COVID-19 outbreak shrinks African airlines revenue
The fall in air travel demand in the wake of the Novel Coronavirus (COVID-19) outbreak is feared to slash African carriers’ revenue in 2020.
At the Aviation Africa Conference and Exhibition held on March 4-5, 2020 at Ethiopian Skylight Hotel airline executives expressed their fear that the impact of the corona virus on the air transport industry and the global economy in general is severe than the impact of SARS that shocked the world’s economy in 2003.
Speaking on the opening day of the conference IATA special envoy to Africa, Raphael Kuuchi, gave the body’s latest CORVID-19 update stating that in December 2019, IATA forecasted 3.8 percent African Revenue per Passenger (RPK) growth for 2020, but this has been narrowed to 3.4 percent following the outbreak. “Previous disease outbreaks have peaked after one to three months and recovered to pre-outbreak levels in six to seven months,” Kuuchi told delegates. Basing its predictions on the 2003 SARS outbreak IATA anticipates that the virus is expected to have a deeper impact than SARS, costing the industry around USD 29 billion in 2020.
IATA forecast that the pandemic would cost African airlines some 40 million dollars in 2020. However, Kuuchi said the forecast was done in December and would be revised soon. Kenya Airways last week announced that it has lost eight million dollars from the disruption of flights to China.
Ethiopian Airlines Group CEO Tewolde Gebremariam also touched on the current coronavirus challenge. “The coronavirus is a huge challenge. We are seeing a 20 percent decline in demand; this is a big shock. However, we are used to these kinds of shocks and we have the experience to overcome this. For us this is a temporary problem, we have faced disease, natural disasters, and sudden spikes in oil prices, and we have the capabilities and skill to recover.”
Egypt Air, Kenya Airways and RwandAir have suspended flights to China as a precaution measure while Royal Air Maroc disclosed that it stopped operation to China due to a sharp decline in travel demand. Africa’s largest airline, Ethiopian Airlines, which serves five destinations in China has continued flying to China despite mounting pressure from inside and neighboring countries.
“Suspending flights to China is not fair and ethical because they have a temporary problem,” Tewolde said.
Highlighting the conference theme, creating a sustainable future for Africa’s aviation industry, Tewolde stated that African aviation has many opportunities, but also faces challenges that the sector must face together to ensure a sustainable aviation future.
“Our main challenges include the attitude to aviation by African governments. We need support from governments, taxes need to be reduced and infrastructure needs to improve. We depend on aviation to connect ourselves and the world. For trade, business investment and tourism, other modes of transport cannot serve us well, African governments have to support aviation,” he said. “African airlines also need to cooperate with each other as there is a lack of it right now. We currently command only 20 percent of the market share between Africa and the rest of the world, and that is painful.”
Lack of human resources is also an ongoing challenge and Ethiopian Airlines continues to invest in training. “We currently have 1,500 students in our training academy, but this is only 50 percent of our capacity, so we are inviting more students to join to obtain the important skills that cover the aviation industry.”
Ethiopian Minister of Transport Dagmawit Moges, echoed Tewolde’s comments adding that while Africa is very accessible it is difficult to move between nations by aviation. “Aviation has great economic potential and geography shouldn’t be a problem. High ticket prices, operations and open skies are all things that can be fixed,” she said. Dagmawit called for a modernization of the infrastructure which requires investment and experts and encouraged private and public/private investments to improve connections, create more frequent flights and lower prices.
Abderahmane Berthé, Secretary General AFRAA, stated that more efficient use of airspace would make a significant contribution to carbon reduction. Citing connectivity as one of the major challenges he said, “Currently 22 percent of Africans travelling between two cities on the continent are forced to travel through non-African hubs, often transferring in Europe or the Middle East. However, this situation can be reversed through network development and scheduled coordination at African hubs.”
To achieve cleaner, more efficient skies will require a massive transformation from stakeholders across the industry working together to push boundaries and think outside the box. “The implementation of Single African Air Transport Market (SAATM) will result in enhanced connectivity and reduced journey times as well as lower airfares. A successful and viable African aviation industry requires concerted efforts and collaboration from governments, regulatory authorities, airlines, airports, suppliers of aviation products and services and of course the passengers themselves.”
Organized by the Times Aerospace Group, Aviation Africa Conference and Exhibition attracted 722 attendees from 81 countries. The Summit was supported by Ethiopian Airlines, the Ministry of Transport and the Ethiopian Civil Aviation Authority.