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Ghana Airways is Ghana’s major airline and one of the predominant airlines in West Africa. Could you give us a brief historical background to Ghana Airways?
Ghana Airways is our only national airline. It is a 100% state-owned enterprise, however it is a limited liability company. We have gained a limited liability status in September, 1995. The airline is about forty-one years old now, which makes it one of the oldest airlines in the sub-region and it has survived mainly on its own resources. It receives no subvention from the government even though it is 100% state-owned. However, the government did assist in the acquisition of the DC10 in 1981 and since then the airline has repaid this loan. I highlight on this fact because most airlines worldwide that have significant state interest, depend heavily on the State and this makes Ghana Airways unique in that respect. The airline has by and large a fully Ghanaian workforce of about 1200 staff and our pride has been that the cockpit staff, who are among the very best in the world, are nearly all Ghanaian. There are very few foreigners who came in very recently.
How many planes do you have at the moment and where do you fly to?
At the moment the airline has two long haul aircraft, DC 10s and two DC9 short haul aircraft. On the long haul we fly to London four times a week, to New York four times a week, we also fly to Rome and Dusseldorf twice a week and Johannesburg and Harare once a week. We have one additional code share flight with SAA to South Africa. In the sub-region we are the dominant carrier. We have about eleven flights a week to Lagos, as well as a couple to Lome and Cotonou , a number of flights to Abidjan, Monrovia, Freetown, Conakry, Dakar, Banjul, Bamako and Ouagadougou, which are all the major regional destinations that we serve.
Could you give us some figures on how many passengers you carry a year, what your annual turnover is?
The airline has gone through tremendous turn around since 1996. From making lots of losses in 1996 and before, the airline managed to show a modest profit in 1997 and sustained that in 1998. In 1996 the turnover was around $70 million, in 1997 it moved to about $90 million and in 1998, for the first time in the airline’s history, it broke through the $100 million mark. In terms of passenger numbers, in 1997 the airline carried 192,700 passengers, in 1998 it carried 270,000 which was an increase of about 35%. That was also more than 50% of passenger movement in this country. In 1998, the airport saw 480,000 passengers come and go and out of this figure Ghana Airways alone carried 270,000.
What would you attribute this turn around to?
A number of factors. I think the fundamental difference is that management today understands that it is in business to fly passengers at their most suitable convenience and also move goods on the same basis. Prior to that I would like to say that the airline did not have that commercial focus, it was more technically driven. The other key attribute has been a tremendous team effort.
So it has been more a question of a change in philosophy rather than a change in management or staff?
The two have gone together because to get a change in philosophy you sometimes need a change in personalities but in addition to that I think the whole business strategy has been looked at more critically. For example what really underpins the airline business is the schedule that the airline flies. Hitherto this was done by somebody fairly junior in the company, today we have a situation where it goes right up to the Chief Executive. Developing the schedules goes all the way up to that level and then it is spread out to various divisions and departments for their input and analysis before being finalized. The very building blocks of the business are addressed very extensively by various parties in the organization. In addition to that, in terms of business philosophy, the company moved to a situation where instead of having de-coupled long haul and short haul operations, (even though operationally they may be de-coupled), we see them as being integrated. So, our regional services feed the long haul operations and our long haul services terminate here, but are then distributed within the sub-regions by our regional services. I think this is one of the key changes in business philosophy or business strategy which has contributed significantly to the dramatic rise in passenger numbers as we have seen between 1997 and 1998.
You were saying that Ghana Airways is the most important airline in the sub-region. How do you see the imminent merger or take over by Virgin Airways of Nigeria Airways?
I didn’t know this was imminent. There have been a lot of speculations and we ourselves have been spoken to by a number of people including Virgin Airways. There is no doubt about Ghana Airways. The fact that South African Airways picked us in the region, to co-operate with and forming an alliance with Ethiopian Airways is a very clear manifestation of the confidence that people in the aviation industry have in this airline. This airline has an impeccable safety record. It has the highest standards of technical operation and it may interest you to know that Ghana is one of the four African countries that have FAA Category One classification, which is the highest accreditation you can have to fly into the US. This accreditation allows us to fly our own planes with our own crew into the US. There are only four countries in Africa who have this, so this gives you an idea of the very high technical standards that the airline has achieved and we all work feverishly to sustain. What I am saying is that even if there are other interests in other airlines in the region, I am sure that without resting on our laurels, or without being complacent, the first choice for anybody will have to be Ghana Airways.
You are not worried then?
It is of concern but, it is worth noting that at the end of the day I cannot see it jeopardizing the airline’s future. Ghana has a very bright future and it has a lot of suitors lined up. I know that whether that happens or not, it is not going to change the destiny of this airline. Provided we maintain the strategies we have identified and we keep putting in the hard work and believing that the customer is first. In addition to what I have just spoken about there are certain endogenous factors as well as exogenous factors. One of the exogenous factors is the environment in which you operate. Even if you are the very best airline in the world but are in some war torn country in sub-Saharan Africa, with a very checkered political history, the chances of being successful are far less than being in Ghana which is well placed geographically, enjoys good political climate, with a very strong economic growth. For us, really the sky is the limit if we get and keep our act together.
So you think it is more of a political environment which is going to affect your operations.
This is one of several factors but a very important one. If for example, there is political instability here and it is war torn to an extent there would be no way of getting a flood of investors in, you would not be getting buoyant trade and growth. And therefore the fortunes of the airline could not be as bright as they are in this environment which is highly stable, and highly investor conducive.
You were talking about your alliance with South African and Ethiopian airlines. What advantages is this going to offer to passengers?
The first obvious advantage is better connectivity, more choice of flights and destinations, improved services and better equipment utilization.
Will this be an alliance like the Star Alliance for example? Is it the same sort of principle?
I think this alliance serves two primary purposes: to make it easier for passengers to move around the sub-region or around the African continent. We view the position of South Africa as very strong for a distribution network in the south, we are positioned in the west with a very strong distribution network here and similarly with Ethiopia in the east. From these points there can be effective distribution and that is what I see the alliance offering in the first place. The second thing is that you are going to get better financial performance from those airlines. There will be better equipment utilization and equipment sharing within the airlines. There will also be a wider catchment area and traffic flow for the airlines. Ghana is to become a Gateway and we see ourselves as being geographically well positioned to feed any traffic from Southern and Eastern Africa to North America. I do not foresee our alliance becoming like a One World or a Star Alliance, however I can see bits of these alliances, fitting into some of the larger, global alliances.
| With regards to Ghana being the Gateway, you are flying to New York at the moment and you have got two other routes scheduled. What about international carriers coming from the states here?
As you may be aware we are in the middle of bilateral air service agreement discussions with the US government towards some sort of liberalized skies policy. There is a strong possibility that in the not too distant future you will see American carriers coming in.
What about other areas of America, South America for instance? Is there much you need for that?
It could well be, but for the moment I do not see it on the horizon. It is something that we definitely intend to explore as part of our medium term plan.
3 All these alliances that these airlines are forming, what do you think this is due to?
One of the key driving factors is that the margins in this business are becoming slimmer and slimmer and as margins become slimmer in any business the need for efficiency becomes greater. If you can imagine three airlines competing head-on on a particular route, if they can form some kind of alliance they can utilize their resources and perform better, they can have a much greater flow of traffic and in many respects share a lot of facilities. We are talking about economic benefits in terms of purchasing power, purchasing of spares, aviation fuel and the aircraft themselves. I see the alliances as a direct result of continued economic pressure and continued lowering of the industry margins, but at the same time the unstoppable rise of customer and consumer expectations.
How do you see the changing world of the airline business considering these alliances? Do you foresee all these alliances merging and becoming single airlines, and where will Ghana Airways be positioned?
We will definitely be well positioned in one of the key alliance groups. As at now, it is too early to tell which one. These alliances will lead to an agglomeration.
Can you tell us what your terms of privatization are?
What I can say is that privatization will bring about, hopefully, capital injection, which is much needed by the airline. As I explained to you, since its inception there has been no capital injection by its present shareholders, the government. For obvious reasons government had more other important things to do with their funds. However, privatization means greater opportunity and greater investment in the airline and there is a history all over the world of privately owned airlines out performing state-owned ones and that must be the way to go.
Why are these other airlines courting you if it’s not with regards to your privatization?
Out of the several airline alliances that exist worldwide very few involve equity participation. It is only about 10% out of the 600 commercial arrangements that do and even those that involve equity participation are more for strategic reasons than anything else. They are not really for commercial reasons, but to answer your question, we have been approached for purely commercial reasons.
So you are not looking for actual equity investment in Ghana Airways from foreign partners?
We are, because Ghana Airways is slated for privatization and there has to be equity investment in the airline. The only thing is that we as the airline are not handling privatization. It is being handled by the Divestiture Implementation Committee.
What do you think are the greatest challenges facing Ghana Airways?
The greatest challenges facing the airline are mainly threefold and they may all be interlinked. First and foremost, the airline has to deliver the highest standards of service to the traveling public. As of today, we compete against the very best in the world and there is nothing like falling short of those standards. We have to be able to achieve and sustain the high standards. The second thing is, we have to survive the increase in the competitiveness in our environment because the government, in order to make Ghana a gateway and an investment destination, has decided to liberalize the aviation policy which must mean that the competition will be increasing. The third and possibly in many respects the most important is to maintain the highest possible standards of personnel in the airline. They are the most vital resource who will help us achieve all our objectives. The future for Ghana Airways is very bright. Ghana Airways is definitely going to be the best on the continent. It is already fast approaching that and in addition to that I think it is going to be one of the finest carriers in the world.
What is your vision for Ghana Airways by the year 2020?
By the year 2020 in global terms Ghana Airways is going to be the single most important bridge between Africa and the rest of the world.
On a more personal level what would you say has been your greatest achievement or challenge while you have been the Chief Executive?
The greatest challenge has been managing people with a state-owned enterprise mind set to work as commercially orientated business; to try and get over the inertia that has existed in this company for so many years – to convert that inertia into results and goals that have been set out. Unfortunately, it is not my greatest achievement in the business because it is still on-going but I think the greatest achievement is to have overcome the inertia and gained momentum and that has set the ball of change and improvement rolling. Creating the awareness for us to survive and thrive in the future, this airline has to go through a change process. This is a total team achievement.
Do you plan to buy any additional planes?
As we speak (and this is one of the achievements of the airline) we are on the verge of doing this. Recently while in London I signed a $55 million loan with the KBC Bank. The money will be used to buy additional DC 9 and DC 10 aircraft. The greatest element of this, is that the raising of the funds has been solely on the strength of Ghana Airways and its future prospects. Very shortly, by November we would have moved from a four aircraft operation to a six aircraft operation. The largest fleet this airline has operated in over two decades.
As you know Forbes Magazine reaches more than four million readers, mostly businessmen. What is your final message to them?
Ghana Airways is an African organization rising to the highest standards. With Africa, particularly Ghana as the investment destination for the future, they should stay tuned for the privatization of the airline and harness the opportunity to actively invest in it. It will be one of the finest stars of the continent.
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© World INvestment NEws, 1999.
This is the electronic edition of the special country report on Ghana published in Forbes
December 13th 1999 Issue.
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