IATA Urges African Governments to Harness Aviation Sector for Economic Growth
The International Air Transport Association (IATA) has called on Africa’s governments to leverage the burgeoning aviation sector to spur economic and social development across the continent.
At the recently concluded Wings of Change Focus Africa (WOCFA) held in South Africa, IATA revealed that African airlines are projected to earn a collective net profit of $100 million in 2024, marking the second consecutive year of profitability post-COVID.
Despite this achievement, the profit translates to just 90 cents per passenger, significantly below the global average of $6.14.
“Africa’s airlines are making a collective profit. That is good news. But it is razor-thin and well below the global benchmark. And there are wide variations across the continent where many individual airlines still struggle with losses,” stated Kamil Alawadhi, IATA’s Regional Vice President for Africa and the Middle East.
He noted that the demand for travel in Africa remains strong, but the sector faces numerous challenges including infrastructure deficiencies, high operational costs, heavy taxation, and the lack of a continent-wide multilateral traffic rights regime.
“The challenges facing African aviation are significant, but they are not insurmountable. IATA’s Focus Africa initiative is by no means a panacea, but it does lay out a framework to build a stronger aviation sector that will provide even better support to economic growth and social development. The prize for working together across the continent for safe, efficient, and sustainable air connectivity is well worth focused policy efforts,” Alawadhi said.
IATA’s financial outlook for 2024 shows that African airlines are expected to achieve a net post-tax profit of $100 million, with profit per passenger expected to reach $0.90.
This figure nearly doubles the 2023 profit per passenger of $0.50, reflecting improved operational efficiency and increased demand. However, it remains well behind the global average of $6.14.
Profit margins for African airlines are anticipated to be 0.6 percent of revenue, up from 0.4 percent in 2023, but still significantly lower than the global net profit margin of 3.1 percent.
Revenue Passenger Kilometers (RPK) growth is forecasted at 8.5 percent, indicating continued strong passenger demand across the region, though it lags behind the expected growth in capacity of 9.1 percent.
The load factor is expected to reach 61.9 percent, slightly ahead of the 59.8 percent breakeven load factor for African airlines.
The Focus Africa initiative targets six priority areas: Safety, Infrastructure, Connectivity, Finance and Distribution, Sustainability, and Future Skills.
IATA’s safety record shows that
Africa had no jet hull losses in 2023 for the second year in a row, and no fatalities in commercial aviation accidents. The all-accident rate for Africa improved to 6.38 per million sectors from the five-year average of 7.11.
IOSA registered carriers continue to outperform non-IOSA registered carriers on the continent and globally. Currently, there are 31 IOSA-registered operators in Africa.
The primary safety priority for Africa remains the implementation of safety-critical ICAO Standards and Recommended Practices (SARPS).
Under the Focus Africa initiative, IATA introduced the Collaborative Aviation Safety Improvement Program (CASIP) to support this goal.
To achieve and sustain connectivity, IATA noted that the Single African Air Transport Market (SAATM) aims to liberalise civil aviation across the continent by removing restrictions on traffic rights for African airlines.
However, few governments have taken the necessary steps to implement SAATM. An IATA analysis of 607 bilateral air service agreements (BASAs) in Africa found that more than half were compromised by non-compliance, hindering the development of intra-Africa connectivity.
To develop economy-boosting intra-Africa connectivity, Africa’s governments must actively support SAATM. This is a key focus of the Focus Africa initiative.
Another challenge is the repatriation of funds from airline sales activities blocked in some African countries. IATA said airlines still struggle with blocked funds in several African markets, affecting their financial stability.
As of June 2024, African countries held $880 million in blocked funds, representing over 52 percent of the global total. This is an improvement following Nigeria clearing 98 percent of its blocked funds.
The top five countries with blocked funds in Africa are Algeria ($261 million), the XAF Zone ($140 million), Ethiopia ($115 million), Eritrea ($75 million), and Zimbabwe ($69 million).
“The potential for aviation in Africa is huge. It has 17 percent of the world’s population yet only contributes about 2 percent of total global travel,” Alawadhi said.
“While there are hurdles to overcome, through collaborative initiatives like Focus Africa with our partners including AFCAC, AFRAA, and AASA, we are addressing critical challenges hindering the advancement of aviation across Africa.
“Our goal is a safer, more efficient, and better-connected continent, driven by a diverse, skilled workforce to unleash aviation’s potential and unlock economic and social opportunities,” he affirmed.
