African BizAv: The Impact of European Investment

Whether it is for an increased charter presence, trip support operations, OEMs establishing service centers, or aircraft sales, there is a growing amount of investment from Europe in Africa’s Business Aviation scene.

As an example, UK-based Satcom Direct has been looking to the continent for investment opportunities for more than a decade and believes that prospects are growing significantly.

Company Vice President David Falberg says there are several catalysts driving this trend, but in recent years the pandemic, coupled with healthy economies throughout the region have contributed.

“The pandemic helped many African governments better understand that Business Aviation is complementary to commercial airlines,” he elaborates. “For state-run airlines, Business Aviation had been perceived as competition, but the success of interlining during the pandemic demonstrated how Business Aviation can add value to a trip.

“As the economies strengthen, the need to travel is more significant. Yet, the distances [across Africa] are enormous, ground infrastructure is limited, and many routes can only be covered by flying.”

Michael Darko, CEO of UK-based private charter company Farringdon Jets, senses a growing realization that various countries across the continent are viable business hubs and attractive tourist destinations. “This recognition has led to a significant influx of both local and foreign investments.

“Consequently, there has been a notable increase in the demand for commercial airline services as well as private charter services. As a result of this heightened demand, there has been a natural and substantial expansion in the overall aviation-related support and services sector.”

Attractive African Investment Opportunities

According to Gavin Kiggen, Vice President at ExecuJet Africa, the combination of economic potential, increasing demand for aviation services, and the desire to tap into emerging markets makes Africa an attractive destination for European aviation investors.

“Africa offers attractive investment opportunities for global Business Aviation players due to its expanding middle class, resource-rich economies, and untapped aviation market potential,” he says. “There's a rising demand for charter services, maintenance centers, and aircraft sales in the region.”

Moreover, African governments, commerce, and regulators are beginning to better understand that Business Aviation is a valuable business tool responsible for driving economies and national wealth, which as a result has streamlined investment in the continent.

The realization of the value of Business Aviation to Africa is tied to the need for corporations to travel to expand and achieve business success, whether locally or internationally, to somewhat underserved regions (in terms of commercial transport). And that is why companies like Satcom Direct are strengthening their footprint.

“With some of the world’s fastest-growing economies located in Africa, a renewed interest in international commercial investment, and a growing interest in regional and national transport, Business Aviation is clearly on the rise,” Falberg emphasizes.

Potential Hurdles Along the Runway

Comprised of 54 countries, the challenges, and opportunities for investment in Africa are not necessarily equal.

Tighter restrictions imposed by some governments reflect a prevailing lack of understanding of the complementary nature of Business Aviation for the commercial air ecosystem. And these still hinder European companies considering investing in the African Business Aviation industry.

Falberg highlights that each country will have its challenges to overcome. 

“In some countries, the governments control all commercial aerospace activity, which impedes the growth of Business Aviation where it vies with commercial operations for ground handling and investment in infrastructure,” he explains.

“Financing for business aircraft is still very limited and is only generally provided to those acquiring large business jets. This reduces the amount of aircraft that can be potentially owned, and thus the potential customer base.”

And security can also prove challenging to potential investors, Kiggen adds. “Concerns about security and safety, including piracy, terrorism, and civil unrest can deter investment in certain regions, especially for Business Aviation companies operating in more remote areas.

“Corruption can be an issue in some African countries, adversely impacting the ease of doing business and increasing operational risks. Transparency and adherence to ethical business practices can be challenging.”

The challenges faced in Africa can vary significantly from one country to another, Darko explains. “In some countries, political instability poses a significant deterrent to foreign investment, creating an uncertain environment.

“Additionally, a lack of transparency and clarity in bureaucratic processes can dissuade investors – especially those not accustomed to operating within the region.”

Nigeria, though, shines as a beacon in terms of training and talent development, Falberg says.

“Human resources remain a challenge [more generally across Africa] as training options are limited,” he adds, “but in the more mature countries such as Nigeria, home grown talent is emerging, which acts as a force multiplier for adding value to the sector.”

The Role of Culture in Jumpstarting African BizAv Investment

Satcom Direct focuses on delivering the connectivity Business Aviation passengers and crew needed to achieve their mission objectives, and when the company first entered the market a different ecosystem was in place, Falberg says.

“Size, high costs, lengthy installation times, inflexible service plans, and expensive upgrade fees limited what was available to the emerging African aviation market.”

That’s very different today, with the company able to offer African customers advanced technology that is minimally invasive, can be easily retrofitted to several different aircraft/airframes, comes with flexible service plans, includes power-by-the-hour options, and has been futureproofed to make it compatible with future upgrades as the satellite and connectivity sector continues to grow.

For Farringdon Jets, connectivity of a different type is the main driver. “We identify significant opportunities in providing our services to facilitate connectivity to remote and less accessible routes for our clients,” Darko notes.

“By doing so, we aim to reduce the need for multiple connections and minimize travel time. And our focus on security in the charter industry enables us to offer end-to-end secure services, appealing particularly to clients with a risk-averse approach.”

Besides performing thorough market research, investing in a new continent like Africa requires knowing the local culture and what potential gaps need to be filled by investors before doing business there.

A widespread solution for that is having a physical presence in Africa, especially considering the great diversity of cultures there.

“Understanding and respecting local customs, traditions, and etiquette is crucial for European investors [in Africa],” says Kiggen. “This includes showing deference to elders, observing local traditions, and being sensitive to cultural nuances.

“Demonstrating social responsibility and commitment to the wellbeing of local communities can enhance a European company's reputation and credibility,” he adds. “Many African countries appreciate businesses that contribute to community development.”

Falberg stresses that the power of relationships must not be dismissed. “Any company looking to invest in Africa should spend time forging relationships, strengthening networks, and recognizing that this is a long-term opportunity,” he shares.

“Cultural sensitivity is as important in Africa as it is elsewhere in the world. The value of customer support cannot be underestimated; automation and technological responses cannot replace trained, professional expertise.”

In Summary…

With some of Europe’s Business Aviation players actively looking at investing in Africa, encouraged by the growing understanding of the benefits of BizAv in the continent, standards will continue to grow in terms of operator service standards, dedicated FBO facilities, dedicated and specialized MRO centers, and local companies seeking to achieve international operational standards.

For those considering future investment in the African Business Aviation industry, an understanding that every country on the continent is different will help you to better navigate the investment opportunities while managing expectations.

“While there isn't a one-size-fits-all answer, some countries and regions in Africa are often considered more attractive for investment due to their favorable conditions,” Kiggen concludes.

Nevertheless, look for other countries and regions to gradually become more open as they see the benefits Business Aviation investment brings to their neighboring regions…