Africa’s air transport industry is set to face another grim year with delays to the region’s economic recovery, job losses and without the continent’s governments urgently providing emergency relief to the entire sector. Governments are also yet to establish a vaccine distribution network, unblock the flow of pledged financial support and systematically implement common Covid-19 testing.
The International Air Transport Association’s (Iata) latest review of 2020 indicates a more than 90 percent average drop in air traffic in Africa’s five largest markets (South Africa, Egypt, Morocco, Ethiopia and Algeria) as a result of the Covid-19 pandemic, its associated travel restrictions and accompanying economic devastation. Measured by supply, demand and profitability, Africa, which had previously seen modest growth, has been one of the hardest-hit regions in the world.
In socio-economic terms, the pandemic and recession have jeopardised 3.9 million African jobs supported by air transport and $32 billion in contributions to Africa’s combined GDP.
Compared with 2019, this year African airline traffic volumes will have fallen by 72 percent, outpacing the 62.8 percent contraction in available capacity. Over the same period, the entire global market will have seen a 66.3 percent fall in demand and a 57.6 percent reduction in capacity. The continent’s airlines are on course to post a combined $2 billion loss for 2020 as revenues have shrunk by 64 per cent since last year. The global industry will lose $118.5 billion this year.
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 around 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 percent lower than in 2019 with 55 percent less capacity in the market compared with last year. Africa’s airlines will post$1.7 billion 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 $30 billion 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 $516 million in revenues generated by airlines serving those markets.
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 long-haul and finally hub operations. The Covid-19 crisis has resulted in a massive decrease in global connectivity. Africa was already disadvantaged before the crisis thanks to the severe limits on intra-Africa connectivity.
However, the crisis has presented a golden opportunity to fast-track the implementation of the Single Africa Air Transport Market (SAATM). This African Union flagship 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 per cent 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 along with all of the other measures Iata has identified will go a long way to creating and safeguarding the system and securing economic rejuvenation across Africa.
Muhammad Albakri is the regional vice president, Africa & Middle East, International Air Transport Association