African demand for airtravel growing in post-Covid recovery
Market indicators signal that African airlines collectively can expect a net profit for the 2024 financial year. This will be the second year in a row that the continent’s airlines post a modest profit.
According to the International Air Transport Association (IATA), the anticipated financial results indicate the industry’s resilience in the post-Covid recovery. However, the expected US$100 million profit, translates to a mere 90 US cents per passenger, which is negligible compared to the global average of US$6.14.
IATA’s Regional Vice President for Africa and the Middle East, Kamil Alawadhi, said “Africa’s airlines are making a collective profit. That is good news. But it is razor-thin and well below the global benchmark. And there are wide variations across the continent where many individual airlines still struggle with losses. The demand to travel is there. To meet it, the African airline sector needs to overcome many challenges, not least of which are infrastructure deficiencies, high costs, onerous taxation, and the failure to broadly implement a continent-wide multilateral traffic rights regime.”
“The challenges facing African aviation are significant, but they are not insurmountable. IATA’s Focus Africa initiative is by no means a panacea, but it does lay out a framework to build a stronger aviation sector that will provide even better support to economic growth and social development.”
“The potential for aviation in Africa is huge. It has 17% of the world’s population yet only contributes about 2% of total global travel. While there are hurdles to overcome, through collaborative initiatives like Focus Africa with our partners including AFCAC, AFRAA and AASA we are addressing critical challenges hindering the advancement of aviation across Africa. Our goal is a safer, more efficient, and better-connected continent, driven by a diverse, skilled workforce to unleash aviation’s potential and unlock the economic and social opportunities,” said Al Awadhi.
From IATA’s 2024 financial outlook for African airlines, a growth of 8.5% in Revenue per Passenger Kilimetre is forecast which the association said is indicative of continued strong demand for airtravel across the continent. Pre-empting this demand in travel is the growth in capacity which is pencilled in at 9.1%
Load factor is expected to reach 61.9%, marginally more than the 59.8% breakeven load factor for African airlines.
A fragmented continental market and blocked funds due to compliance inadequacies, are indicated by IATA as some of the most pressing obstacles that prevent faster growth among the continent’s airlines. The Focus Africa initiative is an attempt to address key challenges and opportunities in six priority areas namely Safety, Infrastructure, Connectivity, Finance and Distribution, Sustainability, and Future Skills.
Integrating airtravel across the continent into a single market depends on removing restrictions on traffic rights for airlines, but IATA points out that few governments have taken steps for implementation of the Single African Air Transport Market (SAATM).
In terms of blocked funds from sales, African airlines still struggle with the inability to repatriate these funds in line with international agreements. In June this year, blocked funds of African airlines amounted to US$880 million, which is slightly more than half of all blocked funds globally. The African countries with the highest value in blocked funds are Algeria, Ethiopia, Eritrea and Zimbabwe. Until recently, Nigeria topped this list but some US$831 million has been cleared in the meantime.
