27048 - AKFED Aviation

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Environmental & Social Review Summary

Project Number

27048

Company Name

Aga Khan Fund for Economic Development SA

Date ESRS Disclosed

Feb 18, 2010

Country

Africa Region

Region

Africa

Last Updated Date

Jun 3, 2021

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : Mar 31, 2010
Signed : Mar 31, 2010
Invested : Jun 10, 2010

Sector

Air Transportation

Industry

Infrastructure

Department

Regional Industry - INF Africa

Project Description

The Aga Khan Fund for Economic Development (AKFED) Aviation Services Division (the Division) is currently expanding its activities in both East and West Africa. The aim of the Division is to assist the airlines in maintaining the critical aviation infrastructure in support of economic development and to provide much needed regional airline services in Africa. The Project would consist of a corporate loan of up to US$25 million to the Division for on-lending to its three airlines: Air Burkina, Air Mali and Air Uganda, to allow the Division to consolidate all of its airlines and aviation activities and optimize routing, synergies and overall effectiveness across the Division’s airline operations. An Aviation Holding Company (AHC) may be set up for this purpose. Loan proceeds will be used to fund fleet acquisition cost (introduction of 9 refurbished MD-87 and 2 MD-83 aircraft) as well as other airline development costs such as: (i) the introduction of 4 leased CRJ-200 aircraft as of Spring 2010 including training of crews and engineers as well as purchase of spare parts; (ii) network extension in East and West Africa with the opening of new destinations and increased flight frequency; (iii) opening the Division’s airlines sales offices in key markets instead of use of third party sales agents; and (iv) improving the maintenance facilities of all 3 airlines.

Overview of IFC's Scope of Review

The review of this project included desk reviews of (i) completed IFC Environmental, Health, Safety, and Social questionnaire for Air Mali and Air Burkina; (ii) the Operations manual, Safety Equipment and Emergency Procedures Manual, Disaster Response Plan for all three airlines; (iii) Air Worthiness Certificates issued by local aviation authorities; (iv) audit reports by (a) International Air Transport Association on Air Burkina in December 2008 and (b) HART Aviation (based in Australia) on Air Mali in June 2009; United Nations assessment of Air Uganda''s policies, procedures and facilities with regards to aircraft operation and maintenance in April 2009; and (iv) interview with The Aga Khan Fund for Economic Development (AKFED) Aviation Division’s senior management. IFC’s assessment considered each airline’s management of environmental policies; labor and working conditions; documentation of safety, operational and quality assurance procedures; compliance with national and local permitting requirements; audit recommendations, and each airline’s engagement with the community.

E & S Project Categorization and Applicable Standard

While all Performance Standards are applicable to this investment, IFC’s environmental and social due diligence indicates that the investment will have impacts which must be managed in a manner consistent with the following Performance Standards:

- PS1 Social and Environmental Assessment and Management Systems;
- PS2 Labor and Working Conditions;
- PS3 Pollution Prevention and Abatement; and
- PS4 Community Health, Safety and Security.

The other Performance Standards are not applicable since there are no issues relating to land acquisition, economic or physical displacement; sensitive biodiversity or natural resource management; indigenous people or areas identified to have cultural heritage potential.

The Project is categorized as B because the investment consists of expansion and refurbishment of aviation fleet and funding of working capital and start up costs; as such the environmental and social (E&S) risks are readily manageable by the Division’s airlines through implementation of mitigation measures and therefore have limited E&S impacts that are mainly avoidable and reversible. The main E&S risks include: (i) aircraft operation and safety including robust training program; (ii) aircraft maintenance and servicing, including handling and management of hazardous material and waste; (iii) environmental protection at ground site; (iv) aircraft noise and emissions controls; (v) employees occupational health and safety and fair working conditions; and (vi) consumer health and hygiene conditions.

Environmental and Social Mitigation Measures

The Division has presented information on its current practices and policies that seek to address safety, environmental and social risks and impacts to ensure that the proposed project currently complies with or will upon implementation of specific additional agreed measures, comply with host country laws and regulations and the IFC Performance Standards on Social and Environment Sustainability and Environmental, Health and Safety guidelines. Findings of the IFC’s review and conclusions are summarized in the paragraphs below. Additional actions to be undertaken by The Division’s airlines are listed in the attached Environmental and Social Action Plan (ESAP).

SOCIAL & ENVIRONMENTAL ASSESSMENT AND MANAGEMENT SYSTEMS
Social and Environmental Assessment
An environmental care assessment was put together by the Division for the three airlines in which applicable environmental laws as well as waste management practices for each airline are outlined.

Management Systems:
The Division relies on the current management system of each individual airline. Each airline maintains detailed manuals with respect to standard operating procedures for air and ground operations, safety equipment, and disaster response plan which are in compliance with respective host country Civil Aviation Authority. The Aircraft maintenance program is established according to the International Civil Aviation Organization (ICAO) standards and approved by the local Civil Aviation Authority. Scheduled routine aircraft maintenance and servicing are undertaken by the Aircraft Maintenance Organization (AMO) of Air Burkina which is audited and approved by the Civil Aviation Authority in Burkina Faso for the line maintenance on the MD series. The AMO of Air Burkina is certified to repair wheels and brakes, and runs a Non Destructive Testing (NDT) and batteries shop. Currently wheels are repaired for Air Burkina and Air Mali. The certification of the brakes shop is expected within 2010. Air Uganda is using a portion of hangar space rented from a local Operator to undertake its maintenance activities.

All airlines have up to date Airline Operation Certificate. The airlines have been audited by the respective local Aviation Authorities and have been subsequently delivered an Airworthiness Certificate. According the regulations, all three airlines have each a Quality Assurance and Safety Manager(s) who report directly to their respective Chief Executive Officer; their responsibilities include assurance of proper implementation of the management system, safety, security, internal audits, compliance with permits and training.

Through its technical assistance partnership with Meridiana SPA an integrated maintenance management system (AMOS) common to all three airlines will be in place. Air Uganda already uses AMOS, Air Burkina and Air Mali will implement the system by 30 June, 2010.

Training:
Certified technicians are trained every two years according to European regulation (European Aviation Safety Agency - EASA Part 147 facility). Even though dangerous goods are not accepted by any of the airlines, a Safety and Dangerous goods training is undertaken by all concerned staff according to local country Civil Aviation Authority and the Aircraft Handling Manual (AHM) training in order to recognize such cargo.

Every six months pilots are sent on a ground and flight simulator course (US based institution for the MD-87, French based for the CRJ-200). For the pilots’ line training, one of the captains in Air Uganda was trained and has been licensed as training captains and is validated by the Ugandan civil aviation authorities. Air Mali and Air Burkina have each had two captains qualified as “Training Captains”.

Air Mali has hired a ground operations training manager who is an instructor in dangerous goods and ground operations. Once the training is completed for Air Mali, he will also train key personnel of the Division’s two other airlines.

Monitoring and Reporting:
The CRJ fleet is equipped with an integrated aircraft data acquisition system (ADS) to record performance of flights during aircraft operation. The MD-87/83 fleet is equipped with the QAR (Quick Access Recorder). In regular intervals, the data is downloaded into the maintenance support system and then analyzed by the respective engineering unit. The engineering unit for the CRJ-fleet is with Britair (an Air France subsidiary in France), whereas the MD fleet is under the responsibility of the respective airlines. An analysis of the downloaded data is then distributed internally for corrective actions if needed.

A pre-IOSA audit (IATA Operational and Safety Audit) was completed for Air Burkina in December 2008 and provided the open items to reach IOSA certification. Air Burkina is implementing those findings and the final certification is expected by end of March 2010. HART Aviation (based in Australia) carried out an audit of Air Mali’s operation in June 2009 and subsequently provided a number of recommendation that are being or have been implemented. The United Nations organization carried out an assessment of Air Uganda’s policies, procedures, standards and facilities with regards to aircraft operation and maintenance in order to ensure compliance with WFP charter agreement and CAA standards.

LABOUR AND WORKING CONDITIONS
Human Resources (HR) Policy:
IFC’s assessment considered the Division’s airlines documentation with respect to fair, safe and healthy working conditions.

The Division’s airlines employ a total of 578 direct employees as of 01 January 2010. 35.5% of the workforce comprises of female employees. Each airline has a Human Resources documentation based on the requirements of national law which includes aspects of recruitment, code of conduct, working hours, overtime, holidays, and leave. Air Burkina and Air Uganda documentations include terms of reference for the workers’ representative whilst Air Mali’s include the workers’ right to join a union. The workers representatives are elected by staff and facilitate communication with management as well as present employees’ grievances. Employees can also express grievances directly to the Human Resource Department. Each employee is provided with a written contract including wages, a copy of the relevant company’s procedures and code of conduct. Furthermore, the Division’s airlines do not hire minors.

The Division is in the process of creating joint service organizations offering staff mobility between the Division’s airlines. As part of this investment, the Division will be required to formulate a common Human Resources policy for these shared services companies. IFC recommends that the Division applies the same labor and working conditions practices across all three airlines to the extent possible.

The Division’s airlines’ management system includes a due diligence procedure to verify if the suppliers are compliant with national labor regulations. The Division’s airlines have agreed, where leverage exists, to amend future contracts with suppliers to include a clause on fair labor and working conditions practices in line with this Performance Standard requirements.

Occupational Health and Safety:
The Division’s airlines comply with respective national regulations governing the protection of the workforce. The pilots, cabin crew and mechanics are required to take an annual medical visit (this is also a requirement prior to being hired) furthermore, employees’ health records are maintained by the HR department of each airline. Incident reporting framework which describes the incident and corrective action undertaken is tracked by the Safety Department; lost time accident is low. The Division’s airlines provide personal protective equipments where relevant, and operations/Safety manager ensure enforcement.

Fire prevention and emergency response procedures are in place, fire extinguishers verification/testing of equipment is undertaken by supplier.

POLLUTION PREVENTION AND ABATEMENT
Emissions and Noise:
All aircrafts are compliant with the International Civil Aviation Organization (ICAO) Annex 16 Chapter 3 technical requirements for emissions and noise levels. IFC will require the Division’s airlines to report on green house gas emissions from their aircrafts as part of the airlines’ annual environmental and social monitoring report.

Waste Management:
Hazardous or dangerous goods are not allowed in any of the flights, however, training is provided to staff to enable them to recognize and reject such cargo. The airlines do not handle, store or dispose off any fuel as it is supplied by licensed aircraft fuelling companies. Small quantities of waste oil, lubricants and cleaning solvents are used for maintenance activities, these are stored in a designated area and disposed of by a third party contractor.

All hazardous materials are stored in a proper separate storage room in accordance with International Aeronautical Rules and supervision of the local Airworthiness Authorities. Tires are retreated by Good Year Holland (GYH) and if the tires don’t meet the recycling specifications, they are scrapped and disposed of by GYH according to European regulations.

Catering waste and Aircraft toilet and washing waters are disposed of by third party contractors.

COMMUNITY HEALTH, SAFETY AND SECURITY

IFC’s assessment considered the Division airlines’ operations impact on the health, safety, and security of its clients and surrounding community.
The Division’s airlines operate in conformity with local and internationally defined standards of flight safety, passenger security as established and reinforced by ICAO. The Quality Assurance and Safety Departments of each respective airline oversee compliance with operational, safety and security procedures, undertake regular audits, put forward corrective actions and follow up on implementation. The Division’s airlines have been operating for over 8 years and, with exception to Foreign Object Damages such as bird strikes on engines and wing leading edges, have not triggered its accident insurance policy. Aircraft holds are equipped with smoke detectors and during ground operation a firefighting equipment is parked under the nose of the aircraft.

Food provided on the plane is outsourced, food safety is ensured by the catering provider.

Stakeholder Engagement

Air Uganda:
Mr Hugh Fraser
CEO
Plot 11/13, Lower Kololo Terrace
P.O.Box 36591, Kampala, Uganda.
Tel: +256 414258 262/4
Fax: +256 414 500 932
Email: info@air-uganda.com

Air Burkina:
Mr Mohamed Ghelala
CEO
29, Av. de la Nation
Immeuble Air Burkina
01 BP 1459 Ouagadougou 01
Tél. (226) 50 49 23 23 / 50 49 23 65 / 50 49 23 70
Fax (226) 50 31 45 17/ 50 31 31 65
E-mail: resa@airburkina.bf

Air Mali:
Mr Abderahmane Berthé
CEO
Siège et Agence Centre ville
Immeuble TOMOTA – Avenue Cheick Zayed, BPE 2286,
Hamdallaye, Bamako, Mali
Tél. +(223) 20 22 24 24 / 20 22 26 26
Fax : +(223) 222 71 11 / 20 29 56 00
Email : info@air-mali.com

Client Documentation

File Name	Actions
AKFED ESAP.pdf

**Information on IFC's Policy and Performance Standards on Environmental and Social Sustainability can be found at www.ifc.org/sustainability

IFC supports its clients in addressing environmental and social issues arising from their business activities by requiring its real sector clients to set up and administer appropriate grievance mechanisms and/or procedures to address complaints from Affected Communities in relation to environmental and social issues arising from IFC's clients' business activities. Since 2012, IFC's Financial Intermediary clients applying the Performance Standards are required to develop External Communications Mechanisms to receive and review inquiries or complaints from any interested party regarding the E&S risks and impacts of their operations.

For IFC projects that are active or under consideration, individual(s), or their authorized representative(s), who allege they have been or will be adversely affected by E&S risks or impacts arising from IFC's clients' business activities, may submit a complaint to IFC directly for consideration. When receiving an E&S complaint, IFC engages with complainants and works with its clients to find solutions to E&S concerns as quickly and efficiently as possible.

Complaints can be submitted to IFC online at www.ifc.org/escomplaints or by email to EScomplaints@ifc.org.

IFC complaint response is separate from and complementary to IFC’s clients’ project level grievance mechanisms and IFC’s Independent Accountability Mechanism (CAO). Lodging a complaint directly with IFC does not, at any time, restrict access to CAO.

Affected communities have unrestricted access to the Compliance Advisor Ombudsman (CAO), the independent accountability mechanism for IFC and MIGA. CAO facilitates the resolution of complaints related to IFC and MIGA projects and sub-projects, undertakes reviews of IFC’s and MIGA’s environmental and social compliance, fosters public accountability for their commitments, and enhances the environmental and social performance of IFC and MIGA.

Independent of IFC and MIGA management and reporting directly to the IFC and MIGA Boards of Executive Directors, CAO helps resolve issues raised about the environmental and social impacts of projects through a neutral, collaborative, problem-solving approach via its Dispute Resolution function. It also reviews IFC’s and MIGA’s compliance with environmental and social policies, assesses related harm, and recommends remedial actions through its Compliance function. Additionally, CAO provides advice to IFC, MIGA, and their Boards to enhance environmental and social sustainability performance and minimize the risk of harm.

Complaints may relate to environmental and social harm regarding any aspect of the planning, implementation, or impact of a project or sub-project, and can be made by any individual, group, community, entity, or other party affected or likely to be affected by the environmental or social impacts of an IFC- or MIGA-financed business activity.

Complaints can be submitted by any of the following methods:

Online form: available at https://www.cao-ombudsman.org/
Mail/Hand Delivery to: 2121 Pennsylvania Avenue, NW, Washington, DC 20433, USA
Voice mail: +1 202 458 1973
Email: cao@worldbankgroup.org
SMS, WhatsApp, Telegram, and Signal: +1 202 650 2627

CAO receives and addresses complaints in accordance with the CAO Policy, which can be accessed at: https://www.cao-ombudsman.org/policies-guidelines.

This Environmental and Social Review Summary (ESRS) is prepared by IFC to disclose its findings and recommendations related to environmental and social considerations regarding potential investments. Its purpose is to enhance the transparency of IFC's activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this ESRS is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein.
It is distributed in advance of IFC Board of Directors' consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following ESRS is disclosed in accordance with IFC's Access to Information Policy (AIP).

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

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