Airlines brainstorm pandemic solutions
The unparalleled circumstances thrown up by Covid-19 have required Africa’s aviation sector to radically rethink operations. Stephen Williams reports.
When the African Airlines Association (AFRAA) called a virtual AGM assembly in November, the theme dominating the agenda was the impact of the Covid-19 pandemic on the industry. The turbulence created by the disease has dealt a severe blow to Africa’s aviation sector.
Alexandre de Juniac, director general and chief executive of the International Air Transport Association (IATA), painted a stark picture of the industry’s decline. “For aviation in Africa, the numbers are staggering. Traffic is down 89% and revenue loses are expected to reach $6bn. And this figure is likely to be revised downwards in our next forecast. But the impact is much broader. The consequences of the breakdown in connectivity are severe: 5m African livelihoods are at risk, and aviation-supported GDP could fall by as much as $37bn. That’s a 58% fall.”
During the assembly, key stakeholders emphasised the importance of coordinated efforts as a way to secure business continuity. An appeal was made to governments and development finance institutions to continue supporting the industry as a means to secure the continent’s social and economic recovery, given the sector’s strategic contribution to national GDP.
As AFRAA’s 2020 annual report, published during the assembly, makes clear, the aviation sector was facing headwinds even before Covid-19. The report cites UNWTO figures showing that the rate of increase of tourist arrivals fell from 8.4% in 2018 to 5.4% in 2019. It also highlights that while the global aviation industry made post-tax profits of $26.4bn ($5.80 profit per passenger), African airlines recorded losses of $300m (a $2.67 loss per passenger), according to IATA.
Consolidation is crucial
Some of the most famous names in African aviation are struggling. One of Africa’s biggest airlines, South African Airways (SAA), has not made a profit since 2011 in a period marred by mismanagement. Draft financial results for 2018 and 2019 made public by SAA in May reveal losses of R10.6bn ($661m) over the two-year period.
But as AFRAA was holding its annual assembly, it was announced that SAA and Ethiopian Airlines (Africa’s biggest airline) were in discussions about Ethiopian Airlines providing planes, pilots and management to SAA. The effort – which could lead to wider consolidation – could offer an example of how African airlines can work together during the pandemic.
AFRAA secretary general Abdérahmane Berthé says that consolidation and collaboration – enabled by further liberalisation of the sector – will be the key drivers of an African airline renaissance.
“Even prior to Covid-19, intra-Africa connectivity was a challenge. To resolve this issue, governments need to support the integration of Africa and ensure policies that allow a conducive environment for the development and provision of safe, reliable and affordable air transport in Africa, necessary for the free movement of persons, goods and services in the continent. The recovery of the airline industry post Covid-19 will be better realised through airline collaboration and liberalisation of African skies.”
A key element of the liberalisation ought to be the introduction of the long-awaited African Union Single African Air Transport Market Initiative (SAATM – commonly referred to as the “Open Skies” Treaty), he says.
“SAATM will go a long way to facilitate the airlines’ rebound due to the fact that market access is a critical challenge for airlines. It will have a positive impact on air transport in Africa: better connectivity, reduced journey times, reduced ticket fares and a contribution to the sustainability of airline operations.”