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in Air Transport / Features

The Phax of life

Posted 23 November 2018 · Add Comment

Tunisian businessman and politician Mohamed Frikha tells Martin Rivers why he is bringing Syphax Airlines back from the dead.

Mohamed Frikha could not have picked a worse time to establish his airline than 2011, the year in which Tunisian President, Zine El Abidine Ben Ali, was ousted in a popular revolt that served as the spark for the Arab Spring uprisings.
Although it seemed like a period of renewal and change in Tunisia – and, indeed, the north African country has fared much better than its neighbours in the years that have followed – fortune was not smiling on Syphax.
Flag-carrier Tunisair threw down the first hurdle by instructing its ground-handling division to block its rival’s very first flight. Then airspace in Libya – a vital market for any Tunisian airline – was shut down as that country spiralled into civil war.
Soon after, a pair of Daesh terror attacks targeting holidaymakers in Tunis and Sousse decimated tourism demand in Tunisia. And, finally, technical problems with the airline’s Airbus A330 grounded its only long-haul route to Montreal.
“We did not have luck,” Frikha shrugged, speaking via video link between the Tunisian and French offices of Telnet Group, the technology company he launched in 1994 and which has been hailed as a model for Tunisian entrepreneurship.
“For a start-up company, the first three years were very difficult – the flights to Libya stopped and all the tourist flights were cancelled – so we could not resist. We were obliged to stop our activities.”
Syphax’s grounding in July 2015 seemed to mark the end of Frikha’s strategy of building an intercontinental hub that would link Africa and Europe via Tunis, with spokes also extending to key cities in north America and east Asia. Its A330 and two A319s were returned to their lessors, and an order for six A320s was scrapped.
The airline’s demise also snatched away air connectivity from Sfax, Tunisia’s second largest city and Frikha’s home town, which has always lacked the busy flight schedules of smaller but more tourist-friendly destinations like Djerba and Monastir. Despite having a population of 330,000, barely two flights a day take off from the city.
With millions of dollars of outstanding debts, thousands of angry customers, and a state-owned rival happy to restore its monopoly on scheduled flights, few believed that Syphax would return to the skies.
But Frikha never lost sight of his dream.
“The first time when Syphax has been stopped all the people said, ‘It’s finished for Syphax. Syphax is dead’,” he recalled.
“I’m the only person who said, ‘No, Syphax will come back’ – because I want to come back and fulfil my obligations. It’s very important for my reputation. It’s very important for the reputation of the civil aviation [sector] in Tunisia. And it’s very important for the country also – [to show] that we take our commitments to the European and American companies seriously.”
Though dissolving the airline would have been an easier and less costly option, Frikha has spent the past three years drafting a strategy to restructure its balance sheet and repay everyone left out of pocket.
He likens the recovery plan – which has been approved by the court in Sfax – to a Chapter 11 reorganisation in America. As well as providing immediate compensation for passengers affected by the failure, it lays down a decade-long roadmap to clear the company’s debts in full.
“We have the people that haven’t used their tickets… The first thing we will do is reimburse them and we will give them also free flights, because they have waited for us,” Frikha pledged.
“We have many providers from Tunisia and also from France – like the French Civil Aviation [Authority], the airport companies, Eurocontrol – and with these providers we will do the necessary to respect our commitment and to pay them for their debt. “Then also we have the people who are [invested in Syphax] in the stock market. For these people also Syphax can come back and the stock can have value.”
Describing his desire to meet these obligations as a “personal challenge”, Frikha said expectations are particularly high because of his recent ascension to the political sphere. The businessman entered Tunisia’s Parliament in 2014 as a deputy for Ennahda, the moderate Islamist party that surged to power after the 2011 revolution. Although it fell into second place in the 2014 election, Ennahda remains a key powerbroker in the country’s coalition government.
Not content with his parliamentary role, Frikha even launched a presidential bid in the same year by running as an independent. The campaign failed to attract many votes but succeeded in raising his profile.
With key figures in Tunisia’s business and political landscapes now lending their support – or at least reining in their opposition – Frikha is tantalisingly close to re-launching Syphax.
The airline took delivery of two Bombardier CRJ-900s this summer, leasing the 90-seater aircraft from Spanish regional carrier Air Nostrum. It plans to soft-launch operations as an aircraft, crew, maintenance and insurance (ACMI) provider upon receipt of its air operator’s certificate (AOC), which was believed to be imminent as this article went to press.
“It will take some months – five, six months – until we will have the traffic rights and we will have our programme for flights,” Frikha said, suggesting a launch date of spring 2019 for regular operations. “For this period we will not leave the aircraft on the ground. We will lease them in ACMI mode.”
He expects both units to be placed with an unnamed African carrier during the interim wet-leasing period.
When Syphax begins its scheduled operation, the CRJ-900s will be put to work linking Tunis, Sfax and Djerba with destinations in Algeria, France, Italy and Spain. Paris and Toulouse are likely to be among the first route launches.
Mohamed Hamdi, a former director of Nouvelair, Tunisia’s main charter carrier, has been appointed chief executive. Though not as well-known as some of his predecessors – notably Mohamed Ghelala, the former president of the African Airlines Association (AFRAA), and Christian Blanc, the former boss of Air France – Hamdi has local expertise and an understanding of how to avoid confrontation with Tunisair.
Under his watch, Syphax will become a very different animal to the company that ceased operations three years ago.
First, the carrier will no longer deploy narrow-body and wide-body jets in its own right. It plans, instead, to focus on regional operations, developing what Frikha sees as an under-served market in the Mediterranean basin.
“It’s a model which has [had] success in Europe. We have the example of Air Nostrum,” he affirmed.
“Development of these kinds of flights in north Africa is very important. It’s more important in this region than in Europe, because in Europe behind the aircraft you have high-speed rail (TGV), you have highways – but in this region there are no highways, no quick trains.”
Frikha still believes that sixth-freedom traffic has a role to play at Syphax, citing the potential to connect towns in eastern Algeria, Libya and the Middle East with Europe via a stop in Tunis. But these flows will be pursued more cautiously than before.
The second strategic shift relates to Tunisair. Syphax was always seen as an enemy by the country’s flag-carrier, which suffers from a bloated workforce and legacy inefficiencies and has tried to minimise its losses by keeping a stranglehold on competition.
Unable to change practices at the parastatal, Frikha is extending an olive branch.
His new network will be designed to complement the state-run operation, providing feeder traffic for Tunisair’s medium-haul and long-haul flights while avoiding head-to-head competition.
Deploying low-capacity CRJ-900s will help Syphax steer clear of Tunisair’s mainline business. And, although the flag-carrier has a regional subsidiary of its own – Tunisair Express, which also has one CRJ-900 as well as two ATR 72-500s – it primarily focuses on domestic flights. Naples and Palermo in Italy and Malta are the subsidiary’s only scheduled international routes.
“The regional flights [from Tunisia in general] are not very developed and we will not be a competitor to Tunisair Express,” Frikha stressed.
In a meeting with Elyes Mnakbi, Tunisair’s boss, Frikha even gave the flag-carrier first refusal to wet-lease Syphax’s CRJ-900s. “That shows the situation is different and we will work in partnership with Tunisair and with other Tunisian companies,” Frikha said. “It’s for the best of the country and for the best of the civil aviation activity in Tunisia.”
The third change to Syphax’s business model could be the most dramatic, though details are thin on the ground for now.
As well as cooperating with Tunisair at home, Frikha wants to find a strategic partner in Europe or the Middle East – specifically one that has A320s or Boeing 737s and is in need of operational and technical support. In short, Syphax plans to broaden its business activities to include pilot qualification, maintenance, repair and overhaul (MRO) services, and some form of operational “off-shoring” – growing its capabilities markedly but without stepping on Tunisair’s toes.
“With our partners, we will develop our activities, and not necessarily from Tunisia,” Frikha explained.
“Today, some very important companies have to leave their aircraft on the ground because they have no crew, because they have problems for the maintenance of these aircraft. We, in Tunisia, have this [human-resources] capacity. What we offer to our partners is to improve their mechanics and all the operation for these aircraft. And our partner can use our capacity.”
He said that Syphax is ready to qualify hundreds of local flight crew as well as open a maintenance base, harnessing the country’s low-cost workforce to the advantage of foreign airlines.
Despite implying that any narrow-bodies would be positioned overseas, Frikha added that Tunisia’s geographical location and Syphax’s access to traffic rights might also be seen as attractive. That appeared to leave open the possibility of a Tunisian base with larger aircraft, though he remained adamant that Syphax “will not do partnership with someone who will make some problems with Tunisair”.
“We need to start our activities to be a serious partner to discuss the future,” he said, when pressed further. “And we wait also for the ‘open skies’ agreement [between Tunisia and the European Union], which is very important to develop this partnership.”
That agreement, signed in December 2017, promises to dismantle bilateral restrictions between Tunisia and the EU, opening the floodgates to low-cost-carrier competition just as Morocco did a decade ago.
As yet there is no timetable for its ratification, and even once implemented it will exclude the country’s main gateway, Tunis Carthage Airport, for a period of five years.
But, in sharp contrast to Tunisair and its affiliated unions – who have angrily opposed the deal, warning of unfair competition from Europe – Frikha sees liberalisation as an opportunity to empower the country’s workforce. He draws parallels with the free-trade agreement that the EU and Tunisia struck for manufacturing industries in 1995.
“In that time all people in Tunisia were afraid. They said our factories would close. But the Tunisian Government had good negotiations for the transition,” he recalled. “If we negotiate the support of the European community with this open skies agreement – if we have support for training, for the development of the airports – we can have a success story in aviation like we have now a success story in industry.”
It is fair to say that Frikha is hungry for success on many fronts.
As well as reviving Syphax and launching a political career, he is rapidly moving Telnet into new technologies. In recent months the company began a partnership with France’s ArianeGroup to build the first Tunisian nano satellite; it teamed up with Japan’s Fuji Imvac to manufacture drones; and it announced plans for an office in Silicon Valley in America. Much of its work will be completed at the Sfax Aerospace Valley, a new site that Frikha intends to become a hub for space technology.
With Telnet’s share price rising faster than any other company on the Tunis Stock Exchange in 2017, investors seem confident in his ability to deliver results. The hope is that Syphax will share in the success and further propel its namesake city.
“If you want to develop the economy of Tunisia it cannot develop only in one town, Tunis,” Frikha concluded. “It should be developed in two or three towns. Sfax should be the second leg of the economy of Tunisia.
“My philosophy is that the person who loves his country should love his region. I love my region, Sfax, and I will continue with its development.”
 

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