RwandAir betting big on Qatar Airways stake deal
RwandAir is on the verge of finalizing a major deal with Qatar Airways as early as next month, a move that is likely to impact the region’s aviation industry currently dominated by Kenya Airways and Ethiopian Airlines.
The agreement, which has been in the pipeline for close to five years, will see Qatar Airways take up a 49 percent shareholding in RwandAir. This strategic collaboration is expected to bring substantial benefits to both airlines and impact East Africa’s air travel market.
“It’s been going on for a while, we have been discussing it for almost five years. So, now, we’re really at the tail-end of it,” its chief executive Yvonne Makolo told the Financial Times.
According to Makolo, the RwandaAir-Qatar Airways partnership is poised to offer Kigali’s flag carrier the means to expand its operations and fleet at a time when the demand for air travel within Africa is projected to grow.
US aircraft maker Boeing estimates that the growth of air-passenger traffic within Africa is set to grow four times in the next 20 years, an opportunity that RwandAir seeks to capitalize on to expand its footprint across the continent.
“The expected aggregate net profit of $30.5 billion in 2024 is a great achievement considering the recent deep pandemic losses. With a record five billion air travelers expected in 2024, the human need to fly has never been stronger. Moreover, the global economy counts on air cargo to deliver the $8.3 trillion of trade that gets to customers by air,” said Willie Walsh, the International Air Transport Association (IATA) Director-General in a June 3rd update.
“Without a doubt, aviation is vital to the ambitions and prosperity of individuals and economies. Strengthening airline profitability and growing financial resilience is important. Profitability enables investments in products to meet the needs of our customers and in the sustainability solutions we will need to achieve net zero carbon emissions by 2050,” added Willie Walsh.
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Code-share agreement
At the moment, RwandAir enjoys a code-share agreement with Qatar Airways, allowing it to access roughly 70 destinations within the Gulf carrier’s expansive international reach.
With the new stake acquisition, RwandAir is set to expand its reach and improve its fleet, which currently comprises only three wide-body aircraft for long-haul flights to Paris, Brussels, and London. Other expected benefits include the skilling of its staff as well as stepping up of its operational efficiency.
The partnership extends beyond the airline itself. Qatar Airways has also secured a 60 percent stake in Rwanda’s new $1.3 billion Bugesera International Airport in Kigali. Set to become operational in 2027, this state-of-the-art airport is expected to handle an initial capacity of 8 million passengers. Airline CEO envisions Kigali turning into a major transit hub in Africa, bolstering the region’s connectivity and attracting more international airlines.
RwandAir’s move to partner with Qatar Airways is a direct challenge to the region’s big players, including Ethiopian Airlines and Kenya Airways.
Ethiopian Airlines, Africa’s largest carrier, operates flights to over 130 destinations and has thrived by forming joint ventures and acquiring stakes in other airlines, too. In contrast, African airlines often rely on bilateral agreements for cross-border operations due to limited deregulation in the aviation industry.
Despite accounting for about 2 percent of global air traffic, Africa is home to about 18 percent of the world’s population, a gap that demonstrates the immense potential for growth within the continent’s aviation industry.
RwandAir’s collaboration with Qatar Airways is expected to bring into Kigali the much-needed capital and expertise, increasingly positioning Rwanda’s national carrier as a more formidable competitor in the region.
For Qatar Airways, the Gulf carrier is set to further cement its presence in Africa, a market with vast potential as trade between the continent’s economies and the outside world increases.
