info@businessghana.com
OVERVIEW
The African continent is home to 17% of the global population but its air traffic accounts for less than 3% of global traffic.
African airlines lose an average of $1.54 per passenger carried while globally airlines earn $6.12 per passenger carried.
Today, in several parts of the world you can fly for 1.5 hours for less than $100 while in Africa total taxes on the ticket are often higher than $100.
Passenger traffic between Africa and the rest of the world is dominated by non-African carriers often charging exorbitant fares.
Out of 55 African states, only 8 have direct flights to more than 20 other African states. Quite often, the passenger is obliged to transit through one or several stopovers.
This data should challenge all stakeholders to commit to creating an conducive environment for the development of air traffic in Africa.
MAIN CHALLENGES FOR AFRICAN AIRLINES
The air transport industry is facing a host of challenges:
Fleet financing is also a critical challenge for African airlines which encounter difficulties in accessing funding due to perceived risk by international financial institutions. African development banks should address this problem by putting in place adequate funding mechanisms for African airlines.
Nevertheless, alongside the challenges there are opportunities and all the stakeholders should work towards harnessing them for African aviation to prosper:
These various projects initiated by the African Union should contribute to improving the fortunes of airlines.
The high economic growth rate, the young African population and the emergence of a middle class are all great opportunities to be grasped.
MARKET ACCESS
The Single African Air Transport Market (SAATM) project was launched in January 2018 in Addis Ababa, Ethiopia. Since then, a total of 28 States have signed the solemn commitment. These signatory States represent 51% of AU member states, 61% of the population and 65% of the gross domestic product (GDP).
10 of the 28 signatory States have already fully implemented the immediate measures recommended by AFCAC (African Civil Aviation Commission) in order to achieve the realization of SAATM.
18 States have also signed a Memorandum of implementation (MoI) with a view to harmonizing their bilateral agreements with the provisions of Yamoussoukro Decision.
The objective of SAATM is to remove all restrictions on traffic rights, frequencies, capacity and tariffs.
Expected and confirmed benefits in several other regions of the world are: better connectivity, decrease of travel time and reduction of air fares to make air transport affordable for as many Africans as possible.
Some Member States are still reticent and have not yet signed SAATM mainly for two (2) reasons:
At AFRAA, we believe that although these reservations deserve to be heard and taken into account, SAATM is a continuous process. The Executing Agency which is AFCAC has been working to move SAATM process forward in the best possible conditions and expeditiously.
Furthermore, we believe that African aviation needs both "small" and "large" airlines. Africa is a vast continent and to effectively serve it, African airlines must work together. Mergers and consolidations will certainly be needed.
SAATM will allow a harmonious development of air transport and result in better profitability for Africa airlines.
TAXES
Aviation is often considered by some governments as a potential source for raising funds. Unlike the other modes of transport, it is highly taxed which increases air fares out of the reach of passengers especially in Africa.
Whereas in Europe you can travel for less than $100, in Africa only taxes range from $50 to $100 depending on the country.
The role of air transport in economic development should be better understood by governments and they should place it at the core of their national development policies.
COST OF FUEL
On average fuel accounts for 25% of airline operating costs worldwide. In Africa this average is higher at 35%. In several stations, the evolution of fuel prices is not in tandem with oil price trends on international markets. This is due to lack of transparency around pricing by local suppliers.
In addition, some States are taxing fuel and therefore do not comply with the Chicago convention recommendations.
AFRAA and IATA (International Air Transport Association) are working together to raise the awareness of States and fuel suppliers in order to address this issue.
NEED FOR COOPERATION
African airlines must enhance their cooperation to drive down their costs and increase revenue. AFRAA encourages regional initiatives in this regard.
Cooperation can be of several types: capital, commercial, technical and operational, etc. "Lager" airlines could help "smaller" ones to grow through enhanced cooperation.
At AFRAA we have recently launched several initiatives aimed at raising the level of cooperation among our member airlines in different areas including training, flight schedule coordination, technical and operations etc.
ENVIRONMENTAL ISSUES
Public opinion is increasingly sensitive to environmental issues. The environmental impact of air transport is particularly about air pollution, noise pollution and global warming.
Aviation accounts for about 2% of global emissions.
It should be remembered that aviation is the first global industry to have voluntarily committed to stabilizing its CO2 emissions from 2020 and to reduce by half by 2050 despite growth forecasts for the sector.
There are several ways to contain aviation environmental impact:
At AFRAA, we support industry efforts (aircraft manufacturers, ICAO, IATA, …) to reduce aviation environmental footprint. We focus on awareness raising and training of our member airlines on environmental issues.
ROLE OF AFRAA
AFRAA membership currently stands at 43 African airlines carrying more than 85% of intra-African traffic. The Association was created in 1968 and is based in Nairobi, Kenya.
It focuses on promoting a sustainable, interconnected and affordable Air Transport industry in Africa where African Airlines become key players and drivers to African economic development.”
It serves African airlines and champions Africa’s aviation industry.
PRIORITIES FOR THE NEXT FIVE YEARS
We want an air transport where African airlines will be economically successful with enhanced connectivity and contribute to the economic integration of the African continent.
THE FUTURE OF AFRICAN AIR TRANSPORT
Africa is a continent with great development potential. To harness this potential, all stakeholders will have to play their role and promote an efficient and sustainable air transport system.
Considering the vast area of the African continent, the absence of adequate ground infrastructure, the high growth rate of African economies and population, air transport will play a key role in the development of the continent.
According to experts, air traffic in Africa is expected to double every 15 years. We must be prepared to absorb this growth.
