Aviation Loses $3.5bn Over High Operating Cost, Poor Infrastructure
Operational challenges in the air transport sector in Nigeria and other African countries have been blamed for the loss of $3.5 billion of potential revenue in three years.
The International Air Transport Association (IATA), at a special session on the African continent, said the losses were incurred between 2020 and 2022, especially due to infrastructure constraints, high operating costs, poor connectivity, regulatory impediments, slow adoption of global standards, and skills shortages.
Economic Confidential earlier reported that multiple fees, taxes, and charges on the continent account for between 40 to 50 per cent of airfare cost.
The local sector has sundry taxes and charges numbering 35. The multiple charges cost the airlines between 38 and 65 per cent of revenue.
A 2022 AirInsight report ranked Nigeria as the eighth most expensive aviation country in Africa – only behind Niger, Liberia, Guinea Bissau, Senegal, Bangui, Sierra Leone and the Republic of Congo.
IATA’s Director General, Willie Walsh, noted that Africa accounts for 18 per cent of the global population, but a paltry 2.1 per cent of air transport activities (combined cargo and passenger).
Walsh regretted that the continent’s carriers suffered cumulative losses of $3.5 billion for 2020-2022, with further losses of $213 million expected in 2023.
He said closing those gaps for Africa, to benefit from the connectivity, jobs and growth that aviation enables, is what Focus Africa is all about.
Walsh added that Africa has a solid foundation to support the case for improving aviation’s contribution to its development. Pre-COVID aviation supported 7.7 million jobs and $63 billion in economic activity in Africa. Projections are for demand to triple over the next two decades.
He said sustainably connecting the African continent internally and to global markets with air transport is critical for bringing people together and creating economic and social development opportunities.
It will also support the realisation of the UN’s Sustainable Development Goals (UN SDGs) for Africa of lifting 50 million people out of poverty by 2030. In particular, trade and tourism rely on aviation and have immense unrealised potential to create jobs, alleviate poverty, and generate prosperity across the continent.
“The limiting factors on Africa’s aviation sector are fixable. The growth potential is clear. And the economic boost that a more successful African aviation sector will deliver has been witnessed in many economies already. With Focus Africa, stakeholders are uniting to deliver on six critical focus areas that will make a positive difference. We’ll measure success and will need to hold each other accountable for the results,” said Walsh.
Chief Executive Officer (CEO) of RwandAir, Yvonne Makolo, said Africa stands out as the region with the greatest potential and opportunity for aviation.
“The Focus Africa initiative renews IATA’s commitment to supporting aviation on the continent. As the incoming Chair of the IATA Board of Governors, and the first from Africa since 1993, I look forward to ensuring that this initiative gets off to a great start and delivers measurable benefits,” Makolo said.
The initiative has six focus areas. These include improved operational safety through a data-driven, collaborative programme to reduce safety incidents and accidents, in the air and on the ground. Facilitate the growth of efficient, secure, and cost-effective aviation infrastructure to improve customer experience and operational efficiency. Promote the liberalisation of intra-African market access through the Single African Air Transport Market (SAATM). Accelerate the implementation of secure, effective and cost-efficient financial services, and adoption of modern retailing standards.
IATA Regional Vice President for Africa and the Middle East, Kamil Al Awadhi, said: “Partnerships will differentiate the outcome of Focus Africa from previous efforts to stimulate Africa’s development with air transport. By partnering, stakeholders will effectively pool their resources, research, expertise, time and funding to support the common goals of the six work areas.
“The tasks for Focus Africa are not new. Work is already underway as part of the work of IATA and other stakeholders in Africa. But after the financial trauma that the pandemic brought to African aviation, we are at a unique time of rebuilding. By launching Focus Africa now, we can ensure that the recovery from COVID-19 moves aviation to an even better place than we were in 2019,” Al Awadhi said.
