A new airline to replace LAC in D R Congo ?

[Bel33]

Following the "Figaro" journal, It seems that DRC prime minister asked Air-France-KLM to enter into a partnership to create the new national airline...

[Darjeeling]

See here: http://tinyurl.com/lmzq7l5

[sn26567]

That would be a big blow for Belgium and for Brussels Airlines. Our diplomacy should intervene as fast as possible!

[Bralo20]

I was exactly thinking the same... Belgium is working with the DRC for some time now to have their CAA up to standards and to work towards a removal from the EU blacklist as a country. Investing money, time, people, etc... SN was involved in bringing Lubumbashi up to standards and invested heavily to do so, even provided fire services, etc. and they are doing (or intended to do so) for other airports.

And now the DRC chose AF/KL to move forward? Seems more then a big blow, it's a big slap in the face towards Belgium and SN. It's saying: thanks for doing most of the hard work and investing and now that we are on the right track we choose another partner with a bigger suitcase of money.

Anyway, I'm actually not surprised by this... Now remains to be seen what actually will happen.

[Air Key West]

Don't panic. No deal has been made (yet). It's not because the DRC Congo approached AF that the deal is done. Given the current difficulties AF has to face, it's far from certain that AF has, at the moment, the time, the energy, the resources and above all the money to step into such a venture.
It shows again that b.air should try even harder to consolidate its position in the DRC and upgrade its operations to Western and Central Africa.
The DRC is one of the few countries in Africa I have never been to, but from what I hear, it's really really difficult to do serious business over there (for reasons I will not mentioned but are widely known).
Too bad, b.air's main "niche" is such a "complicated" country.
But that does not apply to b.air only (AF or KL or whoever would be faced with the same situation, I guess).

[RoMax]

From what I understand from that article is just that the DRC wants Air France-KLM to participate in the tender as well, as they are still by far the biggest player in Africa, so it's not that strange.

On the other hand I wouldn't be supprised SN misses this oppertunity because AF-KL (or maybe one of the African airlines) is much more active in Africa. SN has a big Africa network, but it remains a small airline with relative low capacity on their routes. AF-KL has a big wider route network and much more capacity. But when looking at the DRC as a stand-alone market, SN is the biggest 'group' (when including Korongo) supported by the Belgian authorities who support the RDC to improve their aviation safety record. So that would be a pitty for SN, but it will be largely out of their own power (at least, they can try as much as possible to get a contract, but it doesn't make any sense if the conditions are not in SN's favor).

[rwandan-flyer]

Don't panic. No deal has been made (yet). It's not because the DRC Congo approached AF that the deal is done. Given the current difficulties AF has to face, it's far from certain that AF has, at the moment, the time, the energy, the resources and above all the money to step into such a venture.

In deed, but AF launched Air Cote d'Ivoire last year, signed code share with airlines from Celestair group (Air Mali and Air Burkina). Both airlines currently facing to financial problems, that will not a suprise if AF help them. Furthermore It seems that Aga Khan Fund for Economic Development wants to sell its remaining stake in Air Mali and Air Burkina. They did the same thing with Air Cote d'Ivoire. Note that AF was a major shareolder in Air Burkina and Air Ivoire, in the past.

And we don't forget Air Cemac where AF is now the major shareolders.

It's Africa and it takes a long time before a project starts , but we should keep eyes on this project

[BrightCedars]

Read the article in La Libre a short while ago.

Hope this doesn't spell bad omen for SN and Korongo. I'm not seeing AF group have a dedicated long term interest in developing the DR Congo's infrastructure, I see this as a hostile move against a chief competitor like SN in one of their most important markets. And if indeed this goes thru I say the LH group as a whole should give AF a run for their money on Africa.

The flip side of the coin is that this may also be an opportunity for LH and SN to pull the plug if Korongo didn't turn out to be that money making of an idea.

I hope the local authorities don't believe the ban will be turned overnight if they strike a deal with the French, they would be ill advised.

[sn26567]

It seems that the decision has been taken, according to a news report of Bloomberg reproduced in an article of African Aviation.

CONGO (KINSHASA): Government set to form new national carrier with Air France; ops by early 2014.

The Democratic Republic of Congo has reportedly chosen Air France (AF) as its strategic partner in its planned new national carrier to replace the defunct LAC Lignes Aériennes Congolaises (4V) following months of speculation.

According to Bloomberg, the Congolese Prime Minister's office, Matata Ponyo, announced a tentative launch date of late December 2013/ early January 2014. Mr Ponyo, on Wednesday, held talks with Franck Legré, the head of Air France's African operations, regarding the creation of the carrier, adding that he hopes the French will expedite their involvement in Congo's domestic market "as quickly as possible."

The Congolese had planned to have the airline up and running by June and had approached various carriers - brussels airlines, Turkish Airlines, Ethiopian Airlines, and Kenya Airways - regarding a possible joint venture.

Should the deal in fact go through, it would be Air France/KLM's second stakeholding in an African carrier after its 20% stake in Air Cote d'Ivoire (HF) and its 26.73% shareholding in Kenya Airways (KQ).

Curiously, Air France is also in protracted talks to become a 34% stakeholder in Air CEMAC, the regional carrier aimed at linking Cameroon, the Central African Republic, Congo (Brazzaville), Gabon, Equatorial Guinea, Chad and São Tomé & Príncipe.

Air CEMAC's hub is set to be Brazzaville Maya-Maya International Airport, literally just over the Congo River, though the status of the airline (set to launch before year end - allegedly) and Air France's shareholding, are still in limbo. The Republic of Congo's Minister for Civil Aviation & Transport, Rodolphe Adada, was due to have held talks in Paris with the French to finalize the "contentious" modalities of the deal in late July. However, no mention of any outcome has been heard of since then leading to some doubts over the project's future.

[RoMax]

Not according to Brussels Airlines/Korongo:

http://www.lalibre.be/economie/actualit ... 8e48d2c069

[fcw]

Just one question: How will BruAir, a company who is kept live by state aid and LH be able to invest some money in LAC?

[RoMax]

Just one question: How will BruAir, a company who is kept live by state aid and LH be able to invest some money in LAC?

One of the biggest mistakes you can make as a company which is rebuilding its foundations, lack of investments in potential succesfull projects. Lacking vision and not thinking about your mision, but only looking at the current financial situation.
Lack of vision and investments is what SN made what it's now (or let's say about 1-2 years ago when the situation was even worse).

[fcw]

One of the biggest mistakes you can make as a company which is rebuilding its foundations, lack of investments in potential succesfull projects. Lacking vision and not thinking about your mision, but only looking at the current financial situation.

Is this a potential successful project? How many African Airlines are a success? How many African Airlines went bust in the last 10 years?
Even if it is a potential success: how on earth can you invest if you don't have any money?

[RoMax]

Is this a potential successful project? How many African Airlines are a success? How many African Airlines went bust in the last 10 years?

The African past says nothing, as those airlines were run like sh*t. So yes it's a potential succesfull project, at least, it can be, depends on a lot of things that are unknown about this project for the public.

Even if it is a potential success: how on earth can you invest if you don't have any money?

Don't they? Still still have many millions on their bank accounts and available credits for new investments (like they'll invest in a total renovation and expansion of their lounges at Brussels Airport, to double them in capacity and bring them all 3 up to international standards). Of the 100 million LH invested, tens of millions are not used yet and Brussels Airlines hopes not to use them this year (the rest was invested late last year, as part of the Beyond 2012-2013 plan).

[fcw]

Of the 100 million LH invested, tens of millions are not used yet and Brussels Airlines hopes not to use them this year (the rest was invested late last year, as part of the Beyond 2012-2013 plan).

This was not an investment but a LOAN, so they will have to pay back what they used, not spend the rest on a gamble in Africa.
During the 12 years of existence BruAir was not able to payback a sinle euro of the loan the Belgian State gave them in 2001, they were not even able to pay the intrest.
The money in the bank is money of passengers who bought and prepaid a ticket for future travel.

[RoMax]

This was not an investment but a LOAN, so they will have to pay back what they used, not spend the rest on a gamble in Africa.

Yes a long term loan, of which SN will probably never pay back one single Euro (unless LH decides not to take over SN and they want to see their money back no matter what).
LH gave that loan, not simply to keep SN alive, but for SN to INVEST in their future, like long haul expansion (SN could survive without that German money, but it couldn't invest enough, which would eventually mean they wouldn't survive in the longer term). An investment is always a gamble, an African gamble can be very tricky, but Korongo is supported by LH and if the conditions within this new project with the DRC government are good, LH will be the last to keep SN from investing in Congo once again.

[Flanker2]

Interesting debate here.
SN hardly invest anything in Korongo, so even if they can invest in this venture, what is going to change after that?

If AF-KL invests in it, it's in the DRC and the consumer's best interest as there will be competition.

Let's be honest with ourselves, SN have coined their own fate by delaying and delaying Korongo and not continuing to invest in it when they had a chance to do so. This is also reflected in their overall Africa strategy where they are becoming smaller everyday as they are challenged in each and every single market.
You can be a SN fanboy or a basher, black is still black and white is still white.

I don't blame Allard for one second as he seems to have been asking for investments into Korongo. To me it seems that things move slowly in the DRC, but even slower at SN. If this deal goes to AF, SN would have only themselves to blame. Basing one B733 in FBM and supporting the CAA to get up to standards is too little to claim the rights on the entire DRC market in my opinion.

Let the bribes flow.

[kilobravo243]

Please keep in mind that from a congolese perspective, Brussel Airlines is already getting a huge privilege on the Brussel-Kinshasa line by being granted traffic rights for 2 additional days (for a total of 7) that they used to lease from LAC. This decision by the governement was done against the advice of most local analysts as it cuts the extra revenue LAC was getting.

In addition, Brussel Airlines thru Korongo has invested in infrastructures in some airports through a partnership with Regie des Voies Aeriennes (RVA). I am not aware of the details but I remember reading there are compensations or repayments of Korongo investments.

I higly doubt Brussel Airlines has any chance in that business since a new LAC compagny will directly come in competition with Korongo and will give Brussel Air too much foothold in both international and national traffic in DRC. In addition, Brussel being under the control of Luftansa just makes it financially difficult. But everything is still possible. I guess it really depends on what type of partnership will be required: financial or technical, or both...but Brussel dont seem to be in better position.

[sn26567]

Not according to Brussels Airlines/Korongo:

http://www.lalibre.be/economie/actualit ... 8e48d2c069

Here is the story of La Libre Belgique, as reported in English by African Aviation:

CONGO (KINSHASA): Korongo boss dismisses reports of Air France/Kinshasa tie up; claims game still on.

Christophe Allard, the managing director of Congolese operator, Korongo Airlines (ZC), has dismissed recent media reports that Kinshasa has reached a definitive agreement with Air France (AF) in which the latter will become a partner in a new Congolese national carrier due in the skies in either late 2013/early 2014.

Speaking to Belgian paper, La Libre, last week, Mr Allard claimed that nothing between Kinshasa or Air France had been signed adding that media houses reporting the development had misinterpreted the announcement. (Editor's Note: The original press release on the Congolese Prime Minister Augustin Matata Ponyo's website has now been redacted and, as of this posting, Air France itself has yet to issue any official comment on the purported partnership with the Congolese government.)

"Negotiations are ongoing and all known candidates (Turkish Airlines (TK), Ethiopian Airlines (ET), Kenya Airways (KQ), Air France/KLM and brussels airlines (SN)) are still in contention. We are very sensitive to the trade and discussions with the Congolese authorities continue to move forward," he said.

He said that brussels airlines was in contention under the Korongo brand, in which it owns a joint 70% stake via its holding firm Airbel, and claimed that Air France's involvement in the hunt for a partner is more likely to be in "a technical advisory role."

On his airline's prospects of being chosen, Mr Allard said he was convinced "more than ever" that he could make his airline the most attractive to the Congolese authorities given that the carrier is already up and running and is the only Congo-based carrier that lives up to international standards. This in turn would save Kinshasa valuable time in setting up a company from scratch and instead allow it to focus on the carrier's long term development.

In light of the Congo's infrastructural shortcomings, Mr Allard said air transport would remain the only realistic way of maintaining connectivity throughout the country for the foreseeable future, adding that even if Korongo (and therefore brussels airlines) wasn't chosen, there would still be enough market share for the airline to remain viable.

Korongo serves Kinshasa, Mbuji Mayi and Johannesburg out of its Lubumbashi base using a single B737-300 though Mr Allard now claims two additional B737-300s (as opposed to an additional B737-300 and a Fokker 50 mentioned previously) are to be available to the airline in early 2014.

[Flanker2]

(as opposed to an additional B737-300 and a Fokker 50 mentioned previously)

So it was indeed a F50 that they had in mind? Your report in the Korongo thread mentions an unspecified 50-seater, so we were speculating mainly about the F50, but it wasn't confirmed anywhere.

Given the distances however, if the B733 is possible without major departing payload limitation despite shorter runways at some of their regional airports like MBuji Mayi, I think that it will be a better option.

Korongo seems to be on the right track, but there's still a long road ahead. 3 aircraft isn't bad and a good milestone, but I hope that their ambitions reach out further and that SN start BRU-FBM soon. SN now needs to protect its market against new entrants. If they can, IMO they should hold on to their 2 rented frequencies from LAC, and fly something like 6 weekly BRU-FIH and 3 weekly BRU-FBM with A333.
It's time to fasttrack the investments to make FBM A330-ready and start looking at new routes both inland and across the border to the South and the East so they can feed to FBM.
If they achieve that in minimal time, I see Korongo succeeding and it would also relieve some pressure from SN as they will be positioned aggressively in Central and South Africa.

How long it will take to achieve that will be the only determining factor. But once I see A333's flying to FBM and being fed by 3 B733's, I think that it will really be something that SN could be proud of and definitely a good reason for LH to go all-in.