Syphax Airlines was launched in March 2012 as Tunisia’s first privately owned airline, and its first flight took place on 29 April 2012. The carrier was set up by Mohamed Frikha, an entrepreneur, who established Tunisian software engineering company Telnet in 1994.
Frikha used money raised from Telnet’s initial public offering in April 2011, along with an approximate 20 per cent stake from Telnet to set up the airline. It was launched with TD10m ($6.3m) of capital.
Syphax Airlines’ main base is at the airport of Sfax Thyna in the south of Tunisia. It also operates flights from Djerba and Tunis. Currently, it flies to Paris and Marseille in France, Tripoli and Sebha in Libya, Istanbul in Turkey, and a newly launched destination of Casablanca in Morocco. The airline was permitted to fly from Djerba and Sfax from April 2012, but had to wait until October of that year for an operating licence to fly from Tunis-Carthage airport, when it launched its Paris service, landing at Charles de Gaulle airport.
The delay in the Tunis airport licence was in part due to resistance from national carrier Tunisair and its reluctance to compete with the new airline over the same routes.
Syphax Airlines was established with a fleet of just two Airbus 319s purchased for $55m. The aircraft were named Karama and Hurriya, meaning dignity and freedom, in reference to the country’s 2011 revolution.
In January 2013, the airline placed a further order with Airbus for three A320NEOs (new engine option) and three A320CEOs (current engine option). This agreement will bring the airline’s fleet up to eight aircraft. The A320NEO family of aircraft will come into service from 2015 and incorporate latest-generation engines and large ‘sharklet’ wing-tip devices, which aim to deliver up to 15 per cent in fuel savings.
Syphax Airlines positions itself as a hybrid between the low-cost airline model and a conventional carrier. It aims to offer reduced ticket prices, but also the services found on regular airlines. The airline provides charter services, but most of its business is focused on regular commercial traffic.
At the end of 2012, non-charter passenger traffic accounted for 57.6 per cent of passenger revenues, with 72,248 passengers transported by the airline that year. Charter activity represented 42.4 per cent of passenger revenues, with 45,323 passengers transported.
In the first half of 2012, the airline recorded a turnover of TD3.2m and a loss of TD9.4m. The company’s capital stood at TD601,000.
The carrier runs three flights a week between Sfax and Paris, as well as a daily service between Tunis and Paris. Its Sfax-Tripoli route is serviced four times a week and there is a twice-weekly flight from Sfax to Sebha. It also operates two flights a week to Istanbul from Sfax.
Syphax Airlines is aiming to carve out a greater market share and challenge the dominance of national carrier, Tunisair. The airline was established in 1948, and in 2011, it transported 3.2 million passengers. By contrast, Syphax Airlines has about 1.2 per cent of the market.
One of Frikha’s aims is to use the airline to boost the Sfax region’s economy by generating new employment opportunities.
This year, Syphax Airlines is looking to increase the number of destinations it services. It has recently announced new flights to Casablanca in Morocco and Jeddah in Saudi Arabia. It also aims to launch twice-weekly flights to the Ivory Coast and Burkina Faso, as well as a weekly service to Beijing, and flights to Montreal, New York and Rio de Janeiro.
The airline is also looking to list on the Tunis bourse to raise funds for its expansion. On 18 April, it secured approval from the Financial Market Council to be admitted to the Alternative Investment Market on the Tunis Stock Exchange.
Expansion Syphax Airlines to launch on bourse
Syphax Airlines has been given the go ahead to launch an initial public offering (IPO) on the Alternative Investment Market of the Tunis Stock Exchange.
Tunisia’s Financial Market Council has approved the IPO, which will involve the issuing of 2,500,000 new shares for cash at a price of TD10 ($6.25) a share. The shares represent 45.45 per cent of the company’s capital after the increase. The subscription will be open between 30 April and 20 May 2013.
The airline is looking to raise its current capital of TD12.5m to TD27.5m. Local consultancy firms Tunisie Valeurs and MAC are managing the IPO. According to Mohamed Frikha, chief executive officer of Syphax Airlines, the IPO will provide the company with vital access to capital markets, giving it the necessary resources to expand the airline’s route network and steer it towards profitability.
The airline is looking to support regional transport needs in Tunisia, as well as developing more long-haul flights to destinations such as China, Canada, Japan and the US.
It is keen to take advantage of the geographical position of Tunisia and the locations of airports at Sfax and Tunis as transport hubs, providing links to long-haul destinations.
The carrier is currently examining how to effectively compete against other budget or low-cost airlines if or when an ‘open skies’ agreement between the EU and Tunisia is concluded. Talks began in December 2008 and were revived at the end of last year.
If an agreement is reached, the number of direct flights between Tunisia and Europe would increase, boosting trade and tourist flows. This will open up opportunities for Syphax Airlines to increase its range of routes and lift passenger volumes. However, it would also allow other airlines into the Tunisian market and increase competition between carriers.
The need to expand and strengthen its position in the Tunisian market has become important since open skies talks were renewed.
If the agreement is signed, budget airlines such as Ireland’s Ryanair, Hungary’s WizzAir and the UK’s Easyjet are likely to move into the market, as are other Middle East low-cost airlines such as Sharjah-based Air Arabia. Syphax Airlines will have to ensure it offers competitive prices and services to maintain and grow market share if these airlines start operations in Tunisia.
While this might benefit the consumer and the wider Tunisian economy, Syphax Airlines will need to ensure it is adequately financed so it can continue to offer a widening selection of routes and competitive services to stay ahead.
Morocco set a precedent for open skies agreements between North Africa and the EU when it signed an agreement in 2006. As a result, aviation traffic increased between 15 and 20 per cent a year for the first few years of the agreement.
Despite this increase in traffic and concerns national carrier Royal Air Maroc would not be able to compete in an open skies environment, the airline has maintained a 42 per cent share of Morocco’s market capacity, according to UK-based aviation analyst OAG Aviation. Syphax will be hoping such an agreement will benefit it more than the competition.
Date established March 2012
Main business sector Aviation
Main business region Tunisia
Chief executive officer Mohamed Frikha