RwandAir picks Accra as hub for flights to US
Rwanda’s national carrier plans to use Ghana as its hub to fly to the United States starting December. According to the airline’s application to the US Department of Transportation for an amendment to its current US Foreign Air Carrier Permit, RwandAir plans to launch scheduled services to New York from Kigali, through Accra in Ghana.
The airline says it has already secured authorisation from Ghana to use Accra as the last point-of-departure to the US. “RwandAir has already secured authorisation from the government of the Republic of Ghana to use Kotoka International Airport as the Last Point of Departure (LPD) into the United States,” it said in the filing done on January 21, 2021.
At Accra, RwandAir will exercise fifth freedom traffic rights as provided for in the bilateral air service agreements of both US and Ghana with Rwanda, it said. In the amendment to its filing, RwandAir is seeking to be allowed to either enter code sharing agreement or wet lease with “properly supervised US or foreign air carrier when Rwanda successfully achieves an IASA Category 1 rating.”
The airline is asking the US to amend its condition to RwandAir’s economic authority to state that “RwandAir is permitted to use its own aircraft and crews in the services to and from the United States, in addition to code-share and/or wet lease — arrangements with a duly authorised and supervised US or foreign air carrier.”
The change of tack to allow it wet lease comes barely months after Claver Gatete, Rwanda’s Minister for Infrastructure, told The EastAfrican they had concluded negotiations with Qatar Airlines, which will see the latter acquire 60 per cent stake in the Rwandan airline in addition to constructing Bugesera Airport.
Aircraft
According to the earlier plans, the A330neos were to be deployed on long-haul routes to Guangzhou, China and New York, as well as boost capacity to Dubai, Lagos and Johannesburg.
This however, seems to be futuristic given they are only two on its fleet, hence the airline’s move to opt for code share and wet lease options. In the filing, RwandAir also reveals that it may further expand the proposed US services using “other types of aircraft in the near future.” Last year, it secured clearance to serve New York on code-share and wet-lease basis — an arrangement where one airline provides an aircraft, complete crew, maintenance, and insurance to another airline or other type of business acting as a broker of air travel (the lessee), which pays by hours operated.
The latest filings also show that the airline only owns seven of its 12 aircraft. RwandAir currently operates two Airbuses A330s, four Boeing B737-800, two Boeing B737-700, two Bombardier CRJ-900 and two Bombardier Q400. Of this, it has leased four B737-800 from Air Lease Corporation (ALC) and one Bombardier Q400.
The airline also said that it intends to begin operating the requested services during winter season of this year, precisely December 2021, using Airbus A330 type aircraft. It currently owns two Airbus A330 aircraft. The airline also said it could not offer financial projections for the first 12 months of proposed operations in the US because RwandAir needs to establish a market presence before it will be to set forth an accurate assessment of costs and revenues for the US market.
“RwandAir requests that the Department permits it the same treatment as other foreign air carriers that received Department authority to operate to the US where financial statements and/or projections were completely or partially unavailable,” it said.
Financial statements
The filings also reveal that the airline has accumulated $399.05 million operating loss in the three years to 2019, even with heavy injection of funds by the Rwandan government. The airline’s financial statements covering 2016–2019 posted on DOT’s website, were filed by the carrier on January 21, as it seeks to amend its submissions for US direct flights approval.
According to the RwandAir financial statements, grant income, non-current liability, and current liability accumulated from 2016 to 2019 amount to $877 million, with the government support, in form of grants totalling $406.13 million, showing the heavy investment by President Paul Kagames’ administration into the airline.
The filings also show that the airline revenues continued to grow, largely due to its expended fleet over the three-year period, which has afforded it new routes. In the period, the airline registered $618.63 million in revenues, even as its direct costs jumped to $895.19 million, pushing it deeper into the red. Its accumulated net finance cost for the three-year period stood at $98.08 million.
RwandAir currently operates within Africa, one destination in the Middle East (Dubai), two destinations in Europe (United Kingdom and Belgium) and India. The airline says it is planning to expand its network operations to various directions including three routes in Africa.
