The African aviation industry was projected to grow at 5.5% year on year before the pandemic struck. But African aviation has inherent problems that the industry has carried for years before the current crisis, meaning that for most of the airlines that have collapsed during the past 18 months, the Covid pandemic was simply the proverbial last straw that broke the Carmel’s back
For the African aviation sector, profit making seems to be an extreme sport that is only achievable to a select few. The industry is plagued by a restrictive regulatory environment, high costs and a high tax regime
Willie Walsh, IATA’s director general spoke to African journalists shortly after the organisation’s 77th Annual General Meeting and World Air Transport Summit held in Boston, United States as reported by Punch Nigeria
Regarding the comparative advantage of European airlines versus their African counterparts, he had this to say:
“I suppose what makes European airlines much more efficient is the Open Skies environment in Europe which gave opportunities to new airlines and forced the so-called legacy airlines to adapt to that competition; and consumers have hugely benefitted from that and I think everybody’s performance was raised with Open Skies. Africa needs the same environment for Open Skies that will also be beneficial for Africa and will be hugely fantastic.
If you are restricted, you don’t have economies of scale like you have in a bigger market and that highlights one issue-and that issue is the opportunity that exists in Africa. If there are Open Skies in Africa, it will benefit more African carriers to develop and grow. You don’t have the same economies as much as you have a much bigger market. If there was one issue, it is the opportunity that exists in Africa. If there is an open aviation area and Open Skies in Africa, a lot more African carriers will develop and grow more than they are today.”
He also shared thoughts on the importance on domestic and intra-African connectivity and competition in leveraging the potential of the African aviation market
“If you look at Europe, Europe has grown because of the ability to fly within Europe, thereby increasing domestic connectivity within Europe and also increasing international connectivity in Europe. Domestic connectivity within Europe is good, same with international connectivity. We have the widest connectivity in Europe that has been made possible because of the European Open Skies; that is where growth has come from and that’s where consumers’ benefits come from in terms of prices, because of the introduction of competition to the market.
If you have only one airline operating in the market, what would they do? They get more opportunities and you also get more efficient airline systems. That’s why I think there is huge potential in Africa as a market. I suppose it would happen at some stage. But it is sad to see Kenya Airways and others. As for Nigeria now, where are Nigerian airlines? It is a huge market. The competition, opening up the market, allowing people to expand will certainly help.”
