Tuesday, July 2, 2024
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The International Air Transport Association (IATA) urged African governments to harness the growing aviation sector to enhance economic and social development across the continent.
IATA recently forecasted that African airlines are poised to achieve a collective net profit in 2024 for the second consecutive year. This milestone underscores the sector’s resilience during its post-COVID recovery. Despite this positive outlook, the projected $100 million profit equates to only 90 cents per passenger, significantly lower than the global average of $6.14.
“Africa’s airlines are making a collective profit. That is good news. But it is razor-thin and well below the global benchmark. And there are wide variations across the continent where many individual airlines still struggle with losses. The demand to travel is there. To meet it, the African airline sector needs to overcome many challenges, not least of which are infrastructure deficiencies, high costs, onerous taxation, and the failure to broadly implement a continent-wide multilateral traffic rights regime,” said Kamil Alawadhi, IATA’s Regional Vice President for Africa and the Middle East.
“The challenges facing African aviation are significant, but they are not insurmountable. IATA’s Focus Africa initiative is by no means a panacea, but it does lay out a framework to build a stronger aviation sector that will provide even better support to economic growth and social development. The prize for working together across the continent for safe, efficient, and sustainable air connectivity is well worth focused policy efforts across the continent,” said Alawadhi.
2024 Financial Outlook Highlights
- Net Post-Tax Profit: African airlines are projected to achieve a net post-tax profit of $100 million in 2024, marking the second consecutive year of profitability since the COVID-19 crisis.
- Per Passenger Profit: Expected to rise to $0.9 per passenger, nearly doubling from $0.5 in 2023, driven by enhanced operational efficiency and increased demand. However, this figure remains well below the global average of $6.14.
- Profit as a Percentage of Revenue: Anticipated profit margins of 0.6% of revenue represent a modest improvement from 0.4% in 2023, but still trail behind the global net profit margin of 3.1%.
- Revenue Passenger Kilometers (RPK) Growth: Forecasted at 8.5%, indicating robust passenger demand across the region, albeit slightly behind the expected 9.1% growth in capacity.
- Load Factor: Expected to reach 61.9%, surpassing the breakeven load factor of 59.8% for African airlines.
Focus Africa Priorities
Safety: Africa achieved zero jet hull losses and commercial aviation fatalities in 2023, showcasing significant safety improvements. The continent’s all accident rate of 6.38 per million sectors reflects progress over the five-year average of 7.11. IOSA registered carriers continue to lead in safety performance.
Connectivity: The Single African Air Transport Market (SAATM) aims to enhance intra-Africa connectivity by liberalizing civil aviation. However, implementation challenges persist due to non-compliance with bilateral air service agreements (BASAs) by African governments, hindering regional connectivity and economic growth.
Blocked Funds: Ensuring compliance with international standards for repatriating sales revenues remains a critical issue for airlines operating in Africa, impacting financial stability and operational efficiency.
As of June 2024, African countries reported $880 million in blocked funds, accounting for slightly over 52% of the $1.68 billion total globally. This marks an improvement, notably with Nigeria clearing 98% of its blocked funds, amounting to $831 million. The top five African countries grappling with blocked funds include:
| COUNTRY | AMOUNT BLOCKED ($ MILLIONS) |
|---|---|
| Algeria | 261 |
| XAF Zone | 140 |
| Ethiopia | 115 |
| Eritrea | 75 |
| Zimbabwe | 69 |
“The potential for aviation in Africa is huge. It has 17% of the world’s population yet only contributes about 2% of total global travel. While there are hurdles to overcome, through collaborative initiatives like Focus Africa with our partners including AFCAC, AFRAA and AASA we are addressing critical challenges hindering the advancement of aviation across Africa. Our goal is a safer, more efficient, and better-connected continent, driven by a diverse, skilled workforce to unleash aviation’s potential and unlock the economic and social opportunities,” said Al Awadhi.