RwandAir, carrier of choice — Mirenge

Rwanda Air CEOJohn Mirenge is the Chief Executive Officer of RwandAir. He speaks with AnnualMeetings Daily on how the Rwandan national carrier is making Rwanda accessible to investors among other issues. Excerpts:

Are there any social responsibilities that RwandAir engage in that are directly beneficial to the average Rwandan?
Yes. We are involved in a number of corporate social responsibility projects that are clearly designed to impact on the lives of ordinary citizens. We are involved in the breast cancer initiative, working with some other organizations to assist with cancer detection and treatment supports. We are equally involved in some youth empowerment projects such as talent development. Our company believes in grooming talents. We have also been involved in an initiative called ‘Child Headed Homes’, providing material support to such kids as well as orphans and widows.

Basically, we are providing support to Rwandans through different initiatives and that is geared towards attending to various people in need at different times or helping people to develop their talents. We are also looking at other areas where we can further channel our social responsibility efforts and our marketing teams are working towards that. We really want to make impact in the society.

What is the secret behind the success story of RwandAir?
Our success has more to do with team work. One thing we have seen is that there is no way an airline can succeed without  committed shareholders and in our case, we are happy that our shareholders are committed to seeing this dream come through because they appreciate the role and importance of a vibrant airline for the economy of Rwanda. We have a very well-balanced and diverse board of directors who are involved in virtually all the day-to-day business of the airline, making sure that we get the support we need to succeed timely. We are also blessed with a team of committed staff that work day and night to ensure that we reach our goals.

So, all those three categories of people that I have outlined have not only played their parts the way they should but also play it so well, at times, beyond expectations. That is the secret of our success story so far. However, at the end of the day, the key is our customers who have continued to appreciate our services and we strive to make them better. Yes, there might be issues that come with growth but they have taken them in good spirit and continue to patronize us. That, we can never shy away from acknowledging. This goes a long way in defining our success and who we are today. And with these four categories of people playing key roles in our success story, mine becomes a very simple role: Just sit and try to coordinate everybody.

Are there challenges you encounter locally and perhaps at the international market?
Of course, yes. The airline industry is one of the most challenging businesses you can think of. First, the burden that you carry as an airline (that is transporting human beings through the sky of about 35,000 feet) is too heavy. So, the burden is enormous that you cannot rest until the plane arrives safely at its destinations and customers meet their loved ones or embark on their businesses without delays or other issues.

Also, the airline industry is one of the few industries that have become extremely competitive. The extreme competition and a lot of capacity added in recent years have naturally pushed down fares across the industry. And with that the margins that we continue to work with have continued to shrink yearly. At the same time, all the other direct costs have sky-rocketed. And this industry is heavily reliant on fuel; and oil prices have been rising over the last decade like never before. While fuel prices have been going up, airline fares have been coming down because of stiff competition in the industry. So, it is very difficult to make ends meet in this business across the board.

It is not only the fuel cost that is increasing by the day; all the direct costs involving maintenance, crew, meals etc. have been on the rise. And the astronomical rise of direct costs has ensured the profit margin in the airline business is shrinking. That remains a major challenge to us.

The other factor that is unique to us but applicable in the industry generally is that of skill. While the industry is growing in terms of capacity, with more aircraft being added to the fleets of many airlines, skills are not growing proportionately. And this is an industry that is in constant demand of specialized skills which you cannot train and get within a year or two. Take for instance, training a pilot which takes many years to get such person ready to fly a commercial airplane; same with aircraft engineers or technicians. So, there has been a very big battle for skilled manpower in the industry and because we are also competing amongst ourselves for specialized manpower needs, the cost of skills keeps going up too. And this is also impacting on the direct cost burden of airlines.

The other challenge that we also face is the size of the market we serve which is mainly in Africa. The population of people that can afford to travel by air is not that huge in Africa compared to other civilized parts of the world. Yes, there are potential but Africa is still a developing continent with lower per capita income; and because of that, our customer base is not big. To that extent, we wish there is a way to significantly improve on the livelihood of Africans and get them to fly more instead of cris-crossing the neighbouring countries by bus. Other continents are ahead of Africa today in terms of air travels because a significant proportion of their citizens can afford it. So, we still need to do more in this regard.

As an airline in the heart of Africa, a national carrier for that matter, most of the things that we use, if not everything, are imported. Be it spare-parts for our aircraft or systems. So, support and delivery into our country takes much longer; and this, kind of, constrains our efficiency. The cost of it is more because where the equipment are manufactured are far off and it doesn’t get to you in time plus the foreign exchange issues. We are already struggling and being penalized because of this foreign exchange issue simply because we conduct our business in local currencies and everything else we need to do the business is paid for in foreign currencies. So, these are some of those challenges that we face just like most other airlines.

Major companies and organizations usually cash-in on the hosting of high-profile summits like the African Development Bank’s Annual Meetings. So how does RwandAir hope to leverage on the 2014 AfDB Meetings in Kigali to reach out to other regional markets?
We are indeed excited and honoured that Rwanda is hosting the 2014 AfDB Annual Meetings. First, as Rwandan national carrier, we are definitely positioning our self, to firstly, offer our best services to especially most of the delegates that would attend this great Meeting from outside Rwanda. And we are poised to serve as the carrier of choice for the AfDB AGM so that most of the delegates even after the meeting would continue to patronize us. We fly up to 15 destinations on the continent and that would be a huge opportunity to leverage on our customer base. We hope that we can work together with the organizers of the meeting to ensure that participants at the meeting enjoy our best services at affordable rate. And we are excited at the prospect of playing a key role in the success of this year’s AfDB AGM.

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