Angola’s airline plans expansion TEY_post_Eduardo-FAIREN

TAAG has a historic opportunity to become a regional operator at a very strategic connection point, the new Luanda International Airport.

Eduardo FAIREN CEO TAAG

Angola’s national airline plans expansion

October 12, 2023

Eduardo Fairen, CEO of TAAG, talks to The Energy Year about the company’s performance in 2023, how sustainability factors into its strategy, its strategy for expanding its fleet, its plans in terms of new destinations and the importance of codeshare agreements for its regional and global expansion. TAAG is Angola’s national airline.

How did TAAG perform in 2023?
Even though we managed to break even for the very first time in a long time, the first quarter of 2023 was influenced by external factors. Mainly we were affected by the high inflation we are experiencing all across the world, the delays in the supply chain and the lack of capacity available in the market to attend to some very key and important matters, such as maintenance and parts provisioning and supply.
In the second quarter of 2023, we were also heavily affected by a higher US dollar value. Simultaneously, we have the depreciation of the Kwanza.
Traffic is returning slowly back to 2019 levels, but economic factors are nevertheless affecting the market in terms of the level of travelling.

How does sustainability factor into TAAG’s strategy?
At the moment, our utmost priority is to survive. We need to be pragmatic about that. There is an important issue that affects African airlines, which is access to technology. Today, there are planes using cutting-edge turbine technology, and there are new engines that are being certified for use in commercial aviation. Those new engines are saving between 30% and 40% on fuel compared to current engines.
The problem is that new engines are linked to new aircraft, and all new aircraft are already sold until 2030. Even if you have the money today, you cannot have a brand-new aircraft from the production line until 2030. How can we implement new fuel-saving measures in two or three years? Our production model should change, but of course that will take many decades. Sustainability policies necessarily have to focus on the long term.

What is TAAG’s strategy for expanding its fleet?
The fleet strategy that we have is based on the opening of the new Luanda airport. This new airport gives us the opportunity to not be so restricted by space as we are today. Moreover, operationally speaking it’s much better because they have two parallel runways, so you can have co-ordinated operations and increase the number of flights during peak periods.
We need to expand to fit the size of this airport to keep the market share that we have today and to expand our footprint in the rest of the region. A strong airport needs a strong airline because otherwise the airport will be economically unfeasible.
We have consequently established a strategy to start increasing our footprint based on a fleet of brand-new narrowbody aircraft, which are more efficient than other aircraft because they save a lot on fuel and other costs. These cost savings are why we decided to move to the Airbus 220: this model is the only one available in the market that fits what we are looking for, a narrowbody model for about 150 passengers.
We have already agreed on 15 aircraft that will operate across the whole African continent. However, we want to have a much wider fleet of about 30 aircraft. We have some elements that we need to discuss with our engine manufacturer before we go looking for more aircraft. At least we have these 15 that will cover our needs for 2024 up to Q1 2026. Then we’ll start the search for a new widebody. We’re still in conversation with Airbus and Boeing to see if it’s viable to have one of the new widebodies.

 

What are TAAG’s plans in terms of new serviced destinations?
This is our strategy: cover all the destinations that TAAG covered in the past and some others that show good prospects in terms of profitability. Our idea is to connect Luanda with the main cities in the region using our Airbus 220s. Some countries have two cities with significant business. Some of them have one, and some have none. However, because traffic is so low that it is lower than the Airbus 220’s capacity, it would be uneconomical to use larger planes.

How important are codeshare agreements for increasing TAAG’s regional and global footprints?
The interline agreement with GOL Airlines is working very well. We want to expand this codeshare agreement to more destinations. The codeshare agreement with Iberia has to be reviewed. We are in conversations with some other airlines regarding codeshares as well. We’re focusing on Africa, Europe and South America. Asian markets are very difficult to penetrate, and we cannot operate below cost.

How strategic is TAAG’s cargo business?
Cargo is something that we have expanded into strongly. We’re still in conversation with ANAC [National Civil Aviation Authority] to resume our cargo activities. We want to have more cargo aircraft, but the problem is there are no cargo aircraft on the market: all new cargo aircraft are sold. However, we can convert some passenger aircraft to cargo aircraft.
Despite this bottleneck, we clearly want to continue exploring the cargo market beyond belly cargo. We want to have regular cargo services in place to certain destinations, especially in Angola, where there is such a large quantity of imports coming from abroad. Instead of landing in Johannesburg and then going by road to Angola, some cargo can land directly in Angola. If the conditions are unfavourable, we need to see what alternatives we can take.

How important is TAAG in helping Angola become a regional logistics and economic hub?
TAAG has an advantage as a company: its position. Geographically, Angola is very well placed and is relatively close to South America – about 1,000 miles [1,610 kilometres] from the nearest hub or connecting point. That is a very significant advantage.
Angola and TAAG, as the flagship carrier of Angola, have the advantage of having probably the best airline service agreement in the world with Brazil. We are increasing our presence in Brazil, and we also have some other plans for Brazil that we want to explore. We see that the Brazilian market is very powerful, very demanding and also the gateway to Asia from South America. Until recently, we were the only operator linking the Austral region of Africa with South America.
I think TAAG has a historic opportunity to evolve not only in size but also in presence to become a regional operator at a very strategic connection point, the new Luanda International Airport. TAAG is making a transformation today from being an Angolan company for Angolans to becoming an Angolan company for Africans. This is a really big change.

How significant is the 2022 Open Skies agreement between Angola and the US?
The signing of the Open Skies agreement with the United States was a longstanding dream for us. An air service agreement with the USA is something very important for us, as with China and Russia. For us, it will be very interesting to eventually operate in the United States.
This is all linked to TAAG being properly certified, of course. To fly to the United States, we need to certify our airlines and complete some of the very hard certification processes that the FAA [Federal Aviation Administration] has.
The FAA will work with the Civil Aviation Authority in Angola in the second half of 2023 to see how fast the Civil Aviation Authority of Angola will be certified. The process is lengthy and will take probably one to two years. Then, we can start thinking about operating flights to the United States.

Read our latest insights on: