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Airlines

African promises

Africa is a region of immense prospects, and while this has been known for decades, there are still some unique challenges. Keith Mwanalushi looks at the current landscape of the airline industry
 

Statistics from IATA show that aviation in Africa carries over 70 million passengers a year, supports more than 6.9 million jobs on the continent and generates over $80 billion in GDP. 

 

Over the next five years the African economy is forecast to grow at 4.7% per year, well above the global average rate. For the continent to realise its full economic potential, aviation – particularly commercial air transport – must be prioritised. This was the concurrent theme at IATA’s Aviation Day Africa Conference in Abuja, Nigeria last year. 

 

“Policies that promote investment in air transport infrastructure, improve safety and enhance air connectivity must be implemented,” remarked Raphael Kuuchi, IATA’s Vice President for Africa, at the event. 

 

The general consensus remains that aviation has the potential to make a much more significant contribution to economic growth and development within the continent if its power is unleashed. 

 

Improving connectivity within the continent is critical to the development of African aviation as well as stimulating intra-Africa trade, investment and tourism. “It is imperative for African operators to find the right aircraft to serve especially the thin regional and domestic routes while making profits and offering adequate frequency of services,” says Dr Elijah Chingosho, African Airlines Association (AFRAA) Secretary General. 

 

“Connecting domestic feeder traffic in countries with major hubs like Ethiopia, Kenya, Egypt, Morocco and South Africa, among others, is quite good,” he explains. 

 

The only challenge Chingosho highlights is that local carriers at these major hubs face stiff competition from large carriers from outside the continent that often make embarking on international routes uncompetitive or loss making. “However, operations within the continent are certainly viable because of the huge untapped and growing market.”

 

South African tussle


The low cost carrier (LCC) market in Africa has proved a lot more difficult than many operators envisioned. In parts of North Africa and in South Africa the markets are fairly resilient. Domestic travel in South Africa is picking up due to more affordable air fares. 

 

LCCs are stimulating a great deal of demand in the market and opening up the opportunity for air travel to many who never had the opportunity to fly before.

 

A weaker rand, while not generally good for the country, has prompted an upsurge in international tourists coming into the country, providing much needed feed for the domestic carriers.

 

However, these are still tough times for South African aviation. Last year proved to be a particularly challenging one for local airlines. South African Airways’ (SAA) low cost division, Mango Airlines, posting a loss of R39 million, while SAA secured an additional State loan guarantee of R5 billion. Comair, operators of budget carrier kulula.com, bemoaned similarly poor results, reporting a 10% increase in passenger numbers but a 12% decline in profits after taxation.

 

“There’s no doubt that the market is heavily traded at the moment with an excess supply of seats on domestic routes,” FlySafair Chief Executive Officer, Elmar Conradie, said earlier this year. “Fares are determined by a market and are very much at the mercy of the powers of supply and demand. If supply grows more than demand, prices will fall.”

 

FlySafair announced a profit in 2016, the carrier’s second year of operations. This was despite a tough trading environment, with low economic growth and an over-supply of seats on domestic routes. >>


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