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The Africa, China and

Hong Kong Market

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State of the Regions Its finally happening... Asia will be the dynamo of the industry for years to come

The Africa, China &

Hong Kong Market
Aviation has historically been linked to either well-established colonial links
or trade activity but in many cases the two are intertwined. Several examples
exist, including the EuropeCaribbean market which splits nicely into French,
English or Dutch colonial history; Spanish links to South America being central
to Iberia long-haul services from Madrid and the TAP Air Portugal service
between Lisbon and Maputo which is built around those historic links.
History is frequently a fairly solid indication of the future, no matter how hard
we might want to think otherwise and African aviation is experiencing one
of those indicators at this very moment in time. The historic natural linkage
between Africa and North East Asia has been pretty tenuous but today trade
between the two regions as well as capacity and traffic growth between the
two areas represent one of the fastest-growing markets for African aviation.
China is Africas largest trading partner and in 2014, bilateral trade exceeded
US$200 billion with a large proportion related to commodities with a particular
focus around oil. Direct Chinese foreign investment in Africa has grown by
over 20% per annum since 2009 to around $2.52 billion with a further US$1
trillion expected over the next decade. Major infrastructure projects are
underway that include a 1,400 kilometre railtrack along Nigerias coast line.
Likewise, Japan appears to be competitively seeking to build trade links with
Africa with a similar focus on commodities and continues to seek to build
relationships further with key markets and trade partners. State visits in recent
years and major high-profile trade conferences have all been deployed by
the Japanese as they follow perhaps a softer more diplomatic approach to
growing trade links with the Continent.
In this analysis we look at how those growing trade links are reflected in both
air service development, the range of airlines operating and just as importantly,
how the resultant market has developed over the last few years.
In May 2010, there were some 131 non-stop services operated between Africa
and North East Asia as the network map below (Map 1) illustrates. Hong Kong
was the key arrival point from Africa with some 75 services of which 62 were
from Johannesburg with a combination of South African Airways and Cathay
Pacific both operating daily schedules.

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State of the Regions Its finally happening... Asia will be the dynamo of the industry for years to come

Map 1 Africa to North East Asia Scheduled Services May 2010

Source:

Map 2 Africa to North East Asia Scheduled Services May 2015

Source:

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State of the Regions Its finally happening... Asia will be the dynamo of the industry for years to come

By May 2015 the number of frequencies operated had nearly doubled to

259 flights with some notable new services launched, including a significant
network from Ethiopian Airlines that covers Shanghai, Beijing, Guangzhou and
Hong Kong, allowing the airline to claim a 43% frequency share. Indeed, the
Ethiopian Airlines operation to China and Hong Kong reflects a classic hub
schedule with all their services departing late evening or in the very early hours
of the morning, providing excellent connectivity from their African network.
Furthermore, the operation arrives back in to Addis Ababa early in the morning
to connect back to other African points. Such connectivity and scheduling
structure works well and demonstrates all of the values of hub operations,
perhaps underlying a challenge for the African carriers in building a network to
Asia; the power of the Middle East Hubs and the emergence of Istanbul as a
viable alternate for many destinations.
In 2014, the market size between Africa and China had 1.3 million one-way
passengers compared to 830,000 in 2012, an impressive growth of 55% in
the last two years; a level of growth that had probably not been replicated
in any other market in that time period. As the chart below shows, Ethiopian
Airlines and Emirates were market leaders with 18% and 17% respectively and
were followed by a cluster of carriers before the rest were made up of a very
large fragmentation of passengers carried across a wide selection of airlines,
including some major European carriers.

Chart 1 Airline Market Share 2012, Africa to China

One way passengers

Source:

18%
Ethiopian Airlines

28%

Emirates
Egyptair

17%

Qatar Airways
South African Airways
Cathay Pacific Airways
Others

7%
8%

11%
11%

Within two years, the market share structure has changed considerably as can
be seen in Chart Two. Ethiopian Airlines share has now increased from 18%
to 25% in a market that aforementioned as mentioned earlier grew by 55%.
Last year Ethiopian Airlines carried 318,000 one-way passengers from Africa
to China and Hong Kong; an increase of 114% from the 149,000 they carried
in 2012.

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State of the Regions Its finally happening... Asia will be the dynamo of the industry for years to come

Chart 2- Airline Market Share 2014, Africa to China

One way passengers

Source:

Ethiopian Airlines

20%

Emirates
Qatar Airways
Egyptair
Kenya Airways
Air Mauritius
South African Airways
Cathay Pacific Airways
Others

25%

4%
5%
14%

6%
6%

7%

13%

Direct air services are an obvious measurement of how well a market is developing but they are often
the secondary source of market sentiment; the real early warning signal is the
development of the indirect flows. Using the OAG Traffic Analyser database,
weve looked closely at how those flows have developed in the last few years
and how the market shapes up.
In total, over 400,000 passengers flew indirectly between Africa and China
in 2014, a staggering increase of 46% over 2012. Unsurprisingly, the indirect
market leader was Emirates with a 45% market share and a growth of over
35% in the two-year period measured. Equally surprising perhaps was the
strength of market development and activity from Qatar Airways who with a
42% share of the connecting market have seen their traffic increase by an
impressive 52%. With over 87% share of the market carried by these two
carriers, its clear that both Etihad Airways and Turkish Airlines still have some
way to go before they can compete with the dominant airlines.
As would probably be expected, Beijing is the major destination for the
connecting market with over 116,000 passengers destined for the city from
African points via the four hub airports. Beijing accounts for around one third
of the traffic and has seen demand increase by 38% in the last two years.
Shanghai and Guangzhou both account for around a 25% share of the market
although in the case of Shanghai, traffic growth has slowed considerably in the
last two years to only 8% whereas Guangzhou has grown four times as quickly
with 42% growth in the last two years.
Perhaps of more interest though is the different traffic flows that the respective
airlines appear to be actively developing. In the table below, we have listed the
top five African markets for each of the four airlines:

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State of the Regions Its finally happening... Asia will be the dynamo of the industry for years to come

Table 1 Top Five African Markets for Middle East Carriers

Source:

Emirates

Etihad

Qatar Airways

Turkish Airlines

Johannesburg

Cairo

Algiers

Niamey

Luanda

Khartoum

Lagos

Algiers

Cairo

Seychelles

Cairo

Misurata

Lagos

Nairobi

Dar es Salaam

Cairo

Nairobi

Johannesburg

Khartoum

Tripoli

The appearance of markets such as Johannesburg, Lagos and Nairobi in two

of the four carriers top markets is no great surprise and perhaps the more
interesting aspect of the data is the unique city pairs that some airlines appear
to be successfully developing. For instance, in the case of Emirates, Luanda
is their second largest market flow with some 14,000 passengers compared
to only 3,000 in 2012 whilst for Turkish Airlines, an almost unique service to
Misurata in Libya provides nearly 3,000 one-way passengers a year, to and
from China.
With such strong indirect competitors such as Emirates and Qatar actively
developing the African market as well as adding new destinations and
frequently providing superior product options to the direct service carriers, one
interesting fact stands out. For all four Middle East carriers, Addis Ababa fails
to appear in the top ten connecting African markets and yet, as highlighted
earlier, Ethiopian Airlines enjoys a 43% frequency share in the direct Africa
to China/Hong Kong market and a market-leading 25% passenger share of
all traffic. All of which would give cause for optimism that direct scheduled
services from Africa are capable of competing with the indirect service
offerings via the Middle East when the correct level of product investment and
frequency is created.
In conclusion, for many years African aviation has talked about the growing
opportunities and potential demand for new services to new markets. The
market to China and Hong Kong highlights how quickly a mix of investment
and major infrastructure projects can stimulate demand rapidly but more
importantly, it is possible for African carriers to carve out a niche for
themselves in that market. With other African airlines exploring how best to
launch and serve the Chinese market in the coming years, there is perhaps
optimism that along with new railways will come new direct air services.

2015 OAG Aviation Worldwide Limited. All rights reserved

State of the Regions Its finally happening... Asia will be the dynamo of the industry for years to come

This article was written using data and reports from OAGs Schedules
Analyser and Traffic Analyser products. OAG is the global leader in
aviation information and analytical services. Its flights status and airline
schedules and capacity databases hold future and historical flight details
for over 900 airlines and more than 4,000 airports. OAG has been trusted
and respected within the aviation industry for over 80 years.
OAGs team of expert aviation analysts can provide ad-hoc aviation
analysis or bespoke reports to exact specifications from one-off
projects to regular reporting. For further information contact
OAGMarketIntel@oag.com
For media enquiries please contact Marc Cornelius / Trudi Beggs,
80:20 Communications +44 (0)20 7664 6310 or email
tbeggs@8020comms.com
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