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in Air Transport / Features

Raising the flag

Posted 4 July 2018 · Add Comment

Air Algérie’s new boss, Bakhouche Alleche, tells Martin Rivers he is determined to set the troubled flag-carrier on a better path.

Algeria’s Transport Ministry denied rumours that Air Algérie is heading for bankruptcy in January, insisting that the flag-carrier enjoys the full support of the government, despite its “difficult financial situation”.
The intervention followed a series of walkouts by employees, who are angry at new chief executive, Bakhouche Alleche, for freezing planned wage increases. Those pay-hikes had reportedly been agreed by Mohamed Bouderbala, Air Algérie’s previous boss, but were axed as part of a newly launched turnaround plan.
Speaking shortly before the strikes, the airline’s top management insisted that boosting on-time-performance (OTP) should be a higher priority than lifting an already burdensome wage bill.
“We have [had] this problem for many years,” complained Zoheir Houaoui, the airline’s commercial chief. “We have to go the personnel of Air Algérie and tell them we have to improve.”
Alleche emphasised the positive signs that emerged last year – his first at the helm – when the airline’s OTP rate shot up to 67% from just 53% in 2015. “We did only what we should be doing [in the first place],” he shrugged. “It’s mainly human factors.”
But the strikes in January have now reversed those gains, tarnishing the brand and putting management back on a collision course with workers. Given that both sides are refusing to make the first concessions, further industrial action is widely expected.
Whatever happens internally at the company, Alleche and Houaoui are pressing on with efforts to improve the passenger experience – one that is generally seen as lagging behind that of other airlines in the region.
A spate of aircraft deliveries during Bouderbala’s time in office kick-started the renewal process. Eight Boeing 737-800s, two 737-700s, three A330-200s and three ATR 72-600s arrived in Algiers during or immediately before his short-lived tenure, which began in May 2015. The overhaul gave Air Algérie an enviable average aircraft age of just 11 years.
With the oldest 737s dating back to the turn of the century, however, “10 or 12” narrow-bodies are now in need of refurbishment.
“It takes two years to do,” Alleche said of the proposed work, which will introduce a standardised two-class layout of 16 premium and 132 economy seats. “We will install in-flight entertainment (IFE) and also replace the old seats with new ones that are lighter and more comfortable.”
Work is, meanwhile, under way to introduce a new passenger service system (PSS) linked to Amadeus that will make it easier to keep customers up-to-date about delays and disruption. “In case of a change of aircraft type or cancellation, we can do a mass mailing,” Alleche explained. “That is not possible today with the current system.”
Turning to operational matters, the chief executive admitted that Air Algérie’s network has remained relatively static in recent times.
Hungarian capital Budapest became a rare eastern European addition in 2016, but longstanding plans for a connection to Guangzhou, China have failed to take off. Air Algérie currently serves just two long-haul destinations – China’s capital Beijing, and Montreal in Canada. Western Europe remains by far its largest market, accounting for 22 stations including nine in France.
Six destinations are also served in west Africa, along with four in the Middle East (Beirut, Lebanon; Amman, Jordan; Cairo, Egypt; and Dubai, UAE). Elsewhere, Moscow in Russia, Istanbul in Turkey, Tunis in Tunisia, and Casablanca in Morocco complete the network.
Asked about opportunities for growth, the executives said that home continent Africa offers by far the greatest potential – particularly if combined with a new focus on connecting flights.
“We are looking to the south. We want to develop the Africa market,” Alleche confirmed. “Maybe Chad, maybe Cameroon, maybe Gabon – Libreville – central Africa.”
Houaoui added: “We see it as a big opportunity for Air Algérie also to improve the business with sixth-freedom flows. We had, previously, some issues regarding availability of the fleet and also the crew. Now we can say we are at the level [at] which Air Algérie can make a better performance.”
Transforming Algiers into a hub connecting Africa and Europe will not be easy. Regional competitor, Royal Air Maroc, captures most of the flows in its Casablanca hub, and Tunisair is known to be targeting the same model.
Nonetheless, the development of a new terminal at Algiers Houari Boumediene Airport should give weight to the strategy. The Western Terminal will have an annual capacity of 10 million passengers when it opens later this year, compared to just six million at the existing hub. It will feature vastly improved transit facilities that reduce connecting times between flights.
“The current airport doesn’t meet the requirements of the sixth-freedom business,” Houaoui admitted. “This is the main problem with the transit [traffic].”
As well as enhancing south-to-north flows between Africa and Europe, Alleche hopes the new gateway will encourage more travellers to stop in Algiers en route to Montreal and Beijing. Further down the road, he believes the addition of New York flights will cement the capital’s status as a bridging point for Africa.
“We would launch tomorrow if we had the right,” he said of the long-awaited New York route.
However, with US certification of Algeria’s Civil Aviation Authority likely to take “at least 18 months” once launched – and with no date set for its commencement – the chief executive is not holding his breath.
Continued expansion of the fleet is another consideration. Air Algérie currently deploys 56 aircraft: eight A330s, three 767s, 24 737-800s, five 737-600s, two 737-700C convertibles, 11 ATR 72-500s and three 72-600s. The recent deliveries mean that renewal is no longer a top priority, but Alleche remains mindful of the need for long-term planning.
“We are working on a plan of development maybe until 2025,” he said. “We think we need another 15 aircraft [for growth] … Including replacement units, all together [the number] is 35 aircraft.”
Narrow-bodies will make up most of the orders, allowing Air Algérie to maintain its focus on short- and mid-haul flying. Within the regional-aircraft space, Alleche said the Bombardier CSeries is among the models being considered to replace eight 72-500s.
“We can stay on the ATRs and maybe get the -600, or change maybe to the CS or Embraer,” he speculated. “It’s not decided yet.”
The flag-carrier’s three 767s – by far the oldest aircraft in its fleet, at 28 years of age – will also be withdrawn from service this year. But there is no plan to source replacements given the recent addition of three A330s.
Asked about the likelihood of Algeria following Morocco’s example by opening its skies with Europe – and what this would mean for the flag-carrier – Alleche seemed perplexed.
“As we see it now, the sky is already open,” he insisted. “The tourist market does not exist in Algeria at the moment. That’s why we don’t have the low-cost companies like EasyJet or Ryanair.”
Houaoui added that competition on French routes is particularly dynamic, with Aigle Azur, Air France, ASL, Vueling and Transavia all fighting for market share. While true, Air Algérie nonetheless commands 59% of seating capacity in the country-pair – an advantage that would almost certainly crumble if bilateral restrictions were abolished.
Instead of boosting foreign competition, Alleche believes the state should focus on improving the financial health of its ailing flag-carrier.
Lifting restrictions on ticket prices would be a good start, he said, noting that management are currently forced to seek government approval before setting internal fares. “We are losing money mainly on the domestic flights,” he complained. “We cannot charge the fare [we want] on the domestic flights.”
The opening of Algeria’s East-West Highway strengthens the case for free-market pricing, as travellers now have a cost-effective and convenient alternative to domestic air travel.
However, persuading both the state and its citizens to turn their backs on decades of socialist tradition is not easy. With Air Algérie bracing for more staff walkouts, management have yet to convince even their own employees about the best path forward.

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