ACMI Leases Offer Great Potential for Airline Access to Market-Leading Services to Support the Development of Africa’s Aviation Industry

By January 24, 2023 News

ACMI Leases Offer Great Potential for Airline Access to Market-Leading Services to Support the Development of Africa’s Aviation IndustryAircraft, Crew, Maintenance, and Insurance (ACMI) providers continue to play a prominent role in providing market-leading services to help airlines meet their operations in the post-covid era. Given the growing large-scale fleet shortages for major African carriers, mounting staff shortage issues, and growing demand for aircraft maintenance services and capital leases, it goes without question that the regional market holds significant prospects for lease operators to provide alternative and flexible services to enable these airlines to achieve their expected operational levels in 2023.

In 2022, Fly Comoros issued a request for proposal (RFP), expressing its intention to wet-lease its turboprop fleet to leading African airlines after years of losses and a botched 49% sell-off bid to South African Airways. Other fledgling carriers in the African aviation market, like Cabo Verde Airlines, have partnered with wet lease providers to increase their access to ACMI capabilities. Such partnership has equipped Cabo Verde with expanded capabilities by increasing its access to leased narrow-body aircraft such as Airbus A320. In turn, this has enabled the airline to meet the changing requirements and achieve continuous success in its credibility, reliability, and client satisfaction all year round. Even as other African airlines explore similar or related ACMI options, such partnerships further buttress the significant role and positioning for wet/damp lease operators as the to-go option for regional carriers seeking to achieve flexibility and increase their operational efficiency.

With a growing number of airlines confronting problems related to growing passenger demands, insufficient fleet capacity, and crew and airport staff shortages, ACMI leases have provided a safer bet when balanced against the costs of ordering new aircraft to address capacity deficits or training crews and airport staff to bounce back into service. Additionally, the available hangars are already packed, with many airlines waiting in long queues to have their aircraft serviced. This implies that these airlines have to wait longer to access maintenance services for their aircraft, which may come at a higher cost due to increased demand for such services. In view of the above issues, the choice is between spending the money to have the resources ready and accessible when needed without any guarantee the system will remain operational or sourcing the resources through wet leases until when they can reliably provide or access such services from internal sources.

For ACMI operators, market intelligence provides an important tool to know where demand for such services is likely to grow and where a specific aircraft is situated and can be sourced at short notice. Dainius Staniulis, the Vice President of Commercial and Business Development at Avion Express, emphasizes the significant role that market intelligence plays in connecting ACMI operators who can provide ACMI capabilities, on the one hand, and prospective customers, especially the ones in counter-cyclical markets to Europe, on the other. Significantly, ACMI operators must forge long-term relationships with African Airlines with lease capabilities to ensure that aircraft, crews, and other lease services can be accessed with ease when on demand at the same time maintaining high quality services.

Compared to other regional markets, the African aviation market deals with a constellation of unique challenges. To upset these predicaments, many airlines have placed ACMI at the heart of their respective development plans. Drawing lessons from the chaotic European summer season, lease solutions present an essential tool for significant airlines to capitalize on market demand and reduce financial exposure. Furthermore, the aviation market in Africa is highly fragmented and does not have many carriers with the capacity to dominate the market. For this reason, Dainius Staniulis grants that ACMI extends significant capabilities for small airlines to grow their position and secure a share of the aviation market and for larger and well established market players to increase their market share and/or explore new markets and routes by capitalizing on floating capacity.

Many network planners for major African carriers struggle to develop accurate demand forecasts and identify specific times when peak seasons are likely to occur. By all accounts, the ACMI option guarantees that flexibility by eliminating the requirements for these airlines to commit to adding, say, 20 aircraft in their fleet on dry lease for a fixed period. Instead, troubled airlines can utilize ACMI as a “plug and play” solution in order to meet the operational demand for summer or other peak seasons without necessarily having to scale up crews, maintenance, and airport resources.

To all intents and purposes, ACMI solutions appears to be the only flexible way for African airlines to scale up, penetrate new markets where other carriers have failed or disappeared, and retain their share in existing markets. Considering that the African aviation industry is largely underserved, operators must develop an aggressive strategy to capture the market and capitalize on available opportunities so airlines can plug in and leverage their flexible solutions to drive more growth.

Given the many variables at play, many African airlines continue to deal with uncertainties and an unusually low supply for the ACMI market. The status of the African aviation industry as a niche market implies that wet/damp lease providers may experience difficulties accessing invaluable data about airlines and determining the prospects for wet- lease services. Likewise, many airlines have limited access to critical information about the ACMI market. Under such peculiarities, many airlines are likely to rely on established operators like Avion Express, who have a large number of available aircraft for wet and/or damp lease due to a perfect counter-seasonality between European and African markets as well as extensive knowledge about the market before making choices on where to submit their RFPs for wet or damp-lease solutions.