By Chinelo Obogo
Aviation consultant, Sean Mendis, has advised most airline startups to take half the capital they planned to invest in carriers and set fire to it instead of investing in airline business if they don’t want to suffer loss.
In a piece with Voyageafriq, Mendis, who was the Chief Operations Officer of Ghana’s Africa World Airlines with over two decades of experience in senior management roles within the aviation sector in Africa, said that an investor is more likely to come out 50 percent ahead if he sets fire to his capital than pursued an airline project.
“My advice to most airline startups – take half the capital you planned to invest and set fire to it instead – you are still more likely to come out 50percent ahead than if you had pursued the project. It’s often said that if you want to become a millionaire by starting an airline, you need to begin as a multi-millionaire. Nowhere is this truer than in Africa, where the aviation industry has long been plagued by mismanagement, poor safety records, and protectionism. Despite these challenges, a new generation of African airline startups is always attempting to defy the odds and succeed where so many others have failed.
“African airlines have long been considered a failed industry, with only a few carriers achieve success over extended periods. The primary challenge these startups face is a lack of access to capital. Entrepreneurs in Africa often struggle to secure funding from local banks or equity investors, and must instead rely on governments, high net-worth individuals, or business conglomerates – all of which can bring conflicting priorities to the table. In this environment, a good business plan often lacks the necessary financial backing, while those with the resources frequently lack aviation business expertise.
“Sustainable growth is another hurdle for African carriers. This involves investing in the localisation of human resources, particularly in technical and managerial roles, to reduce the overdependence on expensive and transient expatriates. Creating a pipeline of local talent is crucial for the long-term viability of these businesses. Institutionalisation of corporate strategy (as opposed to individualisation) is also critical to ensure consistency,” he said. He advised startups, especially those that have government’s backing, not to fall into the temptation of expanding too quickly, saying that they have the tendency to repeat the mistakes of their predecessors.
“Startups must also avoid the temptation to expand too rapidly. It is important that airlines scale rather than simply grow as they expand. Operating outside of one’s home region demands globalised business skills that aren’t always easily acquired or transferred. Many airlines have found their entire business collapsing after attempting to ambitiously expand into capital and cash intensive long-haul routes, only to be burdened by exponentially larger losses.
“Startup airlines, particularly those with government backing, have a troubling tendency to repeat the mistakes of their predecessors. The latest cadre of revived state-owned carriers consistently manages to acquire flashy new aircraft with taxpayer backing, while producing shockingly dismal financial results, only to feign astonishment at their failure. As the saying goes, insanity is doing the same thing repeatedly and expecting different outcomes.
“Despite these challenges, not every African airline startup is doomed to fail. Successful examples from recent decades include Africa World Airlines (Ghana), ASKY (Togo), and FlySafair (South Africa) – all well-funded through private sources with minimal conflicts of interest, committed to sustainable practices, and laser focused on their core operations model. Innovative newcomers like Green Africa (Nigeria) and LIFT (South Africa) are also introducing fresh business models that may eventually yield positive returns.
“Nonetheless, my advice to most people looking to start an airline in Africa is to take half the capital you planned to invest and set fire to it instead. You are still more likely to come out 50 per cent ahead than if you had actually pursued the project,” Mendis said.