The latest report from IATA reveals that African Air travel recovered to 93 percent of pre-pandemic levels. However, if Africa is to sustain and exceed the progress being made, it has to resolve its internal contradictions, invest in knowledge and technology and scan the African environment to cash in on promising markets.
Globally the aviation industry is making significant progress as well as recovering from the effects of the pandemic such that a return to profitability is anticipated for the global airline industry this year, 2023.
What this implies is that there is anticipation of profits, though small this year. The report also points to a return to pre-pandemic passenger numbers.
The African market has always held profit for the future. A look at the recovery figures shows that Africa has outperformed the global average with respect to recovery. Overall, the industry average is at 85 percent recovery with anticipation of more connectivity going forward. The entire industry is expected to return to profitability this year but the internal contradictions in Africa will need to be appreciated by all to effectively resolve it.
Hear the IATA vice president for Africa and the Middle East: “Another challenge facing aviation in Africa that is familiar to everybody here is a lack of connectivity. Travel[ling] in Africa is a challenge. Distances that shouldn’t take a few hours can take days simply because the connectivity does not exist. For example, the route between Kigali and Luanda, which currently takes anywhere between nine and 20 hours, would take three hours in a direct flight.”
The challenge of connectivity is such that though Africa contributes 18 percent to the world’s population, it, as a continent, contributes just 2.1 percent of global air travel. A casual observation of flights from African countries to Europe and North America shows high frequency and load factors for foreign airlines that fly to their continent from the continent. Indeed the recovery for African air travel has been skewed in favour of international travel (which is 80%) compared to domestic travel ( 20% of traffic). Should Africa resolve the internal bottlenecks to air travel among themselves there is a promising environment for growth and profitability of air travel within the continent.
Investing in knowledge and technology will help resolve the challenge of high cost of aviation operations. These costs not only erode profits of airports and airlines but also impedes their capacity to compete globally.
Airports have huge fixed costs, following the Russia-Ukraine crisis and cost of living crisis globally, the cost of running airports have become challenging. Though airports are to a large extent monopolies, charges cannot be passed easily to customers and stakeholders. So airports will need to do some deep studies on the capacity to pay the airport community stakeholders. This is necessary so that toxic debts do not find their way into their balance sheets.
The cost of jet fuel is also significantly higher in Africa than in other markets. Costs escalate when inefficient connectivity is added to the high cost of jet fuel. Telecommunications companies may offer some light to aviation in Africa. They have moved from separate stand alone base stations (with their individual power generators) to leveraging on technology to co-locate their base stations – reducing costs and increasing connectivity.
As air travel increases, African airports need to regularly reappraise the personas of their travellers. A proper appreciation of passenger personas helps render service that meets the needs of travellers and improves the bottom line. When all stakeholders see that they stand to gain from the growth in air traffic across the continent, it provides a fertile ground to discuss other issues of mutual benefit.
Some recent reports give an insight into what the thought process should look like in thinking of strategic air connectivity: Henley and Partners, a UK based investment migratory consultancy firm, appraised private wealth in Africa. The focus was on the number of individuals, with a certain level of wealth, management and investment trends, migration of such investments as well as economic mobility in the continent. It came out with a report of cities and countries in Africa hosting the largest number of millionaires in United States dollars.
South Africa tops the list with four cities as Johannesburg, Cape Town, Durban and Pretoria. Egypt is second with Cairo. Nigeria is third with Lagos. Kenya fourth with Nairobi and Morocco fifth with Casablanca. Others are Accra and Luanda for cities while Mauritania, Algeria, Ethiopia, Ghana and Tanzania for countries.
Private wealth in Africa is reported to be constantly evolving with growth prospects. However, a World Bank report points to the fact that seven of ten most unequal countries in the world are in Africa and mainly in Southern Africa. Looking at the latest World Bank “Africa Pulse” report, states that inflationary pressures, threats of recession and declining investment have contributed to weak economic growth rate in sub- Saharan Africa, as well as debt vulnerabilities and sluggish investment growth; as such there is the risk of a lost decade for poverty reduction.
These scenarios and imminent headwinds should be more of the reason why Africa needs to close ties, see prospects and linkages across the industry value chain. Africa needs to collectively maximise wealth creation, enabled by aviation.
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