Iata urges African states to provide relief to industry
Africa’s air transport industry is set to face another grim year with delays to the region’s economic recovery and further job losses, unless the continent ’ s governments urgently provide emergency relief to the entire sector.
They need to establish and safeguard a vaccine distribution network, unblock the flow of pledged financial support and systematically implement common Covid-19 testing instead of unnecessary and confusing measures that deter air travel, trade and tourism.
The latest review of the International Air Transport Association (Iata) indicates a more than 90% average drop in air traffic in Africa’s five largest markets (SA, Egypt, Morocco, Ethiopia and Algeria) due to the pandemic, its associated travel restrictions and accompanying economic devastation.
Measured by supply, demand and profitability, Africa, which had previously experienced modest growth, has been one of the world’s hardest-hit regions.
In socioeconomic terms the pandemic and recession have jeopardised 3.9-million African jobs supported by air transport and $32bn in contributions to Africa’s combined GDP.
Compared with 2019, this year African airline traffic volumes will have fallen 72%, outpacing the 62.8% contraction in available capacity. Over the same period the entire global market will have experienced a 66.3% fall in demand and a 57.6% reduction in capacity. The continent ’ s airlines are on course to post a combined $2bn loss for 2020 as revenues have shrunk 64% since last year. The global industry will lose $118.5bn this year.
DELAY DISTRIBUTION
Looking ahead, the relative lack of cold-chain facilities throughout Africa may delay the distribution of vaccines, which is likely to impede the region ’ s overall economic and financial recovery. Similarly, there are questions about the ability to secure the vaccine distribution network and supply lines in many parts of the continent, especially as vaccines will initially be seen as a ripe high-value target for criminals and terrorists.
Without urgently needed emergency relief, 2021 will be another grim year for Africa’s commercial air transport industry. Demand is expected to be 62% lower than in 2019, with 55% less capacity in the market compared with last year. Africa’s airlines will post $1.7bn in combined losses next year.
No single component of the air transport sector is immune to the crisis and a number have failed, gone into administration or sought bankruptcy protection. If governments allow the industry to collapse they will struggle to recover their economies, which depend upon the connectivity and efficiencies that only air transport is capable of providing.
Iata is raising the alarm for African governments to urgently respond by providing emergency short-term financial relief to the industry on an ownership-agnostic basis. All airlines — private and publicly owned — play a crucial economic role in connecting people, services and products with markets. Governments that are serious about rebuilding their economies must understand this.
Similarly, Iata is appealing to Africa’s governments to remove all bureaucratic obstacles that are preventing more than $30bn of financial support pledged by international finance bodies from reaching the airline and tourism businesses across the continent for which it is intended. Iata is also renewing a call to several African countries that are still blocking the repatriation of $516m in revenues generated by airlines serving those markets.
BOLD STEPS NEEDED
Bold steps will be needed to restart aviation and economies. It is expected that the restart of aviation will commence in domestic markets, then proceed to regional flying, direct longhaul and finally hub operations.
The Covid-19 crisis has resulted in a huge decrease in global connectivity (both in terms of the number of city pairings served by direct flights and the frequency of those flights). Africa was already disadvantaged before the crisis, thanks to the severe limits on intraAfrica connectivity.
However, the crisis has presented a golden opportunity to fast-track the implementation of the single Africa air transport market (SAATM). This flagship AU programme will improve intra-Africa connectivity and foster trade and tourism. In doing so it will determine the speed at which the industry and Africa’s economies will recover. So far 34 African countries, representing 75% of African passenger traffic, have signed up, but only 10 have implemented any of its concrete measures.
No modern, aspirant economy can survive without a fit-for-purpose and efficient air transport system. Expediting the implementation of SAATM with all the other measures Iata has identified will go a long way to creating and safeguarding the system and securing economic rejuvenation across Africa.