With Covid-19 pulling the brakes on international aviation, perhaps now is the time to do things differently when operations restart in earnest? In the 2021 African Aviation Industry Group (AAIG) Webinar on 03MAR21, key-note speakers discussed the topic: “Achieving Affordable Air transport across Africa”.
Imagine, if you were wanting to fly from Vienna to London, that you would have to transit through Nairobi in order to do so. And imagine that your ticket could cost you anything from between half
a month’s to 7 weeks’ of your average salary? What sounds incredible is, in fact, sad reality for many on the African continent. As Chamsou Andjorin, AAIG Coordinator, outlined in his opening
words: “The importance of this topic cannot be overstated, in a context where almost 90% of people in Africa are excluded from the benefits of the aviation services because they just can’t
afford it. The data shows that the number of flights per week per million passengers in Africa is 3 times less than in Asia, 4 times less than in Latin America, 5 times less than in Middle East,
10 times less than in Europe, and 30 times less than in North America.”
Competitive disadvantages pre-Covid-19
The poorly connected network that can mean having to fly via Europe to get from one African country to another, is also a limiting factor for a strong intra-African cargo business. Despite passenger ticket prices that are much higher than in other parts of the world, Oluranti Doherty, Director and Head of Export Development, Afrexim Bank, pointed out that, already prior to the pandemic, African airlines were on average losing $1.09 on every passenger that they carried (with the exception of North Africa, where there was a $14.06 gain per person), and only one African airline was consistently profitable. Passenger load factors, at 71%, were 10% lower than in other parts of the world. Most African airlines are saddled with high financial commitments, and aviation infrastructures, though comparatively more expensive, are often below the industry standard.
High costs restrict competitiveness
The Covid-19 crisis has amplified pre-existing conditions. As Secretary General of AFCAC, Tefera Mekonnen outlined, “High costs of operations exacerbated by taxes, high charges, and fees have continued to restrain the functions and catalytic importance of civil aviation in the socio-economic development and continental integration of Africa.”
All charges, whether governmental, aeronautical, or arising through the “monopoly of service providers,” end up being passed on to passengers in the ticket cost. “Airlines also pay additional charges and fees for ancillary airport facilities and services, ground handling services, oversight and regulatory services by CAAs. Airlines are equally faced with high jet fuel costs, however, the charges and taxes levied by far have the highest impacts on the prices of tickets for air travel in Africa.”
What is the post-pandemic forecast?
With the pandemic, the already thin intra-African connections have dropped by 78% (JAN21 figures) and the cash burn per passenger has increased to $42. It is expected that the net losses in African aviation in 2020 will amount to more than $ 2 billion. Already 8 African airlines are in administration due to systematic problems caused by Covid-19. “Covid-19 will have a negative impact on air traffic through Africa, with higher operating costs and lower utilization levels, due to social distancing,” Oluranti Doherty predicted. In addition, ticket prices are forecasted to be 45% higher within Africa than in other parts of the world.
The United Nations Economic Commission for Africa has published a 30-page policy research paper “COVID-19 and African airlines – overcoming a liquidity crisis” and underlines that “A collapse of African airlines will have dire economic consequences. Air transport supports over 7 million jobs and contributes over $70 billion to the continent’s economy.”
Come together to improve
Captain Gilbert Kibe, Director General of the Kenyan Civil Aviation Authority, pointed out that “Air Transport is the single largest enabler of economic growth,” yet also that “fear of the unknown is the single greatest barrier.”
A number of agendas already exist – such as the AU Agenda 2063 to “transform Africa into the global powerhouse of the future,” or the Single African Air Transport Market (SAATM), and the African Continental Free Trade Area (AfCFTA), yet all panelists agreed that whilst Africa (which is home to 15% of the global population, makes up 20% of the world’s land mass, yet whose aviation industry represents just 3% of the global market), has major potential, national protectionism is preventing these agendas from fully being implemented.
Trust needs building amongst governments and within the aviation industry, so that work can progress on standardizing (safety/aviation) regulations, investing in airport and airline infrastructures, reevaluating taxation and fees, improving intra-African connectivity, benefitting from economies of scale, improving processes, and ensuring that operating costs and air fares are reduced. As one of the points in the AAIG’s communique published after the webinar, concluded: “The affordability of air transport is also dependent on the economic prosperity of the population. Governments are urged to promote and implement policies to encourage investments in all economic sectors to create jobs, to create economic mobility, to reduce poverty, to grow the middle class.”
Will the Covid-19 crisis be the catalyst for change?
As vaccines are now being flown to the continent (often by non-African airlines), and distribution across Africa is having to be coordinated and carried out, will this bring governments closer together on the subject of African air transport, SAATM, and AfCFTA? Will African airlines begin to cooperate and perhaps group together? And is there a silver lining to the pandemic for sustainability, given that airlines which are downsizing their fleets, will only bring back the newer, more environmentally friendly aircraft as they resume operation? Could this finally be the start of the implementation of so many measures that Rodger Foster, CEO of Airlink, stated in the call “have been talked about for over three decades!”? Will Covid-19 lead to a revolution in African aviation?
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