Mario Fulgoni, CEO, Air Djibouti: Interview

Mario Fulgoni, CEO, Air Djibouti

Interview: Mario Fulgoni

How are the challenges of establishing the new national airline being met?

MARIO FULGONI: Working in any developing economy, the biggest challenges are always infrastructure deficiencies and a limited local skills base. In order to launch a technical project it is necessary to bring in expatriate workers and consultants. In addition, the local market for passenger traffic will be restricted until the new free trade zone and business district are completed. Establishing a national Djiboutian airline will accelerate these projects and provide the momentum to increase the pace of change.

The regulatory aviation authorities also require assistance meeting internationally accepted standards. The government already has plans to address this; the airline will encourage training and development of all airline-related skills. It will bring engineering and airline operational training, as well as training in all transport and tourism support industries.

What will the economic impact of the new airline be on the Djiboutian economy?

FULGONI: It will have a major impact accelerating infrastructure growth, in turn promoting investment and confidence, which will increase GDP and create much needed jobs. The increase in visitor numbers will then help develop the hospitality, retail and leisure industries. For every 100 jobs created in the aviation sector, an additional equal or more number of jobs are created elsewhere in the economy as a result of the supply chain and employee spending effects.

How accessible and affordable are ancillary services in Djibouti, such as maintenance?

FULGONI: Accessibility and affordability of ancillary services such as maintenance are not major issues in Djibouti. Air Djibouti has contracted a third-party provider to operate its aircraft pending an upgrade to the regulatory framework within the country. Cardiff Aviation of the UK will be providing aircraft and will manage the safety oversight of the operation through its regulator, the European Aviation Safety Agency. As part of this contract, Cardiff Aviation will bring their own engineers and line maintenance tooling to provide day-to-day maintenance services. In addition, the level of support equipment at Djibouti airport is more than adequate.

Should there be a need for more substantial maintenance, Air Djibouti has a close working relationship with Ethiopian Airlines. Ethiopian Airlines has a sizeable and very expert heavy maintenance facility, and is more than capable of managing such maintenance requirements on behalf of Air Djibouti.

What needs to be done to ensure increased cost-competitiveness in Djibouti?

FULGONI: Landing fees and other operational challenges at many regional African airports are very high and are detrimental to stimulating demand. In order to consider a solution to this issue, one has to understand the economics driving such high prices. Many of these airports suffer from low demand due to a lack of open skies and competition. Therefore, without the possibility of government subsidies, there is a need for higher prices. The only way to solve the issue is to increase traffic and stimulate demand. Air Djibouti, by operating additional services, will itself generate competition, but only with a true open skies policy will proper competition and price negotiation take place. The framework for an open skies policy in East Africa already exists, and the growth of serious airport hubs such as Addis Ababa and Nairobi should help drive a desire for other population centres to follow suit. There is a willingness to move towards full open skies and away from national protectionism. In the meantime, the higher airport operating charge has to be accepted as the cost of doing business and fares can be kept low by good yield management.

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The Report: Djibouti 2016

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