Defying political and economic uncertainty, airlines across North Africa are adding routes and investing in new aircraft as they put their faith in the prospects for long-term traffic growth. Some companies have more tangible reasons for confidence than others.

Morocco’s flag carrier, Royal Air Maroc, reported the highest profit in its history last year – at MD718m ($86.9m), it was far in excess of the MD154m expected by the management. Egyptair, on the other hand, has been feeling the impact of continued political tensions and outbreaks of violence on the streets of Cairo. Passenger traffic slumped by 50 per cent in the third week of August, with a particularly sharp fall in the number of travellers bound for Red Sea holiday resorts.

Libya’s Afriquiyah is seeking to resume its previous role as a bridge to sub-Saharan African countries

At Tunisair, the focus remains on network growth, even though the domestic political environment remains uncertain. Libyan carriers, meanwhile, enjoy an upbeat business outlook, but find themselves obliged to hire other companies to operate their services to EU destinations. This is because the Tripoli government has yet to assure Brussels that local firms are fully compliant with international safety certification requirements.

Vanguard of growth

The overall regional picture is a complex one. Even so, with the exception of Egypt, the broad direction of travel is clearly positive.

It is striking how far the North African aviation sector appears to be in the vanguard of regional economic resurgence, even at a time when some other sectors remain sluggish or hampered by political risk issues.

Morocco’s economy is faltering, after showing resilience during the global financial crisis, while in Algeria, uncertainty hangs over the prospects for next year’s presidential election, following President Abdelaziz Bouteflika’s minor stroke earlier this year.

Tunisia is struggling to negotiate a path out of political crisis in the wake of the July assassination of opposition politician Mohamed Brahmi, while Libya’s ability to fulfill its huge potential for economic development is hampered by ongoing insecurity.

Yet, in all these countries, the aviation industry is feeling confident enough to push ahead with a wave of investments and network expansions. A major reason for this optimism is the sign of a recovery in the tourism industry, with the World Tourism Organisation reporting that arrivals in North Africa rose by 9 per cent last year, rebounding from the 12 per cent fall seen in 2011, during the height of the Arab political turmoil.

Tourism is particularly important for Tunisia and Morocco, and the improved outlook for the sector is reflected in the investment plans of the local airlines.

Nouvelair, the main private carrier in Tunisia – with a fleet of 13 Airbus A320 and A321 aircraft – opened new routes to Germany and Russia last year and saw total passenger numbers rise to 1.2 million, from 1 million in 2011. These are still early days in the recovery of a business that carried as many as 2.5 million passengers in 2007, before the economic downturn in Europe, its key market. Even so, Nouvelair plans further route developments.

Tunisia hopes its national airline can position itself as a carrier of traffic between Europe and west Africa

Flag carrier Tunisair also enjoyed a rebound in demand, with passenger numbers climbing to 3.8 million last year – higher than in both 2011 and 2010. The airline launched an overhaul of its fleet, which comprised 32 aircraft by the end of 2012, with a four-year programme to acquire 13 new planes: seven A320s, three A330-200s and three A350-800s.

However, the position remains fragile, with fresh political instability in 2013 threatening to put a damper on the recovery in tourism. In the first half of this year, Tunisair saw its traffic decline 1.3 per cent, while its personnel costs continued to rise.

Morocco upswing

The positive trend is more clearly set in Morocco, where tourism is underpinning aviation growth. Royal Air Maroc is expanding holiday routes from Spain, with a new service from Valencia to Casablanca and, from December, a service from Madrid to Marrakech three times a week.

The recovery in holiday traffic contributed to record profits at the Moroccan carrier in 2012. Initial indications are that 2013 could see even better results: the first quarter of this year produced an operating surplus of MD135m, compared with a loss of MD65m for the first three months of 2012.

Meanwhile, the aviation sectors in Algeria and Libya are reaping the benefits of overall economic growth.

Air Algerie’s chief executive officer Mohamed Salah Boultif recently announced that the national airline had set aside AD60bn ($736.2m) for fleet modernisation. Flag carrier Libyan Airlines – which carried 1.2 million passengers last year – has already acquired two A330s to replace those lost during the 2011 revolution and has two A330-200s on order for delivery next year. Fellow Libyan airline Afriquiyah has 10 A350-900s on order. There has been talk of reviving a plan to merge the two carriers, a proposal originally developed by the Gaddafi regime, but the most urgent priority is reinstating normal operations.

At present, no Libyan airline is permitted to fly its own planes into the EU under a voluntary agreement with the European Commission, due to concerns over the ability of the country’s aviation sector in the post-revolutionary era to fully comply with international safety standards.

Libya concerns

The government in Tripoli recognises that this is a challenge that has yet to be met and through the voluntary agreement, it avoids the stigma of seeing Libyan carriers formally included in the list of airlines that are subject to a ban or to operational restrictions in Europe – the so-called “EU air safety list”.

The European authorities say some progress has been made, but in July – when they issued the latest edition of the air safety list – they indicated that further work was still required.

Because of the no-fly agreement, Libyan airlines can only service the European market through “wet-lease” arrangements – under which other firms provide planes and crew to operate services on their behalf. For example, Afriquiyah wet-leased an Air Moldova A320 to operate services to London’s Gatwick airport.

Afriquiyah, in particular, has also had to revamp its image. The company was widely perceived as closely associated with the Gaddafi regime and was even accused of transporting mercenaries to fight on the dictator’s side during the country’s civil conflict. Last December, it unveiled a new livery based on the neck markings of the turtle dove, a neutral symbol of love and peace, to replace the old tail-fin logo, a colourful 9.9.99, referring to the date of the foundation of the African Union, in which Gaddafi saw himself as a major player.

The expansionary trend among North African airlines is more than a story of post-crisis economic resurgence or tourism revival; a major strategic shift is also under way. This has been fuelled by a growing recognition of the opportunities offered by the region’s geographic location between Europe and sub-Saharan Africa, and, to a lesser extent, the potential for greater traffic to and from North America and the Far East.

By comparison with these dynamic newer markets, traditional connections to the Middle East appear to be fading in importance for Maghreb airlines. But that may in part reflect the tough competitive challenge posed by the major Gulf carriers – noted for their high service standards and keen pricing.

For example, faced with competition from Emirates, Qatar Airways, Royal Jordanian and Saudia, Tunisair is halting its services to Dubai and Kuwait. Air Algerie also faces increased competition on Middle East routes with the launch of services by Emirates, Qatar Airways and Royal Jordanian.

Demand can quickly fall in reaction to political tension in North Africa or economic difficulties in Europe. The added pressure from Middle Eastern rivals and the fragility of the tourism market, however, appear to be the main drivers behind the strategic rethink by Maghreb carriers as they look for ways to expand.

Their response is to develop long-haul traffic elsewhere: Royal Air Maroc – currently the only North African airline flying to the Americas, with routes to Montreal and New York – plans to start flights three times a week to Sao Paulo in Brazil in December.

Tunisair has partly chosen its new aircraft with an eye on the launch of routes to China, Japan, the US and Canada, while the Algerian government has held talks with Ottawa about Air Algerie’s hopes of starting a daily service to the country. Libyan Airlines is also rumoured to be exploring opportunities in the Canadian market.

African opportunities

However, the key growth market for North African airlines is sub-Saharan Africa. With their good coverage of European destinations, the Maghreb countries are ideally located to serve as hubs linking west and central African states to cities across Europe.

This is a market where a small number of European companies – Air France and Brussels Airlines in particular – have a major role, but they face relatively little sub-Saharan competition.

Among the Maghreb carriers, Royal Air Maroc has again been the pioneer here. Outside North Africa, the only Middle Eastern destinations served by the Moroccan national airline are Beirut, Riyadh and Jeddah. By contrast, it now flies to 14 cities in west Africa and nine in central Africa, with Ndjamena in Chad to be added in December.

Afriquiyah is seeking to resume its previous role as a bridge to sub-Saharan African countries, through routes to destinations such as Khartoum, Niamey, Johannesburg and Dakar.

Meanwhile, Tunisair has set a goal of serving 20 African destinations, with the aim of adding about four cities a year to its network. Services to Ouagadougou in Burkina Faso began in April.

Through the negotiation of an open-sky accord with the EU and fifth-freedom rights with African countries, the Tunisian government hopes that its national airline can position itself as a carrier of traffic between Europe and west Africa – a market that is booming and is largely immune to economic or political uncertainties that could put a damper on travel to or from Tunisia itself.