Air France’s African operations facing turbulence amid diplomatic shifts and security concerns

Special Air France’s African operations facing turbulence amid diplomatic shifts and security concerns
Air France celebrated the 80th anniversary of the Bamako-Paris route in 2017. Shutterstock.
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Updated 23 October 2023
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Air France’s African operations facing turbulence amid diplomatic shifts and security concerns

Air France’s African operations facing turbulence amid diplomatic shifts and security concerns

TUNIS: The decision by the French Ministry of Foreign Affairs to place the West African nations that underwent coup d’etats under a “red alert,” a move initially aimed at ensuring the safety of the European country’s nationals, has taken an unexpected turn, adversely affecting aviation companies operating in the region.

This suspension is particularly painful for Air France, as flights between Paris and Bamako, Mali's capital, represent its third busiest route in sub-Saharan Africa, following only Abidjan and Dakar. The abrupt halt of these services not only deals a blow to Air France but also opens up opportunities for competitors.

This crisis marks a turning point in the operator’s relations with Africa, impacting a substantial 14 percent of its revenue. This underscores the broader issues facing airlines operating in regions with political volatility and highlights the need for a delicate balance between safety and business interests in the aviation industry.

Africa has experienced seven coups since August 2020, with the most recent military power grab occurring in Gabon, preceded by Niger, Burkina Faso, Guinea, Sudan and Mali. However, France’s diplomatic standoff with the military juntas of the region has not played in its favor.

President Emmanuel Macron has just disengaged from Niger, recalling its ambassador and vowing to withdraw its troops by the end of the year, marking a significant shift in France’s approach to the West African Sahel region.

Air France celebrated the 80th anniversary of the Bamako-Paris route in 2017, affirming its commitment to the region, even in the face of conflicts and security challenges. While interruptions did occur during the COVID-19 pandemic, sub-Saharan Africa remained a resilient region for the company, representing nearly 18 percent of its network revenue in 2021.

However, this figure dropped to 14 percent in 2022 as other destinations, particularly in Asia, began to recover. The current crisis, therefore, has both immediate and long-term implications for Air France’s presence in Africa and its overall revenue picture.

The consequences of the suspension extend beyond the airline itself, affecting diplomatic relations and offering competitors new opportunities. As the company navigates the complexities of resuming operations, it faces not only a logistical challenge but also the task of rebuilding trust with local authorities and passengers in these African nations.




Ovigwe Eguegu.

“These West African countries are redefining their ties with France, and it didn’t make business sense to blacklist them even though France’s security concerns are understandable,” Ovigwe Eguegu, a Nigerian policy analyst, told Arab News.

“The possibility of Air France losing market share to Turkish Airlines is real because beyond aviation, Türkiye is working to deepen its footprint in the region and France may just have handed Ankara another opportunity,” he added.

This underscores the competitive landscape of the aviation industry, where swift decisions can lead to a reshuffling of market dynamics. Turkish Airlines, along with other ambitious carriers, now sees a chance to expand their foothold in Africa at Air France's expense.

With regards to the number of seats, the situation was similar for both Niger and Burkina Faso, with both destinations having 4,000 seats each in August 2022. The abrupt cessation of services by Air France, starting from July 27 for Niamey and Aug. 7 for Ouagadougou, has resulted in the collective loss of several thousand seats, amounting to an estimated $3.2 million in lost revenue, according to Arab News calculations.

In August 2022, there were over 10,000 available seats for flights between Paris and Bamako, making it the third-largest destination in sub-Saharan Africa by capacity, according to aviation data provider OAG. However, in the following year, this number dropped significantly to less than 5,000 seats.




Turkish Airlines is set to take some of the market share from Air France. (Shutterstock)

Experts say that the Turkish carrier, known for its ambitious global expansion strategy, is well-positioned to capitalize on Air France’s absence. However, it is not the only player in the game. “African carriers, including Air Sénégal, which boasts an A330 fleet, and Corsair, which has continued its flights to Bamako despite French Ministry of Foreign Affairs’ recommendations, are also in the mix,” Alain Kazadi, a Congolese aviation expert, told Arab News.

“Corsair, in particular, has demonstrated resilience, continuing its services even during challenging times. It plans to operate more flights, further cementing its presence in the African market,” Kazadi added.

The situation also sheds light on the complexities of aviation agreements and the sovereignty of nations over their airspace. “Each state holds the authority to grant or deny permission to airlines, and these decisions can have significant ramifications for carriers,” Kazadi stated, emphasizing that, while bilateral agreements are common in aviation, they can be subject to change at any time.

“In the aviation domain, bilateralism is favored, but agreements are often confidential and can be questioned at any time,” Ovigwe said, commenting on the fact that the Malian Civil Aviation Agency has even gone as far as canceling Air France’s flight operating authorization.

Air France, on its part, has been attempting to downplay the situation, stating that they will need to submit a new authorization request when they resume flights, which they claim is a standard procedure.

Africa holds the distinction of being the continent with the lowest number of air passengers annually, accounting for approximately just 2 percent of global air traffic, encompassing both passenger and cargo transport. The primary driver of air travel within Africa has traditionally been international tourism.

However, the continent’s rapid population and income growth has long offered the promise of new opportunities in this sector, making it increasingly important to delve deeper into the African aviation market. One of the most significant hurdles faced by airlines operating in Africa has been the exorbitant cost of doing business, which far exceeds that of other regions.

In the year 2021, jet fuel and oil expenditures constituted approximately 31.2 percent of the overall costs for African carriers. While soaring global oil prices have affected the entire industry, jet fuel remains 12 percent more expensive in Africa compared to other regions.

Between 2010 and 2019, the premium stood at 18 percent, skyrocketing to approximately 40 percent by 2022. The infrastructural and logistical challenges unique to Africa have led to its carriers shouldering an exceptionally high premium in the global aviation industry.


Dubai’s economy grows 3.2% in Q1, driven by financial, trade and transport sectors

Dubai’s economy grows 3.2% in Q1, driven by financial, trade and transport sectors
Updated 19 sec ago
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Dubai’s economy grows 3.2% in Q1, driven by financial, trade and transport sectors

Dubai’s economy grows 3.2% in Q1, driven by financial, trade and transport sectors

RIYADH: Dubai’s economy saw 3.2 percent year-on-year growth in the first quarter of 2024, with its gross domestic product reaching 115 billion dirhams ($31.3 billion). 

The transportation and storage sector, as well as the financial and insurance activities sector, each posted a growth rate of 5.6 percent, while the trade sector recorded a 3 percent increase. 

This comes as Dubai’s economy continues its upward trajectory, with significant growth across key sectors, reflecting the government’s strategic agenda to enhance the emirate’s global economic standing and attract foreign investment. 

Dubai’s Crown Prince Sheikh Hamdan bin Mohammed Al-Maktoum said the latest GDP figures cement the fact that the emirate showcases robust economic indicators, the Emirates News Agency, also known as WAM, reported. 

“Dubai is progressing in accordance with a clear vision whose foundations were laid down and whose goals were defined by His Highness Sheikh Mohammed bin Rashid Al-Maktoum. What we witness today is a practical reflection of this vision, which has placed Dubai among the leading economic and commercial centers of the world,” said Sheikh Hamdan. 

He added that the accomplishments of the emirate underscore the collaborative endeavors and teamwork of diverse stakeholders in achieving the goals set out in the emirate’s comprehensive development plans for 2033. 

The government’s plans include the Dubai Economic Agenda and Dubai Social Agenda 2033, both aimed at elevating overall well-being and quality of life, while strengthening the emirate’s position as a leading global economic hub and enhancing its appeal as a destination for foreign investments. 

“Dubai’s ambition is limitless, and its success story will remain a role model for cities wishing to create a promising future for their coming generations. Our goal is to sustain success and establish a culture of excellence and leadership across all sectors in the emirate to preserve these gains and move toward new horizons of excellence,” he added. 

Other sectors also contributed to the overall economic expansion, with the information and communications sector rising by 3.9 percent, the accommodation and food services sector increasing by 3.8 percent, and the real estate sector seeing growth of 3.7 percent. 


Riyad Bank introduces first AI center in Saudi banking industry

Riyad Bank introduces first AI center in Saudi banking industry
Updated 21 min 53 sec ago
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Riyad Bank introduces first AI center in Saudi banking industry

Riyad Bank introduces first AI center in Saudi banking industry

RIYADH: Saudi Arabia’s digital banking has achieved a significant advancement after a leading bank introduced artificial intelligence technology, significantly enhancing its operational efficiency and customer experience.

Riyad Bank announced on July 23 the launch of the first-of-its-kind specialized center for artificial intelligence technologies and services in the Saudi banking sector, known as the Center of Intelligence.

The center will allow the bank and its business sectors to harness the latest AI innovations and derive significant value from advanced, proactive analytical insights, while advancing the bank’s vision with the highest standards of quality and innovation, according to a statement from the financial institution.

The move aligns with the broader national goals outlined in Saudi Vision 2030, particularly the Financial Sector Development Program, which works together with the Saudi Central Bank to provide banking services that are more accessible.

The program is committed to contributing to the stability and growth of the banking system to make it even more convenient by investing in technology and offering a wide range of financial products and services.


Education spending up in Saudi Arabia as POS transactions hit $2.9bn 

Education spending up in Saudi Arabia as POS transactions hit $2.9bn 
Updated 24 July 2024
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Education spending up in Saudi Arabia as POS transactions hit $2.9bn 

Education spending up in Saudi Arabia as POS transactions hit $2.9bn 

RIYADH: Saudi Arabia’s point-of-sale spending reached SR10.9 billion ($2.9 billion) in the week ending July 20, with the education sector recording the largest surge, according to official data.

Figures released by the Saudi Central Bank, also known as SAMA, revealed that this section of the economy saw a 10.4 percent increase over the seven-day period, with the total value of transactions hitting SR94.1 million.

The data also showed that spending in hotels increased by 0.2 percent compared to the previous seven days to reach SR270.2 million. 

This small rise came after larger increases in the sector in the previous two weeks, with a 17.9 percent surge from June 30 to July 6 and a 3.8 percent jump from July 7 to 13.

Despite growth in these sectors, POS spending in the Kingdom continued its reverse trajectory, declining by 8.8 percent after decreasing the week before by 9.8 percent. 

Spending on construction and building materials dipped by 5.2 percent over the most recent seven-day period, representing the smallest decrease of any sector compared to the previous week, to reach SR312.6 million.

The health sector witnessed the second-smallest dip, recording a 10.2 percent drop to come in at SR696.3 million.

Spending on clothing and footwear ranked joint-third in decline, along with electric devices, with both categories recording an 11.3 percent drop.

The highest value decrease was seen in the telecommunication sector, which posted a transaction total of SR89.5 million following a 13 percent drop.

Restaurant and cafe outlays dominated POS spending with SR1.67 billion, followed by SR1.64 billion on food and beverages, and SR1.41 billion on miscellaneous goods and services. Combined, these three categories account for 43.27 percent of the total POS spending value.

According to data from SAMA, 33.2 percent of POS spending occurred in Riyadh, with the total transaction value reaching SR3.63 billion, representing a 7.1 percent decline from the previous week.

Spending in Jeddah followed, accounting for 14.4 percent of the total and reaching SR1.58 billion, marking a 7.7 percent weekly negative change.

Expenditures in Hail, Tabuk, and Buraidah decreased by 14 percent, 12.4 percent, and 9.7 percent, respectively, with the figures reaching SR168.2 million, SR189.3 million, and SR249.6 million.

The smallest decrease was recorded in Makkah, which saw a 3.9 percent weekly change to come in at SR441.4 million.


Oil Updates – prices hover near lowest in 6 weeks

Oil Updates – prices hover near lowest in 6 weeks
Updated 40 min 42 sec ago
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Oil Updates – prices hover near lowest in 6 weeks

Oil Updates – prices hover near lowest in 6 weeks

LONDON: Oil prices traded around their lowest level in six weeks on Wednesday, as the northern hemisphere gets deeper into summer with limited signs of the expected fuel consumption surge the period usually sees.

Wednesday saw only a slight reprieve, as prices snapped three straight sessions of decline on falling US crude inventories and growing supply risks from wildfires in Canada boosted prices.

Brent crude futures for September rose 66 cents, or 0.8 percent, to $81.67 a barrel by 11:08 a.m. Saudi time. US West Texas Intermediate crude for September increased 65 cents, or 0.8 percent, to $77.61 per barrel.

The likely reason for the wider sell-off has been the “diminishing hopes of demand resurrection,” with “an admission from refiners that the summer leap in consumption is simply not taking place,” said Tamas Varga of oil broker PVM.

Prices had fallen to a six-week low on Tuesday, with Brent closing at its lowest level since June 9 on ceasefire talks between Israel and Hamas in a plan outlined by US President Joe Biden in May and mediated by Egypt and Qatar.

Prices also suffered due to continued concern that the economic slowdown in China, the world’s biggest crude importer, would weaken global oil demand.

WTI had lost 7 percent over the previous three sessions, while Brent shed nearly 5 percent.

US crude oil, gasoline and distillate inventories fell for the fourth straight week in the previous week, according to market sources citing the American Petroleum Institute, reflecting steady demand in the world’s largest consumer of oil.

Wildfires in Canada were also supporting prices. The fires have forced some producers to curtail production and were threatening a large amount of supply, ING analysts said.

“Market is nearing oversold territory and we still believe that the fundamentals support prices moving higher from current levels over the remainder of the third quarter on the back of a deficit environment,” ING analysts said in a note.

The API figures showed crude stocks falling by 3.9 million barrels in the week ended July 19, the market sources said, speaking on condition of anonymity. Gasoline inventories fell by 2.8 million barrels and distillates shed 1.5 million barrels.

That would be the first time crude stocks in the US fell for four weeks in a row since September 2023.

Official government data on oil inventory data is due for release on Wednesday.


Saudi Arabia issues $856m of sukuk in July

Saudi Arabia issues $856m of sukuk in July
Updated 24 July 2024
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Saudi Arabia issues $856m of sukuk in July

Saudi Arabia issues $856m of sukuk in July

RIYADH: Saudi Arabia completed its riyal-denominated sukuk issuance for July at SR3.21 billion ($855.7 million), according to the National Debt Management Center.  

The level once again remained above SR3 billion, following a June issuance level of SR4.4 billion, SR3.23 billion in May, SR7.39 billion in April, and SR4.4 billion in March. 

NDMC revealed that the Shariah-compliant debt product in July was divided into five tranches. 

The first tranche is valued at SR612 million and is set to mature in 2029, while the second amounted to SR159 million maturing in 2031. 

The third tranche’s value stood at SR961 million, maturing in 2034, and the fourth was a SR1.25 million tranche with a maturity date in 2036. 

The fifth tranche had a size of SR226 million maturing 2039. 

This is part of the Kingdom’s Sukuk Issuance Program, which started in 2017, with the aim of establishing an unlimited riyal-denominated sukuk initiative under the NDMC. 

The announcement from NDMC came as Kuwait’s financial center Markaz published its own figures for bond and sukuk issuance across the Gulf Cooperation Council region for the first half of 2024.

The analysis showed that Saudi Arabia was the leading player in the six months to the end of June, raising $37 billion through 44 issuances.

A report released by S&P Global in April said that sukuk issuance globally is expected to hover between the $160 billion to $170 billion mark in 2024, holding steady compared to the $168.4 billion seen in 2023 and $179.4 billion in 2022. 

According to the US-based firm, the issuance of this Shariah-compliant debt product began on a “strong footing” in 2024, with Saudi Arabia becoming a key contributor to the performance. 

The credit rating agency also noted that the sukuk market will continue to grow in the near term driven by financing needs in core Islamic finance countries, along with the ongoing economic transformation programs which are currently underway in nations like Saudi Arabia. 

It added: “The drop in issuance volumes in 2023, which mainly resulted from tighter liquidity conditions in Saudi Arabia’s banking system and Indonesia’s lower fiscal deficit, was somewhat compensated by an increase in foreign currency-denominated sukuk issuance.” 

In April, another report released by Fitch Ratings also echoed similar views and noted that global sukuk issuance is expected to continue growing in the coming months of this year. 

Fitch noted that economic diversification efforts and the rapid development of the debt capital market in the Gulf Cooperation Council region will propel the growth of the sukuk market in the coming months.