Emirates Airline has signed a 10-year management concession agreement with TAAG Linha Aéreas De Angola that will see the Dubai carrier name a new CEO, appoint four senior managers to work for the state-owned flag carrier and oversee the full scope of operations.
Under the deal, Emirates will not contribute equity, but will provide management support and take the reins of the business plan; fleet, route and network strategy; and staff and crew training.
The airlines will also co-operate on bilateral code-sharing on cargo and passenger services, and frequent flyer programmes, strengthening its connectivity with central-southern Africa.
Raising safety standards is a primary objective as the Angolan airline, which operates 14 all-Boeing aircraft, has been heavily scrutinised by the European Union during the last seven years, and remains on the list of airlines whose operations are restricted in the EU.
The agreement, still subject to government and regulatory approvals, was signed by HH Sheikh Ahmed bin Saeed Al Maktoum, chairman and CEO for the Emirates Group and HE Augusto da Silva Tomás, Angola’s Minister of Transport.
TAAG Linhas Aéreas De Angola will additionally explore business opportunities with Dubai’s dnata, in particular its passenger and cargo handling, flight catering and travel services.
Emirates has declared its intention to grow its business in Africa by 40% by adding 10 passenger destinations to its 22 current routes over the next decade, and the airline is expecting to have raised its African passenger capacity by 8.5 million seats by 2020, in addition to growth in air freight.
Ripe with potential
TAAG has arguably neglecting short-haul routes within Africa in favour of high profile long-haul routes outside of Africa, in contrast to the strategies of Ethiopian Airlines and South African Airways, whose international seat capacity shares are 54% and 70%, respectively.
Angola’s national carrier is likely missing out on these opportunities for African traffic, as well as in the value that such short-haul African routes can add to its long-haul custom. A $2.2bn airport infrastructure programme, supported by the African Development Bank, will at the very least open up Angola’s skies to a number of such possibilities.
Economically, Angola’s situation is much the same. Despite Africa’s second largest oil producer and a strong mining sector, the country has so far failed to capitalise on its innate wealth and is currently falling short of its target of 7.1%, rounding on a figure closer to 4.1%, according to the IMF.
For now, Angola also remains a difficult place for investors and entrepreneurs, and in the World Bank’s latest “ease of doing business” survey, the country ranked 179th out of 189, compounding Luanda’s infamy as the most expensive capital city in the world.
The latent potential of the country, however, is hard to argue against – its natural resources coupling with a calm socio-political climate that anticipates a smooth transition of power from President José dos Santos, 71 and in power since 1979, to his business-minded VP Manuel Vicente, who ran Sonangol from 1999-2012.
Meanwhile, replicating the African rule, a new generation of Angolans is coming of age, and about 60% of the country’s 21m people are under 25, and will be expecting more than just the epic narratives of MPLA’s past political achievements, and they will be demanding jobs.