Transcript Investment in African Aviation Infrastructure Presented to: THE AFRICAN NETWORK—TANCON 2008 by MICHAEL L. DWORKIN Michael L.

Investment in African
Aviation Infrastructure
Presented to:
THE AFRICAN NETWORK—TANCON 2008
by
MICHAEL L. DWORKIN
Michael L. Dworkin and Associates
San Francisco, California 94104
www.avialex.com
AFRICA:
20.4% of the Earth’s landmass
14.2% of the Earth’s human population
The world’s second largest and second most populous continent (11.7
million square miles/955 million people)
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AFRICAN AVIATION:
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With only 4.5% of the world’s air traffic
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25% of the world’s aircraft accidents!
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The world’s 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-Outdated air traffic and air navigation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 EU’s 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
-Withholding aid from countries that do not enforce world aviation safety standards
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INVESTMENT OPPORTUNITIES:
Improving Africa’s 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
Dana Air
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Case Study:
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Nigerian-based conglomerate—involved in:
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Company Philosophy:
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Pharmaceuticals;
Plastics;
Bottled Water;
Rice and Milk Production;
Chemicals;
Motor Vehicles (KIA) and Motorcycles (Sterling);
Electronics (Philips)
“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:
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Pursue excellence and integrity in work and client/contractor relationships
Commit absolutely to maintaining the highest degree of honesty and ethical standards
Believe that the ultimate measure of organizational success is in the degree of client satisfaction with the work
product
Provide the most effective delivery of services through the creation and maintenance of multi-disciplined project
teams designed around the client's requirements
Develop lasting business relationships between the client and Dana Group based on the utmost respect for
individuals
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DANA AIR, cont’d
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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
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Also commencing a VIP Charter Service utilizing newly acquired
business jets.
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…AND GIVING SOMETHING
BACK
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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 society’s 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 NGO’s.
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AIRCRAFT MRO
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MRO: An enterprise dedicated to the maintenance, repair
and overhaul of aircraft, engines and components
• Outgrowth of the fixed base operations (FBO’s) that were
started back in the 1930’s as essentially “gas stations” for
airplanes;
• The dawning of the jet age in that late 1950’s and early
1960’s, signaled the beginning of airlines’ investment in their
own maintenance infrastructure necessary to service their own
fleets;
• Airlines became the principal MRO’s—servicing 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, cont’d
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
MRO’S
• Airlines will continue to outsource. Today’s MRO
outsourcing market is about $50 billion US per year
• Integrated rather than fragmented
• Information technology—maintenance 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 training—investing 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 (LCC’S)
-Continued outsourcing by airlines
(and OEM’s) due to pressure to
contain/control costs
-Governmental support
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WHAT IS NEEDED FOR ENTRY
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Support of governmental entities and/or
private investor(s);
Support of aviation management company
with professional experience in forming
and managing MRO’s or OEM/airline joint
venture;
Building blocks:
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Facilities
Tooling and Equipment;
Personnel and Training;
Systems and Manuals;
Certification; and
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WHAT IS NEEDED FOR ENTRY,
cont’d
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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
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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
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WIN
WIN
WIN
WIN
WIN
WIN
WIN
for
for
for
for
for
for
for
the community
the country
the African Continent
the aviation industry
the traveling public
the employees
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
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