Africa’s aviation industry is at a crossroads
With the global aviation industry taking a nosedive in recent years, the sector across Africa is defying growth trends. Passenger numbers continue to rise every year while 2016 was the safest year for flights in a decade for African carriers. New flight routes and airlines continue to crop up as the biggest African airlines square up to international competition.
However, once you take a closer look at the landscape across Africa’s aviation industry, the story becomes more complex. As new airlines are born, others disappear. And for every African airline taken off the European Union blacklist over safety concerns, another seems to be added.
Then there’s the huge question over creating open skies above African nations – a potential move that would shake up the industry, but divides opinions within in. More so now than ever, African aviation is at a crossroads that will shape its future.
Steady growth (mostly)
For the biggest names in African aviation, growth is relatively steady. In June, Ethiopian Airlines won the “Best African Airline of the Year 2016” award, a year after winning the same award for 2015. Aviation Africa – the organisers of the award, credited the airline’s continued rapid growth, increased profitability and contribution to aviation development in Africa – despite a number of challenges facing the airline and wider industry.
Ethiopia Airlines reported an impressive 18 percent increase in passenger numbers last year, boosting profits to $265 million. Which makes it one of the fastest-growing airlines in the world right now – not only Africa.
Meanwhile, RwandaAir recently opened its first flights between London and Kigali with a keen eye on making the most of its growing reputation as a tourist destination, much like Ethiopia.
According to last year’s Air Transport Action Group (ATAG) industry report, the aviation sector contributes $72.5 billion to Africa’s GDP and more than 6.8 million jobs. Growth is expected to continue over the next decade, too, as experts mark it as one of the most important regions for the wider aviation industry.
It’s not all good news, however. Some of Africa’s leading airlines, including EgyptAir and South African Airways (SAA) are enduring hard times – particularly SAA, whose financial future is under scrutiny. Meanwhile, Kenya Airways is in the process of financial restructuring and Nigerian airlines continue to fight a losing battle for survival.
Dollar prices and African currency crunches are also putting pressure on African airlines this year, making the outlook bleak for airlines that are already struggling. Fuel availability and prices are also an issue while security and infrastructural issues are a growing problem.
However, many experts point to a much bigger problem that’s Africa’s aviation industry from maximising its potential.
No closer to open skies
Despite 44 African governments agreeing to introduce an open skies policy in 1999, the vast majority have failed to implement the agreement. Governments continue to favour protectionism – not only of national carriers, but also smaller domestic airlines.
Most industry experts agree that open skies policies increase industry revenue and drive down prices for passenger, fueling further growth. In fact, a 2014 study from Airlines International forecast that if twelve of Africa’s key nations fully opened their skies to each other, prices would be slashed by 35% while adding a further $1.3 billion to the continent’s GDP and creating more than 150,000 jobs.
There are downsides to implementing open skies agreements, though. Local airlines would undoubtedly suffer under increased competition and even major airlines can struggle from the strain of competing on the global stage.
Then you have the problem of infrastructure and airspace to consider. More airlines, flights and passengers mean greater pressure placed on airports, busier runways and congested airspace – an issue prevalent in Southeast Asia’s open skies expansion.
Are countries like Nigeria even ready for open skies? Is South African Airlines in a position to face even tougher competition in its wounded state? Perhaps not. But many would argue African aviation can’t continue to fight against the promised growth of open skies and expect the industry to flourish. The sector is at a crossroads and, whichever direction African nations choose to take, there will be casualties.
Featured image: By aeroprints.com, CC BY-SA 3.0, https://commons.wikimedia.org/w/index.php?curid=36599263