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.
Short Url
Updated 23 October 2023
Follow

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.


Saudi Arabia committed to adhering to IAEA safeguards for its nuclear program, says minister

Saudi Arabia committed to adhering to IAEA safeguards for its nuclear program, says minister
Updated 5 sec ago
Follow

Saudi Arabia committed to adhering to IAEA safeguards for its nuclear program, says minister

Saudi Arabia committed to adhering to IAEA safeguards for its nuclear program, says minister

Saudi Arabia’s nuclear program is making strides as the Kingdom works toward diversifying its energy sources and supporting sustainable growth, said a senior minister.

According to Saudi Energy Minister Prince Abdulaziz bin Salman, the country is advancing its nuclear development, with a focus on adhering to International Atomic Energy Agency safeguards agreements.

“We are currently working with the agency to finalize all necessary subsidiary agreements for the Small Quantities Protocol to be effectively rescinded by the end of December of this year,” the minister said.

At the 68th General Conference of the IAEA in Vienna, Prince Abdulaziz highlighted the importance of the nuclear project in the context of Saudi Arabia’s broader energy transition.

The minister added that in July, Saudi Arabia submitted a request to terminate the small quantities protocol and transition to full implementation of the safeguards agreement. 

Under this agreement, the IAEA can verify that a state is fulfilling its international commitments and not using nuclear programs for weapons development. 

Prince Abdulaziz reiterated during his address that Saudi Arabia remains committed to meeting its international obligations and will utilize nuclear energy exclusively for peaceful purposes. 

The first atomic power plant, slated for construction at Khor Duwaiheen on the Arabian Gulf between Qatar and the UAE, is expected to produce 2.8 gigawatts of power.

This development aligns with Saudi Arabia’s strategic goals to reduce reliance on fossil fuels and enhance energy sustainability.

Launched in 2017, Saudi Arabia’s National Atomic Energy Project is a cornerstone of the Kingdom’s strategy to diversify its energy sources and reduce its dependence on fossil fuels.

The project aims to integrate nuclear power into the national energy mix, enhancing sustainability and fulfilling international commitments.

“Saudi Arabia continues to implement its national nuclear energy program with all its importance including the construction of the first nuclear power plant to contribute to the national energy mix, achieve sustainable national development, and fulfill international commitments,” said the energy minister. 

He also noted that Saudi Arabia has made substantial progress in its nuclear ambitions, having completed all essential administrative preparations for the nuclear regulatory framework and met the requirements for a comprehensive safeguards agreement. This progress reflects the Kingdom’s commitment to advancing its nuclear program while ensuring regulatory compliance and international cooperation.

He added that Saudi Arabia consistently prioritizes transparency in the development of its nuclear projects, emphasizing the Kingdom’s aim to serve as a role model for other nations. 

“In the Kingdom, we have nothing to hide. This is the driving force behind the Kingdom. We want to be a role model for other countries,” said Prince Abdulaziz.  

The Saudi minister also expressed his satisfaction with the IAEA’s efforts in upholding security within the nuclear sector. 

“We are pleased to see the fruits of the initiative to establish the IAEA’s International Nuclear Security Training Center in Seibersdorf and its tangible impact on strengthening the national capabilities of member states and the global nuclear security system,” added the minister. 

During his speech, Prince Abdulaziz also extended his congratulations to South Korea’s permanent representative, Sang Wook Ham, on being elected president of the IAEA’s 68th General Conference.  


Saudi Ministry of Commerce refers 44 business for prosecution over illegal competitions and discounts

Saudi Ministry of Commerce refers 44 business for prosecution over illegal competitions and discounts
Updated 12 min 33 sec ago
Follow

Saudi Ministry of Commerce refers 44 business for prosecution over illegal competitions and discounts

Saudi Ministry of Commerce refers 44 business for prosecution over illegal competitions and discounts

RIYADH: Saudi Arabia’s Ministry of Commerce has taken action against 44 commercial establishments for organizing contests and sales promotions without the necessary licensing. 

These businesses have been referred to the Public Prosecution for potential penalties under the Anti-Commercial Fraud Law. 

The ministry underscored the legal requirement for brick-and-mortar businesses and online stores to obtain a license before conducting contests or offering discounts. 

Failure to comply with these regulations constitutes a violation of the Anti-Commercial Fraud Law. 

The ministry stated it actively monitors compliance, aiming to identify violations and prevent deceptive or misleading practices that could harm consumers. 

Under the Anti-Commercial Fraud Law, violators can face severe penalties, including imprisonment for up to three years and fines of up to SR1 million. 

Additionally, the law permits the publicizing of violators’ names after definitive judicial rulings are issued by the competent courts. 

The Anti-Commercial Fraud Law was originally issued in 2008, with its latest amendment approved in 2019 to enhance its effectiveness in addressing evolving commercial fraud issues. 

The law was established to address a growing need for consumer protection in the face of increasing commercial activities, both in traditional marketplaces and online. 

It aims to ensure transparency, fairness, and legality in commercial transactions by imposing strict penalties on businesses that engage in fraudulent practices such as misrepresenting products, false advertising, and conducting unlicensed promotions or contests. 

By enforcing this law, the Saudi government seeks to maintain a trustworthy market environment, safeguard consumer rights, and uphold fair competition among businesses as the commercial sector grows. 

Vision 2030 is transforming the Kingdom’s commercial sector by enforcing regulations like the Anti-Commercial Fraud Law. 

The undertaking aims to increase the private sector’s contribution to the gross domestic product from 40 percent to 65 percent and boost non-oil exports from 16 percent to 50 percent of the non-oil GDP. 

It also seeks to attract more foreign direct investment, targeting an increase from 3.8 percent to 5.7 percent of GDP. These initiatives drive market transparency, ensure legal compliance, and foster a more diverse and competitive economy. 

In March, the ministry initiated punitive measures against several commercial establishments and individuals for organizing retail lottery prize draws that required consumers to make purchases as a prerequisite for participation. 

The ministry summoned the offending parties to proceed with legal actions before referring their cases to the Public Prosecution. 

At the time, the ministry emphasized that businesses and individuals should not impose purchasing requirements for consumers to enter contests, offers, or raffles. Additionally, practices such as including a contest voucher within a product or raising prices during promotional events are prohibited. 

The ministry reiterated that demanding payment or purchase as a condition for contest entry constitutes a lottery activity, which is banned in the Kingdom under current regulations. 


Qatar’s industrial production rises by 6% in July, driven by mining sector growth

Qatar’s industrial production rises by 6% in July, driven by mining sector growth
Updated 16 September 2024
Follow

Qatar’s industrial production rises by 6% in July, driven by mining sector growth

Qatar’s industrial production rises by 6% in July, driven by mining sector growth
  • National Planning Council reported a month-on-month increase of 5.5% in the mining sector in July
  • Non-energy private sector continued to grow at the beginning of the second half of 2024

RIYADH: Qatar’s industrial production index rose by 6 percent in July, reaching 103.2 points, driven by the mining sector, official data showed. 

The National Planning Council reported a month-on-month increase of 5.5 percent in the mining sector in July, primarily due to higher production of crude oil, petroleum, and natural gas. Other mining and quarrying activities also grew by 11 percent. 

In the manufacturing sector, the index increased by 7.6 percent in July compared to the previous month. The growth was led by refined petroleum products, which rose by 13.3 percent, followed by basic metals at 12.4 percent, and chemicals and chemical products at 7.2 percent. 

This comes as Qatar’s non-energy private sector continued to grow at the beginning of the second half of the year, according to the latest Purchasing Managers’ Index survey from the Qatar Financial Center, compiled by S&P Global. The PMI registered 51.3 in July, down from June’s 23-month high of 55.9 but still indicating overall improvement in business conditions. 

Qatar’s monthly IPI is a key indicator of industrial sector performance, measuring output across mining, manufacturing, electricity, and water supply. 

Each sector has different weights in the index, with mining and quarrying at 82.46 percent, manufacturing at 15.85 percent, electricity, gas, steam, and air conditioning supply at 1.16 percent, and water supply at 0.53 percent. 

The July data also revealed a 4 percent decline in the IPI compared to the previous year. The mining sector experienced a 5 percent year-on-year decline due to reduced crude oil and natural gas output, despite a 3.6 percent increase in other mining and quarrying activities. 

The manufacturing sector saw a slight annual decline of 0.3 percent, driven by decreases in basic metals and cement. 

Meanwhile, the electricity and gas sector saw a 7.2 percent rise in electricity production compared to June and an 8.2 percent increase compared to July 2023. The water supply sector grew by 6.5 percent month-on-month and 0.5 percent year-on-year. 

In a report released last month, Standard Chartered forecasted that Qatar is poised to restore government revenues to pre-2014 oil price shock levels and double its economy by 2031. 

The UK-based bank attributed this recovery to Qatar’s strategic position in the global energy market and its ongoing efforts toward economic diversification. 


Saudi Arabia’s capital market institutions post 27% rise in operating revenue to $1.1bn: CMA

Saudi Arabia’s capital market institutions post 27% rise in operating revenue to $1.1bn: CMA
Updated 16 September 2024
Follow

Saudi Arabia’s capital market institutions post 27% rise in operating revenue to $1.1bn: CMA

Saudi Arabia’s capital market institutions post 27% rise in operating revenue to $1.1bn: CMA

RIYADH: Saudi Arabia’s capital market institutions reported a 27 percent surge in operating income in the second quarter of 2024 – reaching SR4.1 billion ($1.1 billion).

Data released by the Kingdom’s Capital Market Authority indicated that the standout performer was asset management, contributing the largest revenue share at 31 percent, totaling SR1.28 billion — a 22 percent rise compared to the same period last year.

Investments followed closely, accounting for 30 percent of income at SR1.21 billion, which marked a 15 percent decline from the previous year.

Dealing activities ranked third, generating SR603.67 million, representing a 15 percent share and a 22 percent year-on-year increase.

Meanwhile, investment-banking revenues soared by 66 percent, reaching SR406.18 million and comprising 10 percent of total income.

The combined net profit, reflecting earnings after all expenses, zakat, and taxes, decreased by 3 percent to SR2.05 billion, down from SR2.13 billion in the same quarter last year.

This decline was largely driven by a rise in non-operating expenses, significantly impacting the bottom line.

On the trading front, the Saudi market led with SR900.35 billion, capturing 94 percent of the total traded value by local capital market institutions.

In contrast, US markets accounted for just 6.1 percent, totaling SR58.56 billion. The remaining share was distributed among other markets, including those in the Gulf Cooperation Council and the wider Arab world, Asia, and Europe.

According to the report, these institutions saw a significant boost in their aggregate balance sheet, with total assets climbing 29 percent to nearly SR73.25 billion, up from SR56.83 billion in the same quarter of 2023.

Liabilities surged by 68.73 percent year-on-year, reaching SR27.79 billion. Meanwhile, shareholders’ equity grew by 13 percent compared to the previous year, totaling SR45.42 billion.

According to a KPMG report, the Saudi stock exchange has swiftly evolved from a local market with limited options into the world’s 10th-largest by market capitalization.

This remarkable growth is largely attributed to reforms implemented by Tadawul and the Capital Market Authority, aligning with Vision 2030’s goals of economic diversification.

The report highlighted that increased foreign investment has significantly bolstered these reforms.

The Kingdom’s capital markets have remained resilient despite global economic uncertainties, such as high inflation and geopolitical tensions.

In 2022 alone, they attracted SR50.8 billion through initial public offerings and rights issues. This surge in market activity is fueled by improved liquidity, heightened investor confidence, and the government’s push for privatization and economic expansion, all supported by favorable oil prices.

Saudi Arabia’s CMA launched a strategic plan for 2024-2026 to enhance its debt market and asset management industry, highlighted during the September Debt Markets and Derivatives Forum held in Riyadh.

The plan includes over 40 initiatives focused on increasing market transparency, introducing special-purpose acquisition companies, and facilitating Saudi depositary receipts to attract local and international investors.

Key goals include boosting the stock market’s value to 80.8 percent of gross domestic product by 2025 and expanding the debt market to 24.1 percent of GDP. The strategy also emphasizes regulatory reforms, fintech growth, and improved investor protection to establish the Kingdom as a leading global financial hub in line with Vision 2030.


ADX imposes mandatory insider trading blackout ahead of Q3 results 

ADX imposes mandatory insider trading blackout ahead of Q3 results 
Updated 16 September 2024
Follow

ADX imposes mandatory insider trading blackout ahead of Q3 results 

ADX imposes mandatory insider trading blackout ahead of Q3 results 
  • Restriction prohibits board members, executives, and employees with insider information from trading shares until earnings are fully disclosed.
  • Rule designed to ensure transparency and prevent insider trading ahead of major financial disclosures

RIYADH: A mandatory 15-day blackout on insider trading has been enforced by the Abu Dhabi Securities Exchange, effective Sept. 16, as companies prepare to release their third-quarter 2024 financial results. 

The restriction, in line with Securities and Commodities Authority regulations, prohibits board members, executives, and employees with insider information from trading shares until the earnings are fully disclosed. 

According to a report by state news agency WAM, the decision follows Article 14 of the Securities and Commodities Authority Board of Directors’ Decision No. 2/R of 2001, which outlines regulations on trading, clearing, settlement, transfer of ownership, and custody of securities. 

The rule is designed to ensure transparency and prevent insider trading ahead of major financial disclosures. 

Insider trading involves the buying or selling of a publicly traded company’s stock by individuals who possess non-public, material information about the company. This practice is not allowed because it gives an unfair advantage to people with inside information, which can affect the fairness of the market and reduce trust among investors. 

The report also stated that the resolution will be shared with the SCA, all listed companies, ADX departments, accredited brokers, and investors. 

Established in 2000, ADX facilitates the trading of various securities, including shares from public and private companies, debt instruments, exchange-traded funds, derivatives, and other financial instruments approved by the UAE’s SCA. 

On Aug. 30, WAM reported that ADX has become the most active and liquid ETF market in the Middle East and North Africa region, with notable value and volume since the start of the year. 

ETF trading on the exchange totaled 1.86 billion dirhams ($506.46 million) in the first eight months of 2024. The trading volume for ETFs on ADX reached approximately 450.7 million units, with 19,853 transactions recorded. 

Earlier this month, ADX also welcomed the listing of $1 billion in green bonds issued by Abu Dhabi Future Energy Co., known as Masdar. 

The green bonds are split into two tranches: the first, valued at $500 million, has a fixed interest rate of 4.87 percent and matures on July 25, 2029; the second tranche, also $500 million, offers a 5.25 percent interest rate and matures on July 25, 2034. 

WAM reported that the bond issuance witnessed strong demand from both international and domestic investors, with subscription orders peaking at $4.6 billion, representing an oversubscription of 4.6 times.