Investment%20in%20African%20Aviation%20Infrastructure

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Investment in African Aviation Infrastructure

• Presented to
• THE AFRICAN NETWORKTANCON 2008
• by
• MICHAEL L. DWORKIN
• Michael L. Dworkin and Associates
• San Francisco, California 94104
• www.avialex.com

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AFRICA20.4 of the Earths landmass14.2 of
the Earths human populationThe worlds second
largest and second most populous continent (11.7
million square miles/955 million people)
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AFRICAN AVIATION

• With only 4.5 of the worlds air traffic
• 25 of the worlds aircraft accidents!
• The worlds highest aviation accident rate
  proportional to its air traffic. In other words,
  an air passenger is 30 times more likely to be
  involved in an aircraft accident in Africa than
  in North America!

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AFRICAN ACCIDENT RATE

• WHY?
• -Lack of oversight
• -Outdated air traffic and air navigation
  technologies
• -Infrastructure deficiencies
• -Poor ground handling
• -Lack of training
• -Attitude towards safety standards

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REMEDIAL INITIATIVES

• -African Civil Aviation Authority (AFRO-CAA)
• -Continent-wide safety authority
• -Modeled on US FAA and EUs EASA
• -Unresolved Issue Will member states
  relinquish traditional notions of sovereignty?
• -International Air Transport Association (IATA)
• -Operational Safety Audit (IOSA) program
• -Monetary Investment in Partnership for Safety
  (IPFS)-- emphasis on skill development
• -International Civil Aviation Organization (ICAO)
  
• -State Safety Program/Safety Management Systems
  Seminar and Workshop
• -281 participants
• -Representing 19 African States
• -African-Indian Ocean Comprehensive
  Implementation Program
• -World Bank
• -Working in conjunction with the International
  Civil Aviation Organization (ICAO)
• -Grants and credits to African countries that
  agree to work together to improve air safety

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INVESTMENT OPPORTUNITIES

• Improving Africas air safety record will
  require substantial efforts and resources.
• BUT
• Against a backdrop of globalization,
  diversification, outsourcing, partnerships and
  joint ventures, spin-offs, mergers and
  acquisitions, consolidation, and even possible
  worldwide recession, Africa presents a unique
  opportunity.
• For example
• 1. Airline Start-Ups
• 2. Aircraft Maintenance Repair and Overhaul
  (MRO)

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AIRLINE START-UP

• Case Study Dana Air
• Nigerian-based conglomerateinvolved in
• Pharmaceuticals
• Plastics
• Bottled Water
• Rice and Milk Production
• Chemicals
• Motor Vehicles (KIA) and Motorcycles (Sterling)
• Electronics (Philips)
• Company Philosophy
• Clients' interests always come first. With
  superior performance, service and creativity, we
  are uncompromising in our commitment to
  excellence. In every aspect of our work, we
  strive to find better solutions to client
  problems and to build lasting relationships. We
  will at all times conduct ourselves with
  integrity, dignity and honesty. The intense
  efforts, enthusiasm and dedication of our
  experienced personnel not only sets us apart but
  is key to our success. Therefore, we have
  created, and will strive to maintain, a unique
  environment that fosters excellence, originality,
  teamwork, and respect.
• Governing Principles
• Pursue excellence and integrity in work and
  client/contractor relationships
• Commit absolutely to maintaining the highest
  degree of honesty and ethical standards

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DANA AIR, contd

• Seeks to provide airline service that combines
  best elements of low cost carriers-- world class
  safety, on-time reliable services, with latest
  technology (on-line services) and the operational
  efficiency of new world carriers.
• Seeks to attract leisure and business travelers
  from within Nigeria
• -offering passengers fares lower than are
  presently available
• -bringing service to many under-served routes
  and communities
• -bringing the benefits of competition to
  Nigerian passengers
• -helping Nigerian regions grow as tourist
  destinations
• -flying to the highest operational and quality
  standards
• -bringing employment in the important aviation
  sector
• -be a symbol of pride for Nigeria
• Also commencing a VIP Charter Service utilizing
  newly acquired business jets.

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AND GIVING SOMETHING BACK

• Social Responsibility
• Dana is a Sanskrit (and Pali) word meaning
  generosity or giving. In Buddhism, it also refers
  to the practice of cultivating unconditional
  generosity.
• In 1995, Dana Group founded Sri Sai Vandana
  Foundation for Rural and Community Development,
  for the enhancement and development of rural
  populace in Nigeria, through programs of
  integration and uplifting of lives of societys
  less privileged. The Foundation is involved in
  natural resource management, livelihood support
  or the building of a health and education
  infrastructure, with full support and
  participation of Central and State Governments
  and NGOs.

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AIRCRAFT MRO

• MRO An enterprise dedicated to the maintenance,
  repair and overhaul of aircraft, engines and
  components
• Outgrowth of the fixed base operations (FBOs)
  that were started back in the 1930s as
  essentially gas stations for airplanes
• The dawning of the jet age in that late 1950s
  and early 1960s, signaled the beginning of
  airlines investment in their own maintenance
  infrastructure necessary to service their own
  fleets
• Airlines became the principal MROsservicing not
  only their own fleets, but the fleets of others
• Divestitures of airline maintenance organizations
  and outsourcing of maintenance/engineering
  functions
• -knee-jerk response to declining profitability of
  carriers
• -reduce costs
• -labor constraints
• -improve bottom line

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AIRCRAFT MRO, contd

• The Result--OUTSOURCING
• -Among the legacy carriers
• -engine and component maintenance have been
  outsourced for some time
• -there is an across-the-board migration of
  airframe maintenance to contract third party
  providers and
• -line and other support functions are slowly
  migrating away from in-house airline
  accomplishment
• -Among start-up carriers
• -maintenance functions are outsourced almost
  across the board
• -Outsourcing is not local, but global in nature
• -And technical competence within the airlines is
  diminishing

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THE NEED FOR 21st CENTURY MROS

• Airlines will continue to outsource. Todays MRO
  outsourcing market is about 50 billion US per
  year
• Integrated rather than fragmented
• Information technologymaintenance management
  rather than simply turning wrenches
• Competitive and/or advantageous labor rates
• Quality
• Safety
• Profitable
• Meet US FAA and EU EASA standards/
  regulations/certification
• Environmental awareness
• Ab initio traininginvesting in people and
  creating job skills

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OVERSEAS MRO GROWTH

• To date, most MRO growth has been in Asia.
• Why?
• -labor costs
• -development costs
• -expansion of air travel and air cargo within
  Asia and between Asia and the rest of the world
• -governmental cooperation

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WHY NOT AFRICA?

• -Economic growth of the continent
• -Growth of air travel and air cargo
• -Continued operation of older aircraft
• -Emergence of start-ups and low cost carriers
  (LCCS)
• -Continued outsourcing by airlines (and OEMs)
  due to pressure to contain/control costs
• -Governmental support

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WHAT IS NEEDED FOR ENTRY

• Support of governmental entities and/or private
  investor(s)
• Support of aviation management company with
  professional experience in forming and managing
  MROs or OEM/airline joint venture
• Building blocks
• Facilities
• Tooling and Equipment
• Personnel and Training
• Systems and Manuals
• Certification and

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WHAT IS NEEDED FOR ENTRY, contd

• Vision and Resolve
• To meet globally accepted practices
• Meet US FAA and EU EASA regulations/requirements
  and certification
• To create not only the first state of the art
  facility on the Continent, but a world-class
  facility providing world-class quality services
  to airlines throughout the world

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BENEFITS

• Increased employment within the
  community/country/continent
• Education/training and creation of job skills for
  the local population
• Enhanced world perception
• Increased living standards
• Increased services and industries

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CONCLUSION

• WIN for the community
• WIN for the country
• WIN for the African Continent
• WIN for the aviation industry
• WIN for the traveling public
• WIN for the employees
• WIN for investors

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Thank You

• Michael L. Dworkin and Associates
• 465 California Street,
  Suite 210
• San Francisco, California
  94104
• www.avialex.com

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• Avialex and the stylized logo
• are registered marks
• of
• Michael L. Dworkin