Even though Africa is home to 15 per cent of the world’s population, it only accounts for a relatively small proportion of air traffic, in fact less than three per cent of the world’s total. Small though this may be, the African aviation market is growing fast.
International air passenger numbers have grown consistently year on year since 2004, except in 2011 where the numbers dipped as a result of political instability in parts of North Africa.
From less than 40 million passengers carried in 2004 by African airlines, passenger numbers increased to 73.8 million in 2013. Domestic passenger numbers within the region also increased significantly, reaching 28 million in 2013. This growth is projected to continue.
Boeing’s long term forecast for 2014-2033 indicates that, driven by a positive economic outlook, increasing trade links, and the growing middle class, traffic to, from, and within Africa is projected to grow by about six per cent per year for the next two decades.
This growth will translate into a demand for an additional 1,170 new airplanes, valued at $160 billion. But as with all good things, the proof of the pudding is in the eating.
According to the Air Transport Action Group, in 2014, the aviation industry in Africa supported 6.8 million jobs and contributed $72.5 billion to Africa’s GDP. This accounted for 11 per cent of the jobs and three per cent of the GDP supported by the air transport industry worldwide.
These encouraging developments however do not reveal some of the major obstacles still faced by the aviation industry on the continent. It remains one of the most unsafe regions to fly, it has lagged behind others on liberalisation of the skies, its airport infrastructure continues to require massive investments and the training of skilled personnel is not being properly planned.
Consolidation is another challenge. During the 1970s and 1980s there were about 36 African airlines of which 26 had intercontinental flight services. Today, there are only about 12 African airlines with intercontinental operations.
Over the past two decades, a total of 37 new airlines were launched in Africa but almost all of them failed. Most countries continue to act solo, motivated by choices that are political rather than economic.
We continue to see attempts to create or sustain national carriers, opposing international trends. It is true that Middle East carriers and the good performance of Ethiopian Airlines contradict the doomsayers of state-owned airlines, but these are exceptions that need to be understood in terms of the bigger picture. Which is that 80 per cent of the continent’s long-haul traffic is dominated by non-African carriers.
The average cost of a flight in Africa is higher than anywhere else in the world. High landing fees, exorbitant taxes levied on airfares as well as above-average aviation fuel prices, almost 30 per cent higher than in Europe, do not help.
Funding access for the aviation industry is uneven. Dubai, Abu Dhabi and Qatar-based airlines have reportedly enjoyed a host of benefits over the past decade, valued at more than $42 billion.
That includes subsidised access to capital and sponsored first-class infrastructure. American commercial aviation has since 1918 also benefited from government support, valued at $55 billion. Obviously, African airlines are not in the same league and have been left to fend for themselves.
Without the same easy access to capital markets, export credit financing (which can cover up to 85 per cent of the actual aircraft price), or insurance subsidies, African airlines either have to finance the difference from their own funds or opt for junior loans with punitive rates from commercial banks; or lease aircraft at an even heavier cost. The financing options open to African carriers severely limit their chances for expansion.
It is therefore hardly surprising that mega carriers are doing so well, including in their operations in Africa. They have the ability to expand quickly, to build a market from scratch, increase market share and continue investing heavily in service and marketing.
Intra-African connectivity is so mediocre that passengers have to travel thousands of kilometres out of the continent just to be able to make a connection to another African destination. A quarter of the intra-African routes are actually served by just one airline.
Despite African states signing up for a full liberalisation of the regional market at Yamoussoukro in 1999, restrictions and protectionism, instead of being eliminated, are becoming rampant.
What could constitute a good base for a turnaround? With regard to safety, 2014 marked a significant change. Despite aviation disasters dominating headlines that year, African airlines actually stood out for zero jet hull losses (write-offs) per 1 million flights compared with 2.22 in 2013 and 4.63 in 2012.
This is encouraging news, suggesting regional measures to improve safety are working. Ethiopian Airlines is already leading the way among its continental competitors in terms of establishing ambitious targets, meeting them and turning a profit. With 93 destinations across five continents, including 53 in Africa, its future looks promising.
Having experienced a phenomenal 700 per cent growth in its revenue since 2005, Ethiopian Airlines has demonstrated the strength to face stiff competition.
However, as long as Africa fails to establish a single aviation market and countries continue to restrict African carriers while welcoming their European and Middle East competitors, the performance of Ethiopian Airlines may remain an exception.
An open skies policy would drive the cost of tickets down and increase substantially the number of flyers. According to IATA, by just deregulating and liberating African air services in 12 key markets, an extra 155,000 jobs and $1.3 billion could be generated.
Evidence shows that open skies agreements have worked in other regions. For example, in Europe, they led to an exponential increase in the number of routes and a 34 per cent decline in ticket fares.
Indeed, where African nations have liberalised their air space, either within Africa or with the rest of the world, positive benefits have resulted. For example, the agreement of a more liberal air market between South Africa and Kenya in the early 2000s led to a 69 per cent rise in passenger traffic.
Indeed, just allowing the operation of a low-cost carrier service between South Africa and Zambia (Johannesburg-Lusaka) resulted in a 38 per cent reduction in fares and a 38 per cent increase in passenger traffic.
The continent has to create more space for low-cost flying. In an interconnected world, air travel is no longer a luxury, it is a necessity for a prosperous continent.
Dr Carlos Lopes is UN Under Secretary-General and Executive Secretary of the Economic Commission for Africa.