Airline industry and ministry officials attending the recent Aviation Festival and Airports show in Africa, heard some good news and some not so good news.
According to the International Air Traffic Transport Association (IATA), the 10 fastest-growing world markets for air travel over the next 20 years will be in Africa. They are: Benin, Central African Republic, Guinea, Madagascar, Mali, Rwanda, Sierra Leone, Togo, Uganda, and Zambia.
Feeding this growth is the rise in Africa’s middle class and rapid urbanization.
The bad news, IATA warned, is that the airline industry across the continent continues to be burdened by high taxes, fuel prices higher than the global average, and competition from the Persian Gulf, resulting in continued financial losses.
The big three Gulf carriers—Qatar Airways, Emirates and Etihad—as well as Turkish airlines, have all grown their presence in the African market, with a large number of aircraft on order and plans to further develop African routes. Chinese airlines also pose a potential threat to African carriers.
Without large and successful hubs, African carriers will be unable to compete with the big foreign carriers, IATA warned. Currently the three African hubs, Addis Ababa, Johannesburg, and Nairobi, could all face being bypassed by foreign competitors operating on the continent.
Another constraint on airline carrier growth, particularly low-cost carriers, is the high proportion of ticket sales made in cash. With the absence of alternative payment mechanisms, airlines must rely on agents, who cut into their profit margins.
According to IATA”s 2017 outlook for the global industry, African airlines are expected to lose $100 million, about the same as last year. North American airlines, by contrast, as a group generated half of worldwide profits, while carriers in Europe, Asia, Latin America, and the Middle East were also profitable.
Currently, only South African Airways, Ethiopian Airlines, Egypt Air, Moroccan Royal Air Maroc, and Cape Verde’s TACV airline have the right to fly passengers in and out of the United States.