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Turkish Airlines profits in Africa, where others fear to fly



NAIROBI, Sept 12 (Reuters) – When Turkish Airlines opened a direct daily route to a war-ravaged African failed state plagued by Islamist militants, industry insiders were sceptical.

Not anymore.

“Somalia is one of our most profitable destinations worldwide,” Mustafa Ozkahraman, Kenya country manager for Turkish Airlines, told Reuters in an interview. “Because we are the only (international airline). The first and the only one.”

The Istanbul-based carrier is replicating the move across Africa, expanding to destinations shunned by others. The move comes as political unrest at home last year pushed the airline into the red for the first time in 17 years.

In 2011, Turkish Airlines flew to 14 African cities. By the end of this year, it will operate 52 routes from Istanbul across Africa, after launching a route to Freetown, the capital of Sierra Leone.

From January to June, just under a tenth of total passenger and cargo revenues came from Africa, according to results for the first half of 2017 that showed a net loss of $434 million.

Rival Emirates has less than 30 routes. Last year, the Dubai-based airline cut one African flight and reduced the frequency of several others.

It cited weak economic conditions in Africa, where many countries dependent on revenues from commodities exports have seen economic growth fall below population growth.

But Turkish Airlines, which is 49 percent state-owned, is bullish on Africa, a continent of 1 billion people.

Ozkahraman denied the growing ties between Ankara and many African states drove the airline’s strategy.

“A lot of people would think our flights to Somalia were not business-related,” he said. “(But) we do the feasibility and we have to believe the route will be profitable, either now or imminently.”

He declined to give a specific breakdown on profits for African flights, but said routes like the daily flight on a wide-body jet from the Nigerian city of Lagos were critical to the airline’s bottom line.

Despite challenges like poor security or electricity cuts at some airports, such flights feed passengers into Turkish Airline’s hub, making routes like Istanbul to London profitable.

“You have to have those destinations to make your hub busy and your profitable destinations more profitable,” he said.

Last year the company posted a net loss for the first time since 2000, after a demand slump caused by political turmoil and militant attacks at home. Ozkahraman said some of the shortfall was also due to new planes – 210 have been ordered, he said.

Load factors – a measure of how full planes are – are over 70 percent on many African routes, just below the airline’s global average of 80 percent, he added.

The wide network means that, unlike Ethiopian Airlines, Turkish does not partner with smaller African carriers notorious for poor service.

It opened a business class lounge in Nairobi’s airport in July 2016, its second international lounge after Moscow. British Airlines and Emirates began renting the Nairobi lounge for their business class travellers earlier this year, Ozkahraman said. (Editing by Katharine Houreld and Mark Potter)

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DP World says Djibouti incident could hurt Africa investment



DUBAI (Reuters) – Port operator DP World said on Thursday that Djibouti’s decision to seize control of a terminal project could hurt African efforts to attract investment.

The Dubai state-owned port operator is facing twin political challenges in Africa.

Djibouti abruptly ended its contract to run the Doraleh Container Terminal last month and Somalia’s parliament voted this week to ban the company.

DP World has called the Djibouti move illegal and said it had begun proceedings before the London Court of International Arbitration, which last year cleared the company of all charges of misconduct over the concession.

“Africa needs infrastructure investments and if countries can change their law [to take assets then this] is going to basically make it more difficult to attract investment,” Chairman Sultan Ahmed bin Sulayem told a news conference in Dubai.
DP World reported 14.9 percent rise in 2017 profit to $1.18 billion profit and said that it would invest $1.4 billion across its global portfolio including in Berbera in Somaliland. [L8N1QX0F2]

It is developing a port in Berbera in partnership with the governments of Somaliland and Ethiopia. It is also developing a greenfield free trade zone in the breakaway region.

Bin Sulayem said he was not concerned by the vote in Somalia’s parliament to ban DP World from the country, which the parliament said nullified their Somaliland contract.

It is unclear how Somalia’s federal government could enforce the ban given Somaliland’s semi-autonomous status.

Europe, the Middle East and Africa accounted for about 42 percent of the cargo DP World handled in 2017.

Reporting by Alexander Cornwell; editing by Jason Neely

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INTERVIEW: Somalia gears towards improving its monetary policies



CGTN — Somalia’s central government imposed a five percent sales tax this month as part of efforts to win billions of dollars in international debt relief. This was followed by protests in Mogadishu’s main market by traders opposed to the tax. CGTN’s Abdulaziz Billow sat down with the country’s minister of finance who shed more light on the country’s monetary policies

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Somalia Tax Argument From Both Sides: Bakara Traders vs The Government



Somalia’s busiest and largest open-air market in Mogadishu has been closed for the past two days.

Business owners in Bakara market are protesting over a five percent tax imposed by the government, in an effort to pay back some of its international debt.


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