FLUG REVUE August 2003: Ghana Airways seeks better times

NEW BEGINNING FOR GHANA AIRWAYS

By Andreas Spaeth

What does an airline do when it has only five planes, only one of them is still flying and that one, too, is grounded with a “Technical”? When for years it has been sitting on $160 million of debts thanks to ongoing mismanagement and corruption, its sole shareholder, the government, is reluctant to shell out any more money, and the fourth CEO since the beginning of 2001 cannot make any headway with the problems? When the company, bloated with 1,500 employees, many of them unproductive, has more drivers than vehicles and more secretaries than typewriters, let alone computers, and the payroll is only intermittently paid? They put their trust in God. At the beginning of June, the hopelessness among the workforce of Ghana Airways had reached such proportions that they flew an expatriate preacher back to the capital city, Accra, from London and joined with him in a three-hour prayer session, during which they beseeched the Almighty for help. For a company whose business is after all superterrestrial transportation, this is not actually such an absurd idea. And in fact, barely a few weeks have passed since then but already the airline seems to be making a comeback thanks to Star Alliance member, bmi British Midland. But all in good time.

On Tuesdays, the suspense always mounts at Hamburg airport. “Is it coming or is it not? And what plane will it be?” ask employees and passengers, as the scheduled arrival time of flight GH 713 from Accra via Düsseldorf draws nearer. Since 9 December 2002, Hamburg has been the newest destination of the West African airline, which services its long haul routes from Accra to New York JFK, Baltimore Washington, Rome, London Heathrow, Düsseldorf and now Hamburg with only three DC-10-30 aircraft, aged between 20 and 29 years old. Last year, however, the financial situation at Ghana Airways was so precarious that lenders in Dakar, London or New York kept grounding one or other of its planes until the Ghanaian government, as owner of the company, bailed it out. Two of the tri-jets have been stuck in Rome with Alitalia since the spring of 2003, as there were problems over payment following the performance of D checks. “It was a terrible mistake to put so much money into those old jalopies,” FLUG REVUE was told on condition of anonymity at Ghana Airways, where everyone expects the tri-jets to soon be sold to Biman Bangladesh or carted off to South America.

For since April 2003, both employees and customers of the airline have suddenly discovered what flying can be like. Since then, instead of travelling in the weary seats of elderly 1970s jets with no in-flight entertainment, passengers bound for the east coast of the USA from Ghana have been enjoying a modern Airbus A330-322 after the only remaining DC-10 was grounded due to inadequate strengthening of the cockpit doors. The Airbus, formerly in service with LTU as D-AERD, still bears the logo of its insolvent previous owner, Khalifa of Algeria, and is now flying for Ghana Airways for a limited period. Passengers on the European routes are still having to make do with the DC-10 when a replacement is not sent out due to technical problems or some other irregularity. Thus at the end of 2002, for a time an Airbus A320 belonging to the Egyptian airline, Lotus Air, flew the Ghana Airways services to Düsseldorf and Hamburg, while in April 2003 the Germans were amazed to find themselves ushered onboard a Boeing 767-200 from Cameroon Airways.

All the marketing effort that Hamburg airport had put into wooing another airline has thus not exactly landed it with an easy customer. It was because it had only one intercontinental scheduled service on its books, an Iran Air flight to Teheran, that the Hamburgers went to so much trouble. They pointed out meticulously to the Africans that the overwhelming majority of the Ghanaians resident in Germany live in the north of the country, and that in fact there are 6,000 of them in the Hamburg area. “We chose Düsseldorf in 1983 more for strategic reasons, because it has a central location and slots were available,” explains a Ghana Airways representative. It has taken 20 years for the Ghanaians to come to the area in which most of their customers live. For nearly all their passengers fly in a kind of “ethnic run” between Germany and Ghana; they are overwhelmingly expatriate Ghanaians returning to their home country.

The new service got off on a shaky footing: several times the DC 10 arrived so late in Germany that it was forced to land in Cologne/Bonn because of the ban on night flying in Düsseldorf and Hamburg, and passengers from the north of Germany had to be taken by Hapag-Lloyd Express to their onward flight to Africa. Meanwhile Hamburg passengers have already experienced the dubious pleasure of one of Ghana Airways' specialities, only too familiar to its regular customers: the last-minute postponement of a flight by 24 hours. “We are sometimes a bit naughty,” the airline admits. “Anyone who flies with Ghana Airways can never be sure whether the flight will actually take off on the scheduled date,” complains Natasha, a London lawyer with opulent dreadlocks, originally from Ghana, who frequently travels between the two countries. “Whenever I can, I fly with British Airways.” As reliability is not Ghana Airways' forte, it uses attractive fares and generous baggage allowances to attract passengers: a return flight from Germany to Ghana costs around €430 in Economy Class and €1,300 in Business Class, and all passengers can take 50kg of luggage with them without paying a surcharge. This is still not enough to attract European business travellers. Even the Hamburg Africa Club recently preferred to book a Lufthansa flight with two stops en route for a business trip over a non-stop Hamburg-Accra flight with the Africans.

Ghana is a politically and economically stable country with a population of around 19 million, its area is about the same as the former West Germany, and since the unrest in its neighbour, the Ivory Coast, it has been a kind of haven within West Africa. When one first arrives at Accra-Kotoka airport one can see that things are moving forward here: the redesigned, generous arrivals area makes one forget that this is a developing country. The notoriously overcrowded and chaotic old departures area is soon to be closed and replaced by the new building complex, so that at least Kotoka airport appears to be equipped for a better future as regional hub. Having handled a mere 630,000 passengers last year (up by two percent on 2001), however, the airport, whose dimensions appear somewhat excessive for this number of passengers is, would appear to be still some way away from performing that role. With an average of 24 flight movements per day, it is more like a typical regional airport in Europe or America. The Europeans account for most of the flights. British Airways and KLM operate non-stop flights to Accra from their hubs, whereas Swiss, Lufthansa (five services per week since mid-June) and Alitalia fly to Ghana from Europe via Lagos, Nigeria. Ethiopian Airlines flies from Addis Ababa, also with a stop at Lagos, Nigeria. The other African carriers, Egypt Air, Air Ivoire, SAA, Air Burkina and Kenya Airways, profit like everyone else from Ghana's open sky policy, also newcomer Bellview Airlines from Nigeria with its A300-600 service from Lagos. “The fact that our competitors fly so often hurts us,” admits Fred Taylor, responsible for International Relations, in an interview with FLUG REVUE.

Altogether 320,000 passengers (an increase of 14%) were carried last year by the national carrier – quite an achievement when one considers that it never had more than four planes airborne at any one time during the year. No less remarkable is the airline's clean slate in the matter of safety: despite extremely difficult conditions, Ghana Airways has never sustained any accidents or serious incidents in its flying operations. One of the two DC-9-51's that it uses on short haul flights languished for an extended period with SAS in Sweden having its D check performed at the beginning of 2003, and during its absence the Ghanaians leased an identical model from Million Air in South Africa. Then the first A330 arrived to fill a gap, and this could be a model for the future. There are already plans for a new Airbus fleet. This would comprise three planes from the A320 family, which would be used to cover the European routes, and another two A330's for the American routes.

But Ghana Airways' comeback will not be all plain sailing. A visit by FLUG REVUE to the headquarters of the then airline chairman, William Bray, in the spring of 2003 was sobering, not least because right outside his office there hangs a board listing his numerous predecessors: no fewer than 31 managers have been at the helm of this airline since it was founded in 1958, and William Bray's days turned out to be likewise numbered. In June he was succeeded by Philip Owusu, who had previously worked for the telecommunications authority and thus, like Bray, is not obviously an aviation expert. Another sign of the never-ceasing interference of the state, a phenomenon much criticised among long-serving employees of the company. “As before, the government makes decisions and puts the affairs of the airline in the hands of people who don't know anything about aviation,” complains employee representative Roland Mosore. Other voices in the company say they are hoping that the new chairman will finally bring stability.

Already in the office of his predecessor, there were several very decorative Airbus models in Ghana Airways livery on show. But even William Bray, a former banker without obvious airline affinity, was under no illusions. “If I had the choice, then tomorrow I would have new planes, but we have $146 million of debts and have to make do with kitchen scraps,” is how Bray describes his dependence on scanty handouts from the government. Fred Taylor puts it even more bluntly: “The government has so many problems to worry about that Ghana Airways has to fight to get any attention.” Nevertheless the President has assured the airline that he regards it as a strategic tool for the country and he will make sure that it does not go bankrupt.

Efforts to win a foreign partner last year failed spectacularly. One reason was the mire of systematic corruption which is the norm in these parts, as experts on the country confirm: it was recently discovered that Ghana Airways has over 94 different accounts.

The long-awaited strategic partner was to have been the South African Nationwide Airlines, a small, private airline that operates within South Africa with an ancient fleet consisting of the Boeing 727-100, the Boeing 737-200 and, until recently, the BAC 1-11. A cry of outrage ran through Ghana's press, and eventually the plan was dropped. The Ghanaians' debts on their own would have been sufficient to force Nationwide into bankruptcy. “The whole Nationwide discussion was an insult to Ghana Airways,” says chief pilot Collins Fosu.

In the middle of June there was a new development, which caused great excitement among all those involved: the government wants to set up a new holding company called Fly Ghana in partnership with bmi British Midland, resulting in complete restructuring of the airline within three to five years. The most important aspect of this deal, apart from the job cuts, is the fleet planning: the USA routes and the London route will be operated using two Airbus A330-200's, one DC-10 will be retained for secondary international routes, one Fokker 100 will be purchased to service Ghana's neighbours, and a “suitable” aircraft will be found for new domestic services to be started for the first time, a market that has been almost totally ignored to date. Chief pilot Fosu would be quite happy with this: “The biggest problem is the fuel consumption of the DC-10 – with the same payload, it swallows 40 percent more fuel than an Airbus A330-200.” The most senior of the 58-strong cockpit crew at the airline also often thinks about operating Airbuses. “With only 110 passenger seats, the A320-200 would be ideal for our London route. With that we would be able to offer five to seven flights a week instead of only three with the DC-10.”

But meanwhile it is imperative that the company's reputation is improved. “We need a stabilised operation, a reliable product and a flight schedule that we stick to,” says Captain Fosu. But the losses are still mounting – apparently the last year that the company made a profit was 1994. Since 1998, it has been losing about $3.5 million per month, the equivalent of around $100,000 per flight.

But Ghana Airways claims that since July 2002 it has been making profits again and has even intermittently reduced its debts from $167 million to $146 million. No one can quite explain this sudden turn of fortune. “The new CEO inspires more confidence that we won't go bust, so more people are flying with us,” is Fosu's vague explanation.

He goes on to mention that he is about to fly to New York. Ghana Airways is still the only West African airline to have its own landing rights in the USA. “We always have six days' leave there before we fly back,” he remarks cheerfully. Such inefficiency, which in today's climate is quite anachronistic, goes hand-in-hand with the overmanning: according to Sam Jonah, chairman of Ghana Airways' Supervisory Board, with its 1,407 employees and five aircraft his company has 282 employees for every plane, compared with only 199 at KLM and 167 at BA. Fosu is opposed to speedy job cuts. “Before we can improve these figures we have to change all our business processes and computerise a lot of things.” Instead, all salaries were cut by 35 percent in 2001.

Ghana Airways certainly has the potential to become a successful airline with Accra the undisputed hub for western Africa. Since the multinational Air Afrique went into receivership, the Ghanaians are the only airline that could aspire to these heights. But so far services within the region are totally underdeveloped. “We need to concentrate more on the African market,” said the last CEO, William Bray, “but we have the wrong aircraft for that. 50- to 60-seater planes would be ideal for that, but where do we get the money to buy them?” Chief pilot Collins Fosu sees the problem as well. “If you want to travel from Accra to Conakry in Guinea, which actually is only two hours away from here by air, then you have to either wait several days for a connection in Abidjan on the Ivory coast or else fly directly via Brussels.” Ghana Airways' most important route is the connection to Lagos in Nigeria, which the airline itself flies only five times a week. Nearly all the foreign carriers therefore also stop in Nigeria on their way to Accra. Lufthansa is giving a special kind of development aid: on its five weekly A340 services Frankfurt-Lagos-Accra and back again, it gives the Ghanaians 50 seats on the domestic African leg. “Ghana Airways sells the tickets and keeps the revenue, we carry the passengers in its name as we don't have any traffic rights of our own,” says Michael Wurche, head of Lufthansa's operations in West Africa. “We are doing everything to keep Ghana Airways in the air and are currently training five of its management trainees each for a year, free of charge.”

Victor Osei, aviation expert from Ghana and an engineer with Bombardier in Toronto, is sure of one thing. “The airline is a victim of poor management. With good direction and better service it could be profitable.” Just on their own, the routes to London and New York would be guaranteed to enjoy high utilisation and make a respectable profit; moreover, potential investors would pay a lot of money for the landing rights in Heathrow and JFK alone. Finally, the Ghanaians could make considerable savings if they did their own maintenance. As successful models, Osei cites the profitable Ethiopian Airlines and Kenya Airways, as well as West African carriers like Air Gabon and Cameroon Airlines. In short, he says, “It is perfectly feasible for African airlines to make a profit too.”

From page 24 of FLUG REVUE 8/2003

Last updated 7 July 2003

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