Rwandair CEO Interview

Transcript

Speaker 1:

Right. Let me just click on that. Okay. So, a very warm welcome to Yvonne Mazi Malala, who's the CEO of Rwanda, Rawandair, sorry. Welcome to CAPA Live, Yvonne, and great to have you with us.

Yvonne Manzi Makolo:

Thank you. It's great to be here.

Speaker 1:

Let's let's kick off with, we hear remotely quite a lot about Africa, and obviously any news is always bad news, which is why it's news, but I guess not everything is so bad in Africa. You've managed to keep it at bay in many countries until recently, but on the negative side, vaccination levels are very low, but I think that's pretty much the case for a lot of the world too, but from your perspective, overview from an airline CEO's perspective of how things look on the continent and in terms of your operations beyond the continent as well.

Yvonne Manzi Makolo:

Well, you've summed it up very well. A lot of African countries have managed to contain the pandemic pretty well for the last, almost, year and a half now, including Rwanda, which is where we operate from, but unfortunately, given the issue of vaccine inequity, a lot of African countries have not been able to get the vaccines that they had hoped for, including Rwanda, so we're seeing a situation where for the entire African continent, less than 2% of the population is vaccinated, which is very worrying, and which gives us a lot of concern in the aviation industry in terms of the food we start off of the industry.

Now, in a lot of the developed world, in the US and in Europe, and in other areas, we were seeing much higher levels of vaccinations and we're also hearing a lot of calls for the request that people... To allow only people who are vaccinated and this is a concern for us because if you have almost the entire African continent not vaccinated, how are people gong to travel?

Speaker 1:

Yeah.

Yvonne Manzi Makolo:

So from our side, we really want to see a situation where we still allow people to travel wherever they need to travel as long as they have a negative COVID certificate, and the ones who are vaccinated can be allowed to travel freely, but we have to allow for both, then that's the only way we can have some level of certainty in terms of the restart of the industry. For now, there's a lot of start, stop. You wake up one day and this country has completely closed off, or this other country has completely closed off, or they're limiting the number of frequencies that airlines can operate into the country, so there's a lot of uncertainty which makes planning extremely difficult. And from recently the AFRA, which is the African Airlines Association, the estimate that the loss is for... The cumulative losses for the African airlines last year was close to $10.2 billion. The first quarter of 2021 was about 2.6 billion, second quarter, 2.4 billion, so if this continues, then we're going to see some... It's going to be a bit of a concern for African airlines.

Speaker 1:

Yeah. And this was an industry that we're really not very profitable in in the first place, even coming into this was... Just going back to the connectivity locally, Yvonne, how much are you able to fly as an airline within Africa? Are there some routes that have been relatively stable and open?

Yvonne Manzi Makolo:

Yes. We've managed to restart most of our African routes. We suspended some of the thinner routes, so we have about three routes which we've suspended for a few months now. We're not ready to restart until things change, but most of the African routes are up and running, especially the regional routes, and we really want to focus on connecting Africa even better than we were before. It's still an underserved market and we believe that there's a lot of potential in terms of blinking the African market to each other and beyond the African continent. And we're also very excited because with the implementation of the African Continental Free Trade Area, which came into effect this year, we're likely to see a lot of trade between African countries, a lot of movement of goods and people across the African continent, so that's huge potential for us and that's another reason why we need to get this pandemic under control and get Africans vaccinated.

Speaker 1:

So, on that issue of freight, are you able to carry, perhaps, freight only operations, almost? Are you still sustaining those?

Yvonne Manzi Makolo:

Yes. That's what kept us going. For the airline, we're grounded for close to five months [inaudible 00:06:36] the initial wave of the pandemic, so between March and August, we're doing freight only operations using our passenger aircrafts and we continue to do so on some routes, especially the European routes, and we've seen a big growth in our freight business. It used to account for about 6% of our revenue, now it's closer to 15, but again, that's also because of the drop in the passenger revenue as well, but there's a lot of potential in freight and we'll continue to focus on that using our belly capacity as well as [inaudible 00:07:15].

Speaker 1:

Is that into Europe as well, or just within the region?

Yvonne Manzi Makolo:

We've been doing freights only to London actually, because given the restrictions in London in terms of passengers, bringing in passengers, we couldn't fly into London with passenger, so we were operating cargo only flights in order to sustain the horticultural industry in Rwanda and keep the exports going, so we've been doing that since January of this year. We're going to restart passenger flights to London, fortunately, because the flight ban has been lifted.

Speaker 1:

That's good.

Yvonne Manzi Makolo:

Yes. So we'll be carrying cargo in our belly again.

Speaker 1:

Right. So in terms of... We were talking about the border requirements and vaccinations, and in terms of what Rawandair requires, is that just testing on departure and on arrival, is that the sort of basics?

Yvonne Manzi Makolo:

Yes. Rawandair has been very consistent. Right from when we started, we opened our air space, so what is required for arriving passengers is a COVID negative PCR certificate taken within 72 hours of departure, and the same thing for people departing from Rwanda, a negative COVID certificate is required. And for arriving passengers, the good thing is, there's no requirement for seven day quarantine, as soon as they arrive with a negative PCR certificate, they're tested again here at the airport and then they wait for their results, which takes a few hours, and then they can...

Speaker 1:

Right.

Yvonne Manzi Makolo:

If they're [inaudible 00:09:04] interested.

Speaker 1:

Yeah. Very practical. Talking to our specialists in this region, which also, in a lot of ways, that goes what you're saying about Africa in terms of low levels of vaccination, and they were saying, partly because of that, but also because of the way the virus is creating new variations, that the testing is actually going to be probably one of the main ways of securing open gateways in the future. Vaccinations will be one thing, but it will be the testing that is really critical. So, it's probably something that's going to last.

Yvonne Manzi Makolo:

Yeah, absolutely. And I think on the side of testing, what we need to see is the prices of testing going down, because that's very prohibitive for a lot of people, and some consistency in terms of the pricing, because it runs from $20 all the way to 100 and something dollars, that's in addition to the price of the ticket, and in some cases, people who have to quarantine in hotels, so this makes travel extremely expensive right now. And another... Something that compliments the testing and which is what is being implemented now is having the digital health certificates, because with testing as well, we have a challenge in a lot of cases where people get fake COVID certificates, which again, reinforces a lot of government's decisions to close their borders or to restrict certain nationalities from coming into their country. If you can have the digital health certificates, which can verify that the tests are authentic, then that will give them assurance to open up and allow travel between the different countries.

Speaker 1:

This was a survey done by one of our partners here in this region. I think eight out of 10 people believe that most of those paper passports anyway were fake, which is pretty alarming, and of course, it is so easy to do it.

Yvonne Manzi Makolo:

Yeah, absolutely. And you can't blame a lot of governments if you get statistics like that. 80% of the certificates are fake, so why would...

Speaker 1:

Well, that's what they think anyway. Yeah.

Yvonne Manzi Makolo:

That's what they really... But I think once we get the digital health certificates up and running, that will go a long way in terms of giving people peace of mind.

Speaker 1:

Are you coordinating through IOTA or with the EU? It's obviously very complex at the moment.

Yvonne Manzi Makolo:

Yes. In terms of the digital health certificates, we're currently trialling with the IOTA, we're also working with the... African Union has their own digital health platform as well, and CommonPass as well. So we're talking to all three of them and trialling with them to see what's best for our passengers

Speaker 1:

Already pretty complex though, isn't it?

Yvonne Manzi Makolo:

Yes.

Speaker 1:

[inaudible 00:12:17] standards and once you start digitising, everybody's got different systems underlying that.

Yvonne Manzi Makolo:

Absolutely.

Speaker 1:

I've got to say, it's obviously somewhere we've got to go, but a road that we have to go along, but it does seem to have so many obstacles along the way in terms of interoperability, in terms of validity as well, and also, of course, issues like privacy, which come into this quite frequently. So, yeah.

Yvonne Manzi Makolo:

Yeah. It is complex, but given the fact that we'll have to live with the COVID for a while, I think it's the only way to [inaudible 00:13:00].

Speaker 1:

Got to be practical. Making a big right-hand turn, which I guess it is if you're heading north from Rwanda. Your relationship with Qatar, let's talk about that a bit, Qatar Airways. How's that going and well, how's it going generally? And then we can talk some more specifics about it.

Yvonne Manzi Makolo:

It's going very well. It's still down a bit [inaudible 00:13:30] very well. For the airports, as you know, Qatar [inaudible 00:13:38] airport that's being constructed in Rwanda, so that's been finalised and the construction is [inaudible 00:13:47] smoothly. For the airline transaction where Qatar is taking [inaudible 00:13:52] Rawandair, that's still in progress. I can't say much about that, but it's moving along well.

Speaker 1:

Yep. And so tell me, how does it work? What's the scheme? You're the distributor regionally within Africa, is that the concept? You're well situated geographically.

Yvonne Manzi Makolo:

Yeah. That's the beauty of Rwanda, being very centrally located within Africa, which gives us a very good reach for all sides of the continent, but I believe Qatar sees the potential of the African market, which I mentioned, it's extremely underserved and we want to partner with Qatar to bring world-class service within the African continent. So, in terms of connectivity, quality of service, affordability, and give Africans the aviation experience that they deserve.

Speaker 1:

There's obviously... There's been a lot of... It's been a lot of difficulty since COVID in terms of setting it up with the structure. Would involve, for example, would you be co-chairing with Qatar? Is that part of the, the product? Yeah.

Yvonne Mazi Malala:

We're looking at all those areas, co-chairing as well, which will be key, and feeding, de-feeding each other, but that's still being worked on, but it's very exciting and we're looking forward to it, with partnering with such a world-class airline, so it's very exciting, a bright spot in this very dark period in the aviation industry.

Speaker 1:

Yeah. Well, we certainly need a few of those. Yeah. And it's very good in terms of skills exchanges and that sort of thing, isn't it? Having this sort of relationship then.

Yvonne Manzi Makolo:

Absolutely. So the potential for transfer of knowledge, and as I said, just helping us in terms of improving the quality of the product that we currently have, the potential is immense, so we've been looking forward to tapping into that.

Speaker 1:

Yeah. It's certainly a terrific airline, and if I could ask you one thing, which I perhaps shouldn't ask you, but as you well know, I'm sure Akbar Al Baker has been on the record suggesting that no woman could run his airline. Do you reckon you could? I might tell him what you said.

Yvonne Manzi Makolo:

I'm a big believer in the fact that women can do anything that men can [inaudible 00:16:42] even better, so that will be the response, but with Akbar, I'm sure he was joking, but he's been extremely supportive and I'm working very well with him and he's a great motivating when it comes with pushing us as Rawandair as well, and pushing me [crosstalk 00:17:04].

Speaker 1:

Remarkable, man. Yeah.

Yvonne Manzi Makolo:

Yes.

Speaker 1:

So, I'd have to confess, I don't know much about the infrastructure at the airport, but is it... Are there moves to enhance the whole infrastructure at the airport? [inaudible 00:17:25] the long-term projects, of course.

Yvonne Manzi Makolo:

So the current airport, the Kigali International Airport, it's been a lot of work that's been done in terms of increasing the capacity of the airport, but given the ambition of the airline, as I mentioned, we need a much bigger airport, which is what is being constructed right now. So we're looking at the new airport, the first phase handling close to 7 million passengers, so, which is a big jump from what we currently have at the Kigali International Airport, which is about between 1.5 and 2 million passengers. So that allows the airline to really grow, and also positions Rwanda very well as a hub, as a regional hub, which competes with other hubs in the area, so that's exciting, both for the airline and for the country.

Speaker 1:

Mm. Yeah. I was going to say that because there's a lot of difference between an airport that caters mainly for point to point operations and one which aspires to be a central African hub in a lot of ways. What are the models you're looking at there? Obviously, Ethiopian and Addis are longstanding distributors through the region. Is that the model that you're looking at?

Yvonne Manzi Makolo:

Well, we are looking at being a hub and a good alternative to whether it's Addis or Nairobi or Johannesburg, giving people an option to transit through Kigali, and as I mentioned, Qatar is taking 60% of the airport, so it's most likely it's going to be very similar to what we have in [inaudible 00:19:17] currently.

Speaker 1:

Mm. Given what you're saying about the state of the industry, and obviously the massive debt that's been accrued in an industry in Africa, which was already not where it wanted to be, anyway, if you're in a position now to springboard with Qatar Airways, I'll ask you the question but I'll put it to you as a proposition that this is probably a very good time to be looking at expanding in that way because there isn't really going to be a lot of alternative once we start to come out from under this cloud.

Yvonne Manzi Makolo:

Yeah. No, you're absolutely right. This partnership is coming at really the right time. For Rawandair, even prior to the JV with Qatar, the potential JV with Qatar, I think the pandemic has really, I could say the silver lining in this whole disaster, it's given us an opportunity to really re-look at our operations, really streamline our network, [inaudible 00:20:29] fleet. Basically, we've had to shrink a little in order to be ready to grow when things pick up, so we're a leaner operation, and then with the combination of partnering with Qatar, then I think the potential for growth is immense.

Speaker 1:

Yeah. Do you have any plans at this stage to increase your fleet?

Yvonne Manzi Makolo:

Down the road, yes, we are looking at increasing it, but as I mentioned, right now, we're trying to survive, so we're keeping it as it is for now, but in the coming years, we will be expanding the fleet.

Speaker 1:

Yeah. And obviously none of us knows, but from an airline planning point of view, you do have to have some sort of timescales within which you're doing things, don't you? What sort of... Do you have any time plans in that respect? That obviously have to be very flexible.

Yvonne Manzi Makolo:

Yes. No, with [inaudible 00:21:32]. We can work on a 25 year plan given what's happening now, but we're looking at a five-year plan and we are looking at increasing our fleet, close to doubling our fleet in the next five years, but again, that's based on what's happening. We have to re-look at the plans as things unfold. As you say, it's very difficult to plan right now, but that's the current plan, but we're constantly revisiting it based on what's happening in the markets.

Speaker 1:

It's pretty hard, isn't it? As I said, you do have to plan, but when everything's moving around you, it's not easy. What about Europe, for example? How do you see that as a market for Rawandair?

Yvonne Manzi Makolo:

Europe is a very good market for us. It was before the pandemic and it'll continue to be a key market for us. We currently operate to Brussels and London. Brussels, because a lot of the African diaspora live in Brussels, and London is a key market for us, not only for exports, but also for tourism. The UK, I believe, is number two in terms of tourism to Rwanda, but also in terms of connectivity beyond London, especially to the US and Canada, which is where a lot of the diaspora, African diaspora, live as well. So Europe will continue to be a key market for us and once things stabilise, we're looking at we... We currently tag London to Brussels, we'll probably untag that and add more frequencies to the European continent.

Speaker 1:

Right. And through your relationship with Qatar, you're entering the family of one world as well, which presumably should give you some planning prospects.

Yvonne Manzi Makolo:

We hope so, that's something down the road, but that's another great area of potential growth for the airline.

Speaker 1:

Do you have any other partnerships within Africa? Have you talked about them?

Yvonne Manzi Makolo:

Yeah, we have coaches and Interlines with other African carriers [inaudible 00:24:00] and SAA before they stopped, and a number of other smaller carriers, and we want to grow this even further. We believe partnerships is the way to go in terms of increasing our footprint within the African continent, so we will be focusing on that a great deal, not only within Africa, but beyond.

Speaker 1:

Yeah. And that one of the aspects that we tend to be looking at as we come out of COVID, hopefully come out of COVID. We've got a way to go yet. But because a lot of the airline systems networks are going to be broken and have to be reconstituted, that partnership is going to be something that everybody's going to be looking to do because they just won't be able to get back to the connectivity that they had before.

Yvonne Manzi Makolo:

Yeah, absolutely. Again, as I mentioned, the fact that the continent is underserved and the fact that the pandemic has impacted so many airlines, we're seeing that connectivity shrinking even further, so we need to find a way to work together, the different African airlines, in order to make sure that we can connect, we can grow this footprint even further, otherwise, it's going to be a big challenge for a lot of African countries in terms of moving from point A to B. So this is something that's being discussed a great deal through AFRA, the African Airlines Association and one-on-one with the different African carriers.

Speaker 1:

I remember many decades ago actually saying that intra African cargo was one of the great potential areas for growth. It's still not really being satisfied, is it? It's not where it could be.

Yvonne Manzi Makolo:

Absolutely not. Both for cargo and passengers, the potential is immense and it's not where it should be, as you say. And as I mentioned, with all these initiatives happening within the African continent, we need a good, strong aviation industry to support these initiatives, including the continental free trade area that's being established, but it's not only in terms of connectivity, it's also in terms of the Visa regimes in a lot of African countries where we need to see more opening up and allowing people to travel freely across the different countries without requiring lengthy Visa processes. So that goes hand in hand with opening the skies, it's also opening the borders as much as possible and allowing Africans to freely trade within the continent.

Speaker 1:

That's right. Yeah. I wasn't thinking so much about the Visa issues, but that has been a real bug bear, isn't it? A real constraint on growth. So if you overlay that with the issue of having health passports as well, which is another form of Visa, it's going to be a challenging prospect, but maybe looking on the bright side, that could actually be the log jam breaker to... If you can get discussions at health level, then you get in the door, you get your foot in the door. It's [crosstalk 00:27:25].

Yvonne Manzi Makolo:

Yeah, that's a very good way of looking at it. This could be it, really, after years and years of trying to reach that blockage, but I believe with the opening up of the African skies, with the revisiting the taxes that are being imposed on airlines and the charges which are being imposed, if this can be re-looked in order for fairs to go down, then we can get a lot more people moving across the continent

Speaker 1:

Well, you're doing a great job in that direction under very difficult circumstances, and I apologise for making you the representative of the entire continent of Africa, but you're doing pretty well in Rawandair. Lovely to see you, Yvonne. Thank you very much for joining us on CAPA Live.

Yvonne Manzi Makolo:

Thank you.

Speaker 1:

And good luck. Hope things go well.

Yvonne Manzi Makolo:

I need this, thank you. [inaudible 00:28:22].

Speaker 1:

Bye-bye. Thanks.

Yvonne Manzi Makolo:

[inaudible 00:28:26]. Bye-bye.

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