Regulatory, financing snags curbing SA aviation

6th December 2019 By: Rebecca Campbell - Creamer Media Senior Deputy Editor

The past few weeks have seen a series of important conferences in South Africa, as far as the aerospace and defence sectors are concerned. And the aerospace and defence sectors are a significant part of the country’s high-technology manufacturing industry. They were the 2019 Aeronautical Society of South Africa Conference, the South African National Space Agency’s Second Space for National Development Conference and the 2019 Aerospace, Maritime and Defence Conference. I had the great pleasure of attending all three.

It may come as a surprise for many to learn that South Africa actually has a successful aeroplane manufacturing industry. They are small planes, generally referred to as sports aircraft, but they are real, solid, aircraft, not microlights (which South Africa also produces). They are internationally successful, internationally respected.

The single biggest obstacle to the growth of this sector is the inability of the South African Civil Aviation Authority (SACAA) to provide what is called type certification for locally designed and built aircraft. Those local manufacturers that desire type certification of their aircraft have to get it abroad, at enormous expense. SACAA can not provide type certification because it does not have the resources to do so. The easiest (and probably the cheapest) way for the South African government to stimulate and expand the local aviation manufacturing sector would be to strengthen the SACAA, giving it the resources to establish and maintain a proper type certification capability to the level of what is generally referred to FAR Part 23, and to negotiate reciprocal recognition of type certification with other aviation regulators around the world.

FAR Part 23 is US terminology, but used worldwide because it serves as convenient shorthand for a wide range of smaller aircraft that are in high demand and are very useful.
‘FAR’ stands for Federal Aviation Regulations, which are issued by the US Federal Aviation Administration (better known as the FAA). FAR Part 23 contains the type certification rules for aircraft which can carry nine or fewer passengers and with a maximum takeoff weight (MTOW) of 12 500 lb (about 5 670 kg) or multi- engined (usually twin-engined) aircraft which can carry 19 or fewer passengers and have a MTOW of 19 000 lb (about 8 618 kg).

South Africa’s private-sector aviation industry has already shown itself to be perfectly capable of designing, developing, producing and successfully selling single- engined aircraft that would fall under the aegis of FAR Part 23, if they had type certification. (Currently, they have to be sold as ‘Experimental’ types – another FAA category.) A notable example is The Airplane Factory, with its Sling aircraft family, which comes in two-seat and four-seat versions. (See Engineering News November 8, 2019.) Another example, further up the scale, is Falcon Air, which is producing, at a low rate, its single turboprop-engined, one- or two-pilot, six- or seven-passenger Falcon 402 – based on, but a radical redesign of, the Cessna 402 twin piston-engined aircraft. (See Engineering News January 20, 2017.)

Focusing on such unglamorous aircraft (in comparison to jet airliners or combat types) might seem unambitious, but it is not. They provide a financially viable and sustainable foundation for a local aviation industry. Local (and so much more affordable) but internationally respected type certification would make rapid growth of these local enterprises much easier.

Many in South Africa’s aerospace sector envy Brazil’s success in establishing Embraer and making it a global success story, especially as, when Embraer was established, South Africa had a bigger and more advanced aviation industry. Embraer was set up in 1969 as a State-owned company; it was privatised in 1994, the State retaining a ‘golden share’ to safeguard national interests. Early this year, Embraer announced a commercial aviation joint venture [JV] with US giant Boeing, named Boeing Brasil Commercial, which is 80% Boeing and 20% Embraer, which takes over responsibility for Embraer’s commercial airliner range – the E-Jet and E-Jet E2 families. It also announced a second JV with Boeing, called Boeing Embraer Defense, 51% Embraer and 49% Boeing, which will take control of the C-390/KC-390 military airlift aircraft, now named the Millennium. Embraer will retain all its other businesses, including business jets, combat aircraft and other defence activities.

But it is generally forgotten in South Africa that the aeroplane which launched Embraer, the twin-turboprop engine EMB-110 Bandeirante, started life capable (in its initial civil version) of carrying no more than 16 passengers, although a late version – the EMB-110P2 – could carry up to 21 passengers. (A Bandeirante, by the way, was a Brazilian pioneer, based on São Paulo – today the home state of Embraer – and penetrating deep into the interior of South America. Do not think Amercian Wild West settlers in covered wagons; the Bandeirantes were more like land-based Vikings, raiding as well as settling!)

Mention of Embraer does lead to the other major constraint for the development of the local aerospace manufacturing industry – financing. If you buy Embraer aircraft, the deal can be financed by Brazil’s development finance agency, the National Economic and Social Development Bank (its Portuguese acronym is BNDES). For example, back in May, the BNDES reported that it had granted financing of up to $189-million for the sale of Embraer E-175 jet airliners to US airline Skywest. The bank also reported that it had provided such funding for export customers of Embraer aircraft for 25 years. Total financing for Embraer aircraft exports in that period came to $22-billion.

I have been told, although I cannot confirm the story, that the BNDES actually has an entire office dedicated to providing financing for Embraer’s export orders. Whether there literally is such a dedicated office or not, financial support for Embraer export contracts is clearly a well-established and regular process. The South African aerospace sector has, alas, no such institutionalised financing support. That is also needed to grow the sector, especially into Africa.

One final point – South Africa also has a very small, but successful, private-sector space design and manufacturing sector, which has, in recent years, produced nanosatellites which are now successfully functioning in orbit, as well as subsystems successfully flying and functioning on other countries’ spacecraft. But that is a story for another time.