Chairman of the Board Of Avia Solutions Group Gediminas Ziemelis: West Africa’s 64% of grounded fleet globally could be revived by ACMI

By November 16, 2022 News

 Chairman of the Board Of Avia Solutions Group Gediminas Ziemelis: West Africa’s 64% of grounded fleet globally could be revived by ACMIThe aircraft ACMI leasing market in Africa has reported unprecedented growth in the first three quarters of the financial year 2022 and is expected to maintain this trend during the forecast period until 2028. Given the ongoing resource investments and tactical adjustments by key operators, the leasing market is likely to unveil grander opportunities for regional airlines to increase operational flexibility, enhance their performance quality metrics, and become more sustainable.

As of now, global key operators have maintained a strong presence in Europe, North America, and the Asia Pacific, with the African ACMI market remaining largely unexplored. In terms of product, these operators have acquired over 45% of the total market share in the wide-body segment and 52% in the global air cargo market.

With the circuitous effects from other non-aviation sectors, the growing demand for sustainable solutions by leading airlines in the Sub-Saharan African continent, and perspectives involved with market improvement, ACMI operators should unveil key opportunities to cover the emerging needs in this largely unexplored market and, at the same time, improve their competitive positions in the global ACMI leasing market.

Remaining flexible, meeting the changing operational and capacity demands, and rapidly adapting to unexpected market instabilities is the linchpin for African airlines to achieve sustainability moving forward. In reality, only a few regional airlines are currently keen on utilizing ACMI solutions to increase their flexibility and advance toward sustainability. African airlines should start issuing lease requests for proposals (RFPs) to key global ACMI operators as a strategy to increase flexibility, provide an unrivalled experience for air passengers, and improve their overall competitiveness.

As far as I am concerned, wet-leasing solutions appear to be the most ideal and promising solution for leading African airlines to increase their sustainability yet remain the most underutilized solution in the region. ACMI solutions present some significant and sustainable options for airlines in the region. As large and small airlines navigate the 2022 headwinds and align themselves in the path of sustainability, they face the problem of how to increase their flexibility and match uncertain demand with their operations and aircraft capacity. Under such circumstances, wet-lease airlines provide a go-to option for struggling airlines to achieve reliable and sustainable performance.

In 2018, Avia Solutions Group subsidiary Avion Express, completed 52,500 block hours, with current forecasts indicating that the company’s productivity in ACMI leasing will increase significantly by the close of 2022 and into 2023. The beauty of working with such ACMI operators is that these companies have a tailored solution for every type of carrier, whether an international airline with a 500-aircraft fleet or a regional turboprop operator with only one aircraft.

By July 2022, West African countries led the chart with around 64.23% grounded fleet globally, followed by Hong Kong, Iran, and Malaysia. It seems strange or unrealistic that African carriers would consider wet-lease options in such a situation. However, ACMI services still provide a safer bet for these airlines when balanced against the costs of reviving the grounded aircraft and providing recurrent training for pilots who were out of service.

Wet leasing provides a choice between sourcing resources from established ACMI operators or investing resources – in most cases unavailable – without a guarantee that such investments will prevent a system shutdown in the short term or long term.

For established ACMI providers, market intelligence provides an important lever, enabling these companies to know where lease aircraft can be accessed at short notice, considering that these companies have established long-standing relationships with legacy ACMI airlines. This means that African airlines struggling with capacity and other performance issues should consider third party, wet leasing as the most apposite solution to address their woes and align themselves in the path of sustainability.

From the growing numbers of educated customers in the African aviation market, Avia Solutions Group foresees massive demand for wet-leasing services, with more and more airlines outsourcing aircraft, MRO services, provision for spares and tools, and insurance. Our subsidiary companies, including KlasJet, are joining us to expand their service portfolio and add more clients from unexplored regions, Africa being our priority and primary target market for ACMI leasing. In a recent communication by Rita Domkute, CEO of KlasJet, the business aviation carrier plans to expand its wide-body fleet by adding 5 economy class, next-generation Boeing 737 by the close of 2023. Each of these aircraft will provide an additional 189-passenger capacity to the existing fleet, providing opportunities for KlasJet to expand its ACMI operations and extrapolate its industry expertise to new markets like Africa.

As many African airlines may have witnessed in recent years, the aviation business is not immune to unexpected disruptions and the circuitous effects from other industries that typically affect their ability to meet operational demands and achieve sustainable development. Wet leasing solutions offer a flexible way for struggling African airlines to scale up and expand their market share in aggressive aviation markets dominated by non-African carriers or where existing airlines have become unsustainable.