“We want to become Africa’s number one cargo carrier,” announces straight-talking Astral Aviation founder and CEO Sanjeev Gadhia. He seems to be on the way to achieve this aim thanks to a
smart and sustainable strategy. We spoke with Sanjeev in Brazzaville on the sidelines of the 47th Annual General Meeting of the African Airlines Association (AFRAA).
It is almost a miracle that Astral Aviation not only still exists but also can constantly expand its business. This must be seen against the background that the survival rate of newly founded African carriers is on average only 2.6 years! An extremely short lifespan.
New market entrants make typical mistakes
Why is this so?, we asked Sanjeev. His answer to this: “Newcomers start very quickly and enthusiastically, with mostly an ill-conceived strategy - if any, no adequate market analysis, little equity capital and often the wrong aircraft,” he says. Furthermore, interest rates in Africa are extremely high when purchasing an aircraft. They often surpass 12 percent, whereas in Europe it’s between one and two percent, in comparison.
So in short: the cost base is extremely high and the margins are usually very low. African Airlines, Sanjeev says, generate only one US dollar profit per passenger, far less than their European rivals which achieve $4 or airlines from the Middle East that statistically earn $10 per pax.
Going the extra mile
Given these facts, how did Astral Aviation, incepted in 2002 manage to stay in business until now, generating an annual turnover in the region of 40 million US$ (2014) with this year producing an even higher figure as it seems. Sanjeev’s answer to this: “We managed because we had the right strategy and started with aircraft that suited exactly our needs.” In comparison to the passenger world that is very glamorous, particularly in Africa, air freight processes are basically easier to perform, he weighs both segments. Touching the strategic approach he outlines that Astral Aviation literally speaking goes the extra mile. “Our main secret of success is that we fly to places nobody else dares to serve.” These include routes from the carrier’s home base Nairobi to embattled Juba in South Sudan or civil war crippled Mogadishu in Somalia. “At some of the destinations we serve we have an advantage because we land there since a number of years already, so we are well known,” Sanjeev states. However, no matter where you fly to, “make sure you have responsible people right on the spot, particularly in politically disputed regions.”
Smart partnership program
Another important strategic cornerstone is his carrier’s alliance policy. “Actually, we cooperate commercially with 20 airlines, including Lufthansa Cargo, all Gulf carriers, South African Airlines, Egyptair, Ethiopian, Kenya Airway or Rwandair to name some of them.” This pays off, since Astral Aviation feeds and de-feeds the Nairobi services operated by its partners and distributes their goods throughout the central and east African region.
Currently, privately owned Astral Aviation operates a mixed fleet of seven leased freighters, comprising of Boeing 727-200Fs, DC-9Fs, Fokker 27Fs, Cessna Caravans and a single 747-400F. While the smaller aircraft are operating on intra-African routes or utilized for charter projects, the 747-400F connects Nairobi with London Stansted while returning via Liege and Lagos to the Kenyan capital.
Fleet rollover and new sub-hubs
Sanjeev announces plans for partially rolling over his fleet, retiring the aging DC-9Fs and 727Fs and replace them with six Boeing 737-300Fs.
This is part of the carrier’s geographical expansion plan, which foresees the building of secondary hubs in both Lagos, Nigeria and Johannesburg, South Africa, hence, offering the market transport services in most parts of sub-Sahara Africa. Establishing both gateways is a task standing on Astral’s 2016 agenda. Once accomplished, the carrier has come one decisive step closer to realizing its goal of becoming Africa’s leading cargo airline.