Although the global airline industry is expected to post a $31-billion net profit this year, African airlines will once again incur losses of up to $800-million.
Southern African Development Community airlines are expected to incur a combined $350-million loss, of which about $100-million will be from South Africa’s carriers.
“Across the continent and, particularly in Southern Africa, our industry remains characterised by intense competition, domestically, regionally and internationally, with a number of players increasing their footprint across the continent,” Airlines Association of Southern Africa (AASA) CEO Chris Zweigenthal said on Friday.
Addressing delegates at AASA’s forty-seventh annual general assembly, in KwaZulu-Natal, he said African governments’ failure to reform market access, whether through the Yamoussoukro Decision, which is the open skies vision of the African continent, or the African Union’s commitment to establish a single common African aviation market, was a challenge.
He added that high US dollar-driven operating costs, together with safety and security concerns and the need to remain focused on continually improving safety performance throughout Africa, were hindering the industry’s ability to grow on the continent.
“Revenues earned in some countries are being withheld and access to them blocked by governments that are attempting to hoard foreign exchange reserves,” he stated, adding that climate change and the need to embrace and comply with initiatives, measures and associated goals that mitigate aviation’s contribution to global warming were also growth barriers for the industry.
Africa has been the weakest growth region for the past three years.
According to the International Air Transport Association’s 2017 industry economics performance guide, losses emerged again owing to regional conflict and the impact of low commodity prices.
Research shows that breakeven load factors are relatively low, as yields are a little higher than average and costs are lower; however, few airlines in the region are able to achieve adequate load factors, which average the lowest globally at 52.9%.
Performance is improving, but slowly.
“Some airlines have made more progress and are more successful in tackling these issues than others,” said Zweigenthal.
Meanwhile, he pointed out that airline executives and African aviation authorities were concerned about the exodus of skilled aviation professionals from Africa to so-called greener pastures.
“Besides stemming the exodus of young blood, we also have to ensure there is a pipeline of talent ready to take over from those leaving the industry through retirement over the coming years,” he said, adding that this will require the structured and coordinated transfer of skills to a new generation of aviation professionals.
As the older airline professionals move out of the industry, and the previous missing middle move to fill these senior positions, he suggested that a structured mentorship programme be put in place to support the transfer of skills – particularly in critical and scarce skills areas.
“If there is agreement with the airlines, the AASA could play a coordinating role,” he said.