Awakening Africa's sleeping giant: prospects for business aviation

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2nd Middle East Corporate Aviation Summit (MECAS 2013) – Sofitel Dubai Jumeirah Beach, UAE - June 13, 2013 …

2nd Middle East Corporate Aviation Summit (MECAS 2013) – Sofitel Dubai Jumeirah Beach, UAE - June 13, 2013

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  • 1. © 2013 1BlueHorizon Group - www.1bluehorizon.com 1BHG | Aeropodium Conference MECAS 13.06.13 2nd Middle East Corporate Aviation Summit (MECAS 2013) – Sofitel Dubai Jumeirah Beach, UAE All rights reserved 0 ‘JOIN THE DEBATE’ BUSINESS AVIATION PROSPECTS AWAKENING AFRICA’S SLEEPING GIANT… June 2013 The ‘idea factory’ thinking ahead strategies www.1bluehorizon.com 2nd Middle East Corporate Aviation Summit (MECAS 2013) – Sofitel Dubai Jumeirah Beach, UAE    
  • 2. © 2013 1BlueHorizon Group - www.1bluehorizon.com 1BHG | Aeropodium Conference MECAS 13.06.13 2nd Middle East Corporate Aviation Summit (MECAS 2013) – Sofitel Dubai Jumeirah Beach, UAE All rights reserved 1 The aim of today presentation is to enhance our knowledge about the African market to be able to assess potential opportunities in Africa F a c t ‘Aviation can be a vital catalyst for Africa’s Economic & Social Development’ D i l e m m a s Some African Governments are reluctant to cede control to truly autonomous National Civil Aviation Authorities… Can a developing country promote ‘Open Skies’ and still protect its own Airline Industry? Africa has made some headway in implementing Air Transport liberalization, but still has much to achieve… Full implementation of the Cape Town Treaty that gives Aircraft Lessors and Lenders the ability to repossess their assets worldwide in the event of default with Aircraft Collateral Assurance, 60 Day Repossession and Governments Support… Lack of fixed-base operator (FBO) to ease business aviation operations (crucial matter of attractiveness) and maintenance, repair and overhaul (MRO) facilities…
  • 3. © 2013 1BlueHorizon Group - www.1bluehorizon.com 1BHG | Aeropodium Conference MECAS 13.06.13 2nd Middle East Corporate Aviation Summit (MECAS 2013) – Sofitel Dubai Jumeirah Beach, UAE All rights reserved 2 Awakening Africa's sleeping giant is still to be considered as developing economies region (continent) with a few exceptions  Advanced Economies – Post-industrial countries characterized by high per-capita income, highly competitive industries, and well-developed commercial infrastructure.  Emerging Markets – Former developing economies that have achieved substantial industrialization, modernization, and rapid economic growth since the 1980s.  Developing Economies – Low-income countries characterized by limited industrialization and stagnant economies.
  • 4. © 2013 1BlueHorizon Group - www.1bluehorizon.com 1BHG | Aeropodium Conference MECAS 13.06.13 2nd Middle East Corporate Aviation Summit (MECAS 2013) – Sofitel Dubai Jumeirah Beach, UAE All rights reserved 3 Awakening Africa's sleeping giant potential is tremendous with the travel within Africa increasing by 30% in the last ten years  Opportunities: – Economy forecast to grow to $2.6 trillion in 2020 from $1.6 trillion in 2008 – Growth in: mining, agriculture, development of ports, roads, and other infrastructure – From 2000 to 2010, foreign direct investment increased six fold to $58.56 billion – Large & Growing Population  Challenges: – Poverty – Mainly Small & Weak National Economies – Low Per Capita Income – Political Instability & Conflicts in Several Countries – Africa ranks low on World Bank’s Ease of Doing Business survey  Aviation sector baseline: – Little Disposable Income for Air Travel & Tourism, etc. – Africa is an underserved market where tickets sell at higher fares compared to other markets (Government-Regulated) – Traffic is increasing due to more entrepreneurs doing business abroad – Gradual improvements to Africa’s aviation infrastructure Source: © 1BlueHorizon Group | Management Consulting Research & Analysis
  • 5. © 2013 1BlueHorizon Group - www.1bluehorizon.com 1BHG | Aeropodium Conference MECAS 13.06.13 2nd Middle East Corporate Aviation Summit (MECAS 2013) – Sofitel Dubai Jumeirah Beach, UAE All rights reserved 4 Developing business within the awakening Africa's sleeping giant might be very challenging and required a long term investment commitment  Political instability  Looking to take immediate profit (upfront…)  Weak Intellectual Property protection  Bureaucracy and lack of transparency  Dual economy / contrasts  Accessing capital  Partner availability and qualifications  Finding the right physical resources (office space, utilities, etc.)  Understanding local consumers  Understanding and working with Family Conglomerates Source: © 1BlueHorizon Group | Management Consulting Research & Analysis
  • 6. © 2013 1BlueHorizon Group - www.1bluehorizon.com 1BHG | Aeropodium Conference MECAS 13.06.13 2nd Middle East Corporate Aviation Summit (MECAS 2013) – Sofitel Dubai Jumeirah Beach, UAE All rights reserved 5 Africa’s Aviation Industry: Challenges and Opportunities  The performance of the African aviation industry is still lagging behind those of the rest of the world. Nonetheless, demand for air transport has increased steadily over the past years with passenger numbers and freight traffic growing by 45% and 80%, respectively. Over the period 2010-2015, Africa will be the third fastest growing region in the world in terms of international traffic with an average growth rate of 6.1% compared to the global average of 5.8%.  This trend is expected to continue in the coming years due to a number of factors, notably robust economic growth, demographic boom, increasing urbanization, and emergence of the middle class. Air transportation plays a vital role in the country’s growth process by accelerating convergence of goods and persons. 5.8 7.9 6.9 6.1 5.8 5 4.9 0 2 4 6 8 10 Global Middle  East Asia  Pacific Africa Latin  America Europe North  America Aviation industry growth  (2010 ‐ 2015)  Growth in air transportation has directly maps into economic growth due to spillover effects through creation of direct and indirect jobs in the industry and other auxiliary sectors such as tourism and other service sectors.  Expansion in air transportation creates market opportunities for local entrepreneurs by creating regional and global economic centers. In 2010, the aviation industry in Africa supported about 7 million jobs (including 257,000 direct jobs) through the impact on travel and tourism which translated into USD67.8 billion of the continent’s GDP. Forecasts indicate that the aviation industry’s impact on African economies is set to grow. Over the next 20 years, implied job creation by the industry is projected at 1 million.  Africa can maintain the growth of its aviation industry if more and more people can afford to pay for the cost of air travel. Currently, only 10% of Africans travel by air but given the current rate of economic growth and emergence of the middle class, there be high demand for services linked to air transportation.
  • 7. © 2013 1BlueHorizon Group - www.1bluehorizon.com 1BHG | Aeropodium Conference MECAS 13.06.13 2nd Middle East Corporate Aviation Summit (MECAS 2013) – Sofitel Dubai Jumeirah Beach, UAE All rights reserved 6 Challenges: The rapid expansion in Africa’s aviation industry is hampered by a number of factors  The main constraints the industry is facing are : - poor record of safety and security; - lack of adequate resources and infrastructure; - distance and limited connectivity; - lack of regulation and government actions.  These constraints add to competition and high operating costs resulting from surging oil prices. Addressing these challenges could significantly unlock the industry’s potential for future growth.  A recent report on 24 African States sponsored by the African Union, the African Development Bank, the Development Bank of Southern Africa, the Infrastructure Consortium for Africa, NEPAD and the World Bank ‘estimates that US$93 billion are needed annually over the next decade, more than twice what was previously thought’, to fund infrastructure and other development. A substantial amount of this would be required in the capital-intensive aviation industry, therefore it is critical that African countries invest in those infrastructures...  The industry is still not the top priority of African governments. More, some African governments are still reluctant to open their skies fearing foreign competition could undercut national airlines. Source: : The Wall Street Journal June 2nd 2013, 1BlueHorizon Group | Management Consulting Research & Analysis
  • 8. © 2013 1BlueHorizon Group - www.1bluehorizon.com 1BHG | Aeropodium Conference MECAS 13.06.13 2nd Middle East Corporate Aviation Summit (MECAS 2013) – Sofitel Dubai Jumeirah Beach, UAE All rights reserved 7 Opportunities: Nowhere is the potential for aviation greater than on the continent of Africa  Nowhere is the potential for aviation greater than on the continent of Africa – the home to a billion people spread across 20% of the world’s land mass.  Air travel is essential to the prosperity of Africa as it opens up opportunities that did not exist before. Fostering the African aviation industry may be one of the driving forces of regional integration on the continent.  Better connected African countries and regions through a viable air transport industry could be the catalyst that can boost intra-African business, trade, tourism as well as cultural exchange.  Developing the aviation industry may also represent an opportunity to mitigate chronic transport problems faced by the 16 landlocked African countries.  World class safety is possible in Africa and various organizations support their commitment to achieving it by 2015. It will also be a time to remind governments of the many challenges that stand between African aviation today and its potential to drive growth and development – from high costs and taxes, to inadequate infrastructure and unreliable fuel supply…  Without any doubt, Africa is a sleeping giant awakening too slowly… Source: 1BlueHorizon Group | Management Consulting Analysis
  • 9. © 2013 1BlueHorizon Group - www.1bluehorizon.com 1BHG | Aeropodium Conference MECAS 13.06.13 2nd Middle East Corporate Aviation Summit (MECAS 2013) – Sofitel Dubai Jumeirah Beach, UAE All rights reserved 8 General aviation services provider are already active to awake Africa's sleeping giant – transforming marketing events to results might take time ExecuJet Promotes Futuristic Jet Travel to World Cup VIPs for VIPs and sporting personalities passing through its FBO in Cape Town, South Africa Vista Jet promoting their services to Government representatives during a road show in various African countries, here in Kinshasa (DRC) early 2013 (Illustrative)
  • 10. © 2013 1BlueHorizon Group - www.1bluehorizon.com 1BHG | Aeropodium Conference MECAS 13.06.13 2nd Middle East Corporate Aviation Summit (MECAS 2013) – Sofitel Dubai Jumeirah Beach, UAE All rights reserved 9 Indisputably the role of business aviation in Africa's economy will grow in the coming years as GDP and other parameters improve Drivers of Business Aviation in Africa… Business aviation has been defined as that part of general aviation that focuses on the business use of aircraft. This excludes regular scheduled airlines and military operations. The raison d'être of business aviation is ‘the need for fast, flexible, safe, secure and cost-effective access to destinations across the country and around the world’. Perhaps, one of the major drivers of business aviation in Africa is, or ought to be flexibility. Business aviation in Africa has continued to grow even though figures may not readily available. However, the African air transport industry is poised for growth of averagely 5.5% in the years to come and many believe this growth should also be felt on the business aviation side of the industry in the same proportion, if not more. While there are many factors expected to drive the growth of business aviation in Africa, there exists a number of challenges the sub-sector must wriggle itself out of in order to bring its immense benefits to communities and organizations in Africa. … with administrative and regulatory bottlenecks to be considered Where political and economic situations do allow business aviation to thrive, administrative delays by Civil Aviation Authorities in Africa in processing of flight permits are a major threat to developing African business aviation market. A source at one of the leading fixed based operators in Africa notes that on average CAAs in Africa require 72 hours to process permits. Business aviation is based on speed and flexibility and a 3-day period to process a permit for a business trip does harm to business aviation.
  • 11. © 2013 1BlueHorizon Group - www.1bluehorizon.com 1BHG | Aeropodium Conference MECAS 13.06.13 2nd Middle East Corporate Aviation Summit (MECAS 2013) – Sofitel Dubai Jumeirah Beach, UAE All rights reserved 10 Africa's need for business aviation is expected to increase correspondingly as long as Africa's resources keep attracting investments Implementing FBOs in those countries is highly advisable As example, the Chinese way… Source: Chinese investment offers in Africa (2010), 1BlueHorizon Group | Management Consulting Research & Analysis
  • 12. © 2013 1BlueHorizon Group - www.1bluehorizon.com 1BHG | Aeropodium Conference MECAS 13.06.13 2nd Middle East Corporate Aviation Summit (MECAS 2013) – Sofitel Dubai Jumeirah Beach, UAE All rights reserved 11 Even Africa's giant is still sleeping, the future is definitely bright for business aviation in Africa – B e r e a d y t o la n d in A f r ica… Source: © 1BlueHorizon Group SHOUKRAN - THANK YOU We are used to generate 1BlueHorizon® out of the Rough... Our turnkey solutions have continuously an implementation focus… EVENT: The African Business Aviation Association (AfBAA) Regional Symposium next September in Marrakech (Morocco) will debate the future of business aviation, discuss different business models, enhance the knowledge about the African market, and learn about the regional infrastructure development, and network with leading experts as well as business aircraft operators. (Thursday, 26 September, 2013 to Friday, 27 September, 2013) OEM Pilatus launches a new jet that aims at Africa, presented as ‘the world's first super versatile jet’. The new PC-24 not only has the ability to use short runways but can also land on unpaved surfaces and will have a cargo door fitted as standard. ‘The PC-24 is the first business jet to have the ability to use very short runways, paved or unpaved, and a cargo door as standard’ said Pilatus chairman Oscar Schwenk.
  • 13. © 2013 1BlueHorizon Group - www.1bluehorizon.com 1BHG | Aeropodium Conference MECAS 13.06.13 2nd Middle East Corporate Aviation Summit (MECAS 2013) – Sofitel Dubai Jumeirah Beach, UAE All rights reserved 12   SOLUTIONS PACK 1BLUEHORIZON GROUP GENERETING THRUST TO PROPEL YOUR BUSINESS FURTHER... March 2013 We generate 1B l u e Horizon ® out of the Rough... www.1bluehorizon.com P R O P R I E TA R Y I N F O R M AT I O N A s s e t M a n a g e m e n t | M a n a g e m e n t C o n s u l t i n g | I n t e r i m M a n a g e m e n t   A b u D h a b i – B e r n – L o n d o n – P a r i s
  • 14. © 2013 1BlueHorizon Group - www.1bluehorizon.com 1BHG | Aeropodium Conference MECAS 13.06.13 2nd Middle East Corporate Aviation Summit (MECAS 2013) – Sofitel Dubai Jumeirah Beach, UAE All rights reserved 13 Source: © 1BlueHorizon Group Corporate profile 1BlueHorizon Group® value proposition is simple — Deliver great value through a network of senior aviation executives worldwide  1BlueHorizon Group® (Asset Management | Management Consulting | Interim Management) was established in 2007 as a network of International aviation professionals. is a specialist aviation consultancy providing objective, independent, evidence-based analysis, advice and implementation support. We build on the experience of our team to help clients realize real and measurable results, quickly. Start-ups, restructuring, cost cutting, project management office, due-diligence or exploiting growth opportunities, we have experts who have faced these challenges.  Our senior experts have experience from leading companies in both management roles within their disciplines and as senior level professional advisors throughout diverse and complex locations in the Middle East, Europe, Africa, Asia Pacific and North America.  Privately owned, 1BlueHorizon Group® is independent of any financial institution, manufacturer, operator, insurance company or maintenance provider assuring our clients the benefit of truly unbiased, comprehensive and flexible provision of service.  1BlueHorizon Group® believes in working closely with client staff to transfer our knowledge and experience, which means 1BlueHorizon Group® continues to deliver value long after the project is complete.  A unique blend of languages, age groups, cultural backgrounds and skills qualifies 1BlueHorizon Group® to provide turnkey solutions for any and all of your aviation requirements - worldwide.  1BlueHorizon Group® range of services is continuously tailored and adapted to suit the geographical scope and needs of our customers. P R O P R I E TA R Y I N F O R M AT I O N
  • 15. © 2013 1BlueHorizon Group - www.1bluehorizon.com 1BHG | Aeropodium Conference MECAS 13.06.13 2nd Middle East Corporate Aviation Summit (MECAS 2013) – Sofitel Dubai Jumeirah Beach, UAE All rights reserved 14 Interim Manage- ment Managing Consulting Asset Management  1BlueHorizon Group® | MC will work side by side with you with senior personnel having experience in various corner of the world and quickly understanding what you need when the margin of error is thin…  1BlueHorizon Group® | IM can help by giving comfort and control, ready to field a team of relevant seasoned advisors whenever and wherever they are needed…  1BlueHorizon Group® | AM team works individually with each of our clients to develop creative strategies and solutions for all types of aviation equipment.… Source: © 1BlueHorizon Group Practices Knowledge transfer Turnkey solutions Innovative Hands-on The 1BlueHorizon difference 1BlueHorizon Group® is build around three dedicated Practice to propel clients business further with a comprehensive approach ahead of strategies P R O P R I E TA R Y I N F O R M AT I O N
  • 16. © 2013 1BlueHorizon Group - www.1bluehorizon.com 1BHG | Aeropodium Conference MECAS 13.06.13 2nd Middle East Corporate Aviation Summit (MECAS 2013) – Sofitel Dubai Jumeirah Beach, UAE All rights reserved 15 Family conglomerates (Governance, Portfolio analysis and investment Strategy) Economic development (Business review / Cluster / Project Management office) Air Transportation (Airlines / Airport / General Aviation / Aerospace & Defence) Management Consulting Operational Improvement Our understanding of operational improvement is quite simple: Whereas restructuring is about stabilizing a company and fixing how it does things, operational improvement is about seeing a company through the transformation of becoming more competitive. Asset Management Fleet Strategy & Planning With our Fleet Solutions, we can help you expand your fleet, transition from older models to newer aircraft types, or provide interim capacity. We back our support with a global team of technical experts and industry specialists who will provide you with the fleet solution that meets your specific needs. Interim Management Knowledge transfer Finding talent is difficult even at the best of time. Finding resources to assist for a short- term assignment of a proven heavyweight interim executive manager to manage a period of transition, crisis or change within an organization or to take on critical projects or senior positions for a limited time is even more difficult. Ahead of Strategies Three Practices If you want a feasibility study or business plan to assess the case or are burning cash and running into trouble as you approach launch or help the executive teams assess the case for entering immunized joint ventures or looking for an interim management solution… 1BlueHorizon Group® senior personnel are helping along three dedicated Practices stakeholders and management of companies to maximize their potential by providing turnkey solutions, thinking ahead of strategies… Our Practices Service Lines are focused on Strategy and Performance Improvement, no matter how complex the issues Source: © 1BlueHorizon Group Business model with Sectors (Horizontals) & Practices (Verticals) P R O P R I E TA R Y I N F O R M AT I O N
  • 17. © 2013 1BlueHorizon Group - www.1bluehorizon.com 1BHG | Aeropodium Conference MECAS 13.06.13 2nd Middle East Corporate Aviation Summit (MECAS 2013) – Sofitel Dubai Jumeirah Beach, UAE All rights reserved 16 1BlueHorizon Group® Sectors expertise covers the entire breadth of the air- transportation, Economic development and Family conglomerates Airline Economic development Corporate governance structure  Portfolio analysis  Investment strategy  The family element  Performance Management  Organization Improvement  Privatization  Aerospace cluster  Logistic, Cargo, GH Airport Family conglomerate  Restructuring MRO, Aerospace & Defence  Performance Management  Organization and Change Management  Pricing and Revenue Management  Market Forecasting  Branding, Marketing and Sales General aviation Aerospace & Defence  Feasibility, Business Plan  Operations Improvement  Merger & Acquisitions  Due Diligence  Fleet Planning  Business review  Cluster strategy  Project Management office  Public–private partnership (PPP) Source: © 1BlueHorizon Group Core competencies in the main Three sectors P R O P R I E TA R Y I N F O R M AT I O N … and our clients well recognize this!
  • 18. © 2013 1BlueHorizon Group - www.1bluehorizon.com 1BHG | Aeropodium Conference MECAS 13.06.13 2nd Middle East Corporate Aviation Summit (MECAS 2013) – Sofitel Dubai Jumeirah Beach, UAE All rights reserved 17 “1BlueHorizon Group is the only consulting firm that works successfully on all levels: Board level, middle management, implementation" “1BHG senior personnel come in with strong views but integrate perfectly in our teams" “1BHG has convinced us through it's excellent industry- and technology expertise" "The 1BHG team knows perfectly well how to push the necessary change" "In each project step, we could clearly identify 1BHG's added value and improve the overall bottom line" “1BHG guys are implementation - oriented and their cooperation with my people is very good " “1BHG Practice has very qualified people who really know a lot about our industry" Clients Feedback - What do Travel & Transportation Customers or Family conglomerates think about 1BlueHorizon Group Note: Detailed references upon request P R O P R I E TA R Y I N F O R M AT I O N
  • 19. © 2013 1BlueHorizon Group - www.1bluehorizon.com 1BHG | Aeropodium Conference MECAS 13.06.13 2nd Middle East Corporate Aviation Summit (MECAS 2013) – Sofitel Dubai Jumeirah Beach, UAE All rights reserved 18 Notes Partners Network – Aviation Sector P R O P R I E TA R Y I N F O R M AT I O N Source: © 1BlueHorizon Group Partners Network
  • 20. © 2013 1BlueHorizon Group - www.1bluehorizon.com 1BHG | Aeropodium Conference MECAS 13.06.13 2nd Middle East Corporate Aviation Summit (MECAS 2013) – Sofitel Dubai Jumeirah Beach, UAE All rights reserved 19 Contact: LEONARD FAVRE Partner, Managing Director Email: leo@1bluehorizon.com 1 BlueHorizon Group | Management Consulting| P.O. Box 34154 Abu Dhabi, United Arab Emirates M: +971 50 6164 007 (U.A.E.) M: +41 79 2080 256 (Switzerland) S: leof007