Somaliland: The Lucratively Challenging, Yet Successful Airline Business Sector


Ethiopian Airline at Egal airport September 1st

Somalilandsun – In recent years, the word “Somali” has been linked with piracy, drought, famine, civil-war and terrorism. It’s a fact that, since the demise of Somalia as a united state in 1991, most of the country’s infrastructure has collapsed and destroyed during the civil war. The economy failed and production, services and public service sectors including factories, farming, health, education, banking, telecommunication, travel and tourism were all hit badly. Later, some sectors including telecommunication, financial services, education and health recovered quickly as Somalilander/Somali business men and women invested in the country and created private businesses and companies providing communication, money transfer services, health care and education – up to and including university levels. However, the sector that is most worthy of note, that has since flourished is the Air Transport service industry.

Prior to the last Somali Republican government which was overthrown by rebels in 1991, air transport services in Somalia (including Somaliland) were provided by Somali Airlines – the White Star service as it was known. Somali Airlines was the national carrier of Somalia and was founded in 1964 as a joint-venture between the Somali government and Alitalia, the Italian flag carrier. When the airline was established, there were a handful of airlines in Africa including Egypt Air, Ethiopian Airlines and South African Airways. Somali Airlines was famous for its great on-board traditional Somali hospitality, and flew to Moscow, Frankfurt, Rome, Jeddah and also Cairo, Abu Dhabi and most other African capitals.

Sadly, the airline collapsed during the civil war in the early 1991 and its highly skilled pilots and engineers were recruited by foreign airlines including Saudi Arabian Airlines and Lufthansa. Personally, I wasn’t lucky (or old) enough to travel on it, but I met some of the airline’s management, crew and ground engineers; the ultimate people who made the carrier an international airline within a very short period of time.

Fortunately, from 1991 the year Somaliland declared its independence from Somalia, many privately-owned airlines emerged to fill the gap resulting from the loss of the Somali Airlines and they started providing domestic and regional air transport services. These pioneers were: African Express Airways and Daallo Airlines, and later Damal Airlines, Inter-Somal Airways, Star Airlines and Jubba Airways were founded.

The newly-established privately-owned airlines simplified the flow of passenger and freight between Somaliland/Somalia and the outside world and strengthened the trade relations between Somaliland/Somalia and the Gulf states, particularly the United Arab Emirates and Saudi Arabia, where large numbers of Somalilander/ Somali business people were based. Moreover, these carriers contributed positively to the local economy as they created hundreds of jobs and provided badly-needed income for employees; consequently supporting the lives’ of thousands of families in Somaliland/Somalia. The airlines enjoyed more than a decade of booming business with the subsequent profits and prosperity.

However, after many years of flourishing success in Somaliland/Somalia, the airline industry faced a series of disastrous events and large Somali airline companies got into serious financial difficulties, sustained huge loses and finally ceased operations. For example, Damal Airlines, Star Airlines, and Inter-Somal Airways were among the bankrupt Airlines.

A number of factors contributed to the failure of these carriers. After 11/Sept 2001 incident, the aviation industry faced its worst ever disaster as people abstained from flying and security checks tightened at airports all around the world which put extra financial pressure on the airlines and led to the failure of big-name airlines around the world. Somali-owned-Airlines had their share of such misfortune when they sustained substantial costs in terms of aircraft lease, security and insurance.

Soaring fuel cost – because of unrest and political tensions in the oil-rich Middle East- is partially to blame as it contributed to the bankruptcy of these Somali-owned-airlines. Globally, hundreds of airlines were hit by such huge rise of fuel price and subsequently filed bankruptcy.

In 2004, visa restrictions were introduced by the United Arab Emirates and it was imposed on Somali passport bearers. The UAE banned the issuance of visas to persons travelling on a Somali passport and that impacted hugely on Somali airlines’ business and weakened the demand as the majority of people traveling on the airlines were holding Somali passports.

Another issue that accelerated the failure of the airlines was the unexpected grounding of the Ilyushin 18 airliner by the UAE Civil Aviation Authority for safety reasons. Consequently, Somali-owned-airlines were not able to find suitable alternative airliners to operate to Somaliland/Somalia as most airports are either not asphalted or not able to accommodate the larger aircraft.

Just to illustrate further, for more than a decade, the IL-18 (USSR made) was one of the most well-known and reliable aircraft in Somaliland/Somalia. It has been operated by the majority of Somali-owned-airlines as a passenger aircraft with a layout (configuration) of 110 seats. Others operated it as a Combi flight, which transported passengers and cargo on the same plane.

I personally used to fly in (and worked as a cabin crew member) for a long time on one of the Ilyushin aircraft operated by Damal Airlines. And at the time, despite its age, the airliner seemed to me (operationally) the most appropriate one to operate in Somaliland/Somalia as it can land and take-off within a short distance – at almost every airstrip in Somaliland/Somalia.

Later, the UAE government slightly reversed its decision to ban the IL-18 and the airliner was allowed freight/cargo status but could not operate as a passenger plane.

All of these dilemmas created problems for the airlines and many of them simply ceased operations. Remarkably, despite all the above-mentioned issues and in the light of the recent global downturn, today, there are three Somali-owned airlines in the market and they are all doing great business. Namely, they are: Daallo Airlines, Jubba Airways and African Express Airways. However, by looking at the airline fleet size and type, number of flights and employees and destinations they serve, it is obvious that Daallo Airlines and Jubba Airways are leading the way.

As I mentioned earlier, Daallo Airlines was founded in 1991 in Djibouti (Headquarters) by Mr Mohamed Ibrahim Yasin (Olad) and Mr Mohamed Haji Abdillahi (Abusite). The CEO of the Carrier: Mr Olad a well-educated and successful businessman who received a BSC (Hon) MSC from Oregon State University and who has twenty years of business management experience, is responsible for short and long-term planning, budgeting, operations and finances of the company. Daallo airlines enjoyed decades of flourishing business and gained the lion’s share of not only Somaliland/Somalia’s passenger market, but Djibouti’s too. This attracted foreign investors and in 2007, Dubai World subsidiary Istithmar World Aviation (IWA) Holdings bought Daallo Airlines in a joint venture with the founders and the Djibouti Government. The aim of this venture was to re-brand the airline and create a new first class carrier. However, for a number of reasons – including that of a power conflict- this sell off didn’t quite work and Daallo Airlines ceased operations soon after. Fortunately, the founders of the company used their wealth of expertise to re-launch Daallo airlines as a better and stronger model with more routes and planes including the BAe 146-200 airlines that was bought from the Falko Company to operate on domestic routes. However, later Daallo Airlines decided to return the airliner (BAe 146-200) to its previous owner as the airliner seemed to be an inappropriate fit (operationally and financially) to the Somaliland/Somalia Market.

The other airline that is doing well is Jubba Airways which was established in 1998 by a group of Somali entrepreneurs including Mr. Said Nur Qalinle, a successful business man and the General Manager of the Company. Jubba Airways is a sustainable, on-time and reliable airline registered in Mogadishu and operates from Aden Abdulle Osman Airport. The airline employs a team of more than 300 skilled professionals and has its own leased aircraft maintained by highly qualified engineers.

Both Daallo and Jubba operates Passenger and Cargo flights to many destinations in Somaliland/Somalia, Africa and Middle-East including Dubai (DXB), Addis-Ababa(ADD), Diredawa(DIR), Djibouti(JIB), Mogadishu(MGQ), Hargeisa(HGA), Berbera(BBO), Bossaso(BSA), Galkayo(GLK), Garissa(GAS), Nairobi(NBO), Sharjah(SHJ) and Jeddah (JED). They operate mixed fleets including B737-300, 400 and have sales offices in Somaliland/Somalia, Djibouti, Kenya, Ethiopia, Dubai and Saudi Arabia where well trained staff to a high standard in customer services- conducts ticketing and assists passengers.

Around the world you can buy Daallo and Jubba tickets at selected travel agencies or even online using your debit/credit card. Every year, thousands of Somali-origin passengers, mainly from Western countries, travel by Daallo Airlines and Jubba Airways to Somaliland /Somalia for business purposes and/or visiting family and friends. Last summer, passengers who travelled on Daallo Airlines and Jubba Airways have witnessed the improved service quality that airlines deliver and offer at their offices, airport and on-board the plane. More staff has been employed at Dubai airport to assist passengers, and as usual, the airlines were offering a free bus service for their passengers between Berbera International Airport and Hargeisa city, which is not the case in this year as airlines operate to the Hargeisa Int’l Airport.

In terms of catering- when departing from Dubai, the airlines has an agreement with catering specialist company at Dubai Airport to provide meals for the airline passengers. In Somaliland/Somalia, Djibouti and Kenya the airlines have selected the best restaurants in the towns to provide tasty and healthy food prepared by top chefs for their passengers.

When it comes to punctuality and reliability, the airlines perform perfectly as they stick to their published schedule and timetable. As a result, last year they were rated 93% on time by the passengers whom I have spoken to. However, delays and cancellations can occur for technical, weather and even political reasons, but they do all they can to support passengers.

In addition to the regular flights, the carriers operate every year smooth Hajj flights to Jeddah to transport thousands of “Pilgrims” who are undertaking the Hajj. The airlines provide free Hajj services for the passengers heading to Makah including collecting passports from pilgrims to arrange visas, preparing travel cheques that can be cashed in Saudi Arabia, arranging accommodation for hajji’s at Makah, Mina and Medina and giving out the white “Ihram” clothes. As a result of these additional services, Daallo Airlines and Jubba Airways have achieved a high degree of customer satisfaction and become the most favoured airlines nationwide.

All in all, Daallo Airlines and Jubba Airways are among the most successful privately-owned airlines in Africa. They have proudly succeeded where other airlines have failed, and proven that although the airline business in Somaliland/Somalia is a very challenging investment, it can yet be a successful one. And as the managers of Daallo Airlines and Juba Airways have been involved in the airline industry for a great deal of time and gained invaluable experience, and even learnt from why other airlines have failed, I am certain hat they can professionally steer their businesses to a safe shore even in the current economic downturn.

Abdikarim Ali Baarjeex

MSc Aviation Management

Bristol, United Kingdom