Challenges in aviation including fuel supply, red tape, visa regimes and supply chain issues are strangling the growth of African airlines.
At the Airlines Association of Southern Africa annual general assembly in Paarl, Western Cape, last week, industry representatives gathered to discuss opportunities and challenges facing the industry.
Opening the assembly, Blacky Komani, Chairman of Safair Operations, said: “We have to be brutally frank with our issues and we do have issues. If we can’t resolve these as a collective, then we have a problem.”
Kamil Al-Awadhi, Regional Vice President: Africa and the Middle East for the International Air Transport Association (IATA), said the combined global revenue for airlines in 2024 is expected to reach US$1 trillion with costs of US$936 billion.
This 3.5% profit margin translates into an average global profit of just US$6 per passenger.
In Africa, this profit is under US$1 per passenger due to higher input costs. A delayed flight could eat into this profit entirely, Al-Awadhi said.
Aircraft fuel is 17% more expensive, tariffs are 12% higher, maintenance is 6-9% more expensive and insurance costs 6-10% more in Africa than elsewhere in the world.
“CEOs and airlines immediately start on the wrong foot in Africa,” Al-Awadhi added.
Fuel
Airlines Association of Southern Africa CEO Aaron Munetsi said: “Fuel is our single biggest cost item and our biggest vulnerability.” Any spikes in the cost of crude oil and jet fuel will stall growth in the region, he added.
Munetsi said extension of the deadline for fuel suppliers, by the South African Revenue Service, to comply with storage licence regulations in South Africa has diverted what would have been a devastating jet fuel supply crisis ahead of the peak season.
But he added: “We are still in a vulnerable position following damage to local refinery and transport infrastructure in 2021 and 2022. Although we have been getting by on just over four days of reserve fuel stocks at OR Tambo International Airport, this is lower than recommended standards.”
Unsupportive visa regimes
Munetsi also called on governments to remove red tape and implement automated processes for visa-free travel. He said, out of 55 countries, only five allowed fellow Africans to travel visa-free.
Lulu Rasebotsa, CEO of Air Botswana, said: “Why do we have visas? Is it for security or is it a revenue-generating scheme?”
She said China is demonstrating that removing visas helps boost travel into markets, tourism and people coming to spend in the country.
Aircraft supply issues
Munetsi said slower and halted aircraft production and engine recalls are forcing airlines to keep older aircraft in service for longer, requiring more maintenance and parts.
“This has created a shortage of pre-owned aircraft. Even when new aircraft make financial sense, they aren’t available for up to six years. For operators with conservative models, sinding suitable aircraft without costly overhauls and reconfigurations is becoming harder and more expensive.”
Despite the challenges, the continent presents significant opportunities in aviation, added Munetsi.
“We have all the ingredients for success and growth. We have a common purpose and a vision but we urgently need to fix some things that trip us up just as we’re about to cross the threshold.”
