With growing Chinese aviation ties in Africa, coupled with a concerted push to improve the African airport landscape, one must ponder how China’s investments in African aviation will change the market going forward. Keeping in mind the general market trends, Chinese investments can help facilitate interconnectivity while also stimulating the creation of new markets; in particular, inbound Chinese tourism.
The African aviation market has long been challenged by a lack of integration, deficient infrastructure, and high costs. China, for its part, can most easily assist African states with the latter two issues. The former issue, however, rests exclusively in the hands of African states.
Critical infrastructure, critical for growth
Concerning infrastructure, China can do (and has done) more than just build new airports or refurbish runways. Thanks to a fast growing domestic market, the Civil Aviation Administration of China (CAAC) and it’s suppliers, such as China Satcom, have both technical expertise and recent experience of developing civil aviation structures. Such proficiency can benefit African air traffic management and, in turn, help spur wider industry confidence in the region.
Equally critical, however, is the availability of aircraft. Airbus predicts that the continent will require 1,130 new aircraft by 2037. While established manufactures will be vying for these orders, likely proposing smaller aircraft such as Embraer E2 or the Airbus A220, the PRC will look to offer the C919 and ARJ21 as alternatives. As reported by Bloomberg, China has already sought to sell its aircraft to Ghana and Tanzania, and this practice is unlikely to end anytime soon.
The availability of finance is fundamental to overcoming some of the market’s most challenging issues. China, through its central administration and commercial entities, has readily provided support to its African partners.
Again, this goes further than the headlines and flagship investments such as Ethiopia’s Bole Airport.
The PRC has at its disposal dozens of financial services institutions which barley break the news. These range from state-owned bank conglomerates and policy banks such as the China Development or Exim Banks, to more than a dozen aircraft finance firms. Many of these entities can, presumably, provide the PRC’s most favoured partners with preferential finance conditions.
For African states, many of whom are considered to be under developed countries, the availability of cheap, readily available and flexible finance is essential. Costs arguably take priority over many other considerations.
Opening new markets, solidifying existing ones
As China is quickly becoming Africa’s preferred trade partner, establishing direct transport links between the regions is of significance for both nations, as well as the airlines operating within them.
On the Chinese side of the equation, the granting of routes is held by the CAAC. Recently, CAAC has allowed African airlines to operate routes into the PRC from destinations like Nairobi, Addis Ababa, Kigali, and Antananarivo. African states, on the other hand, manage this on a national level. Hence, the CAAC, and in turn the PRC, holds a significantly important card in its hands.
Video of the day:
Through the granting of routes, the PRC can essentially favour connectivity with certain nations, presumably those with which it has the warmest ties. The CAAC can, for example, grant frequencies and even assign slots favoring, and in some ways shaping, the nature of air traffic and aero-political relations with a given country.
Take, for example, RwandAir’s recent Guangzhou route which, according to the airline’s CEO, is squarely aimed at the business and cargo markets. Yet, with onward-connections in Kigali or direct flights between China and destinations such as Mauritius, leisure travel between Africa and China becomes a possibility.
As incomes in China steadily grow, and the middle class increases both in absolute numbers and relative proportions, Chinese consumers will increase their leisure and transportation spending. According to the World Tourism Organization (UNWTO), 135 million Chinese outbound tourists accounted for 21% of all international tourism spend in 2016. These figures have invariably increased over the years.
For many African states, rich in history, natural beauty and culture, attaining their share of outbound Chinese tourists can be a route towards economic prosperity. China, for its part, has significantly aided African states in achieving this goal.
In addition to funding infrastructure projects and granting routes, China has added upwards of 19 African states to its list of approved tourist destinations. This is a clear signal that the PRC accepts, perhaps even desires, the establishment of Africa as a leading destination for China’s growing traveling class.
Sino-African aviation ties are a multifaceted, multi-leveled, ever evolving phenomena. While infrastructure and financing needs of the African commercial aerospace industry may be met by Chinese investments, diplomacy and foreign investments, regardless of origination, will always have critics.
What do you think of these developments? Will the African market be filled with Chinese built aircraft? Will Africa become a leading destination for Chinese tourists? Let us know in the comments.