BAE Systems tells ANN that 'Africa's airlines are recognizing the potential of regional jets and are beginning to grow their fleets of these aircraft.'

Speaking at the 16th Annual Air Finance for Africa conference in Nairobi on Wednesday November 21, Nigel Benson, Director Sales and Leasing for BAE Systems Regional Aircraft stated, "Nearly half of the total African airline fleet are regional aircraft but only 10 percent, or 64 aircraft, are regional jets. However, this figure has increased from only three percent of the fleet total twelve months ago."

He continued, "Used regional jets such as the BAe 146, have considerably lower acquisition costs than newer generation aircraft. These lower capital costs outweigh any operating cost advantages of new aircraft, particularly in uncertain markets, or on routes where there is a lot of competition. This also applies to developing routes, often found in Africa, where additional frequencies are required to stimulate traffic and consequently economic growth. The superior cabin space and flexibility of the BAe 146, as well as its large underfloor baggage holds, could also be a telling factor in the African market."

Mr Benson told the conference that BAE Systems' studies showed that in the African market the low capital costs of used regional jets represents a compelling argument for their economic competitiveness, even in the face of continued high fuel prices. Further, the higher capital cost assets need to be worked hard which is not necessarily possible given the aviation infrastructure in Africa, such as with turn-round times at airports.

The conclusion that Africa is realizing the potential of the regional jet is borne out by the growth in the BAe 146/Avro RJ penetration of this market over the past year. In addition to Air Botswana as an existing customer of the type, Regional Aircraft placed three BAe 146-200s into SA Airlink during this year.

In addition, new operators have announced their plans to acquire and operate fleets of BAe 146s during 2008. Kenyan carrier Fly540, which is 49% owned by pan-African investment firm Lonrho, is taking three BAe 146s to help its expansion plan into other hubs outside Kenya across sub-Saharan Africa.

Belgium's Brussels Airlines and Congolese carrier Hewa Bora Airways are creating a new Congolese joint venture carrier, AirDC, to be based at Kinshasa. This new carrier will operate a fleet of BAe 146 and Boeing 737s to feed traffic from 10 domestic and African regional destinations into Brussels Airlines long-haul routes into the Belgian capital.

Benson added, "We are also aware that another entity has purchased six ex-Mesaba Airlines RJ85s for operation in Africa."

Benson concluded by stating that in addition to having some aircraft for sale, BAE Systems can also offer dry leasing as a well-established method of acquisition for regional aircraft, providing flexibility and further reducing capital requirements. He added that Regional Aircraft's Chapter 3-compliant lease portfolio is well placed to meet the equipment demands of Africa's regional operators."

FMI: www.baesystems.com