s just a question of maximising your potential in this region.

BUSINESSMAG. International fuel prices are a major concern for airline companies. Would you recommend practices such as hedging given that prices have been on a downward trend these recent months?

It is a very difficult question to answer. From a hedging perspective, we’ve seen airlines that have been successful and some that have made terrible mistakes. A lot of airlines, such as Air Mauritius and some South African carriers got caught. In my opinion, hedging in a volatile market is extremely risky and depends on other factors such as the foreign exchange rate.