Will African Airlines Conquer Financial Fragility in the New Normal

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The COVID-19 pandemic has unleashed both a global health emergency and an unprecedented economic crisis of historic magnitude and  African aviation has not been spared from the dilemma.

In trying to abide with the World Health Organization (WHO) guidelines aimed at containing COVID-19 cases surged in many parts of the world, governments posed strict measures which include border closures, quarantines and lockdowns to fight the pandemic and as a result, African airlines felt the economic pressure.

Last year, the operations of airlines were shattered with over 60% of commercial aircraft in the world grounded and this has seen passenger traffic dropping at the peak of the Covid-19 pandemic particularly in Africa.

This is explicitly supported by the African Development Bank’s director for Infrastructure and Urban Development, Amadou Oumarou’s 2020 presentation which underscores that the pandemic’s aviation effects, while felt worldwide, have been sharpest in Africa.

Nearly 5 million of the continent’s 7 million aviation and tourism industry-related jobs have been lost in 2020, in addition to as much as $15 billion in revenue, half of this to African airlines,” said Oumarou.

According to International Civil Aviation Organization data, in 2020, Africa has seen far fewer flights than other regions during the pandemic with sometimes the entire West and Central African region seeing just a single daily departure.

Following stiff restrictions put in place by governments to curb the spread of Covid-19, a decline in traffic was witnessed with Africa losing an estimated $7.7 billion in the aviation sector in 2020.

This was revealed last month by the International Air Transport Association (IATA) regional vice president for Africa and the Middle East Kamil Alawadi at a virtual press conference on Covid-19 and civil aviation organised by the WHO.

He bemoaned the negative impact the pandemic has brought to African airline workers as he indicated that seven million employees have suffered as a result, while eight airlines have gone bankrupt.

He stressed that it would take until 2023 or 2024 for the situation in the aviation sector to improve and return to 2019 levels.

In the beginning of the year 2021, the Covid-19 cases were still rapidly surging but African airlines which includes Africa’s largest commercial airline, Ethiopian airlines were still in the game and there was a resolve for survival for other airlines.

However, the question still remains ‘Will the domestic and international travels continue to standstill and sail through the pandemic?’

In the first quarter of 2021, despite hurdles and devastating impacts of the pandemic, a plethora of various African aviation authorities are striving to survive hoping for a tourism boost.

This has seen a number of African airways such as South Africa and Somalia being open for domestic ones, and Cameroon, Equatorial Guinea, Tanzania and Zambia having commercial flights.

Speaking to the press early this year, Johannesburg-based aviation expert, Phuthego Mojapele pointed out that the aviation industry in Africa has really seen a turbulent time like any other countries or continents around the world.

I think Africa was not spared. But if you look at how we have done things in Africa; in trying to keep our planes in the skies and making sure that we connect Africa that has always been difficult to do. We have managed to do that very well through Ethiopian Airlines that we know very well that they are doing fantastically well“.

Ethiopian airlines, Africa’s largest commercial airline, quickly diversified to cargo as it avoided seeking bailouts and laying-off full-time employees.

In Northern Africa, Air Maroc offered free insurance packages to woe customers back into flight.

The International Air Transport Association said traffic in Africa fell by 89 percent. Nevertheless, in spite of this drastic fall, carriers on the continent made tremendous strides to survive.

It highlighted that Africa’s leading carrier, Ethiopian Airlines, managed to close the year with profits of around 2.85 billion euros at the end of June which is still a shortfall compared to the forecast of over 3 billion euros.

The International Air Transport Association also warned in April 2020 that 25 million jobs were in danger of collapse because of COVID-19 demand for air services.

The Effect of the COVID-19 pandemic leaves the international airline sector with a colossal loss of US$371 billion of gross passenger income by 2020 with another predicted loss of US$286 to US$317 billion by 2021,” said IATA.

Reports have it that some of the major airlines, including Alitalia, South African Airways and Thai Airways, faced with a financial headwind, have seen their decline accelerate and have been only kept airborne by major cash supplies from their governments.

During a workshop held in December 2020 which was organised by African Development Bank, the need was highlighted for African airlines to adopt aircraft leasing and other innovative practices to cut costs and build efficiencies, strengthening freight operations which have been less hard hit than passenger traffic, and seizing direct opportunities presented by the imminent need to distribute COVID-19 vaccines across Africa. The workshop was running under the theme, African Aviation Recovery Conference: coordinating an efficient response to the COVID-19 crisis’s effects on the Aviation sector in Africa.

By Joyce Mukucha

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