Air Transport Financial Measures Will Minimize Disruptions

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The COVID-19 Pandemic has hit the air transport industry in Africa very hard since March 2020. The industry needs every support as it attempts to restart amidst concerns and optimism in the industry. Mr. Raph Kuuchi, Special Envoy, Aero-Political Affairs, Africa, International Air Transport Association (IATA), emphasizes how African airlines and air transport industry could restart safely and sustainably, in this exclusive interview with Aviation & Allied Business Journal.

 

Q: How would you describe the impact of the COVID-19 Pandemic on the Aviation industry in Africa?

A:COVID-19 has crippled the aviation industry. Airlines in Africa are struggling for survival. We forecast airlines in the region will lose US$6 billion in passenger revenue this year compared to 2019, which translates to a 51% slump in airline revenues.

 

A number of the region’s carriers have already gone into business rescue including Air Mauritius, Comair, South African Airways and SA Express.

 

Q: There is a fervent call by the global and African aviation community for government financial and other support to help quick recovery of the aviation industry. Would you think African governments are ready to heed this call?                

A: We hope so, airlines are at the core of the Travel & Tourism value chain that supports 24.6 million people across the continent, contributes US$169 billion to Africa’s economy which represents 7.1% of the continent’s GDP. Containing the pandemic is the top priority. But without a lifeline of funding to keep the sector alive, the economic devastation of COVID-19 could take Africa’s development back a decade or more. Financial relief today is a critical investment in Africa’s post-pandemic future for millions of Africans.

 

Q: How do you think African Airlines can return to safe, secure operation post-COVID-19 given that these Airlines have been mainly on lockdown except for occasional emergency operations?

A: Even as the pandemic continues, the foundations for an industry restart are being laid through close collaboration of the air transport industry with ICAO, the World Health Organization, individual governments and other parties. An industry roadmap has been developed to assist airlines in restarting operations.

 

Q: Given that African airlines predominantly have limited cargo revenue and heavily dependent on passenger revenue, do you expect more African Airlines to venture into cargo operations post-COVID-19, and is there any risk in this?

A: We don’t expect more African Airlines to venture into cargo operation post-COVID-19. While there is an immediate capacity shortage, which carriers across the world have jumped to fill, the collapsing economy is expected to depress overall cargo volumes.

 

The capacity crunch will, unfortunately, be a temporary problem. The recession will likely hit air cargo at least as severely as it does the rest of the economy.

 

Q: Do you think Aeropolitics and the Single African Air Transport Market (SAATM) would have significant impact in the efforts to re-launch interconnectivity on Africa’s important city-pairs?

A: Many of the important city-pairs in Africa before COVID-19 were already connected and operations will resume as soon as governments lift travel restrictions. There is no risk of a scale down of operations on these routes because of aeropolitics or the roll-out of SAATM since existing traffic rights will be unaffected. In fact, for important city-pairs that are underserved, we anticipate that SAATM will result in additional capacity to meet the demand.

 

SAATM envisages an increase in connectivity between existing city-pairs; development of new city-pairs as well as a boost in capacity. This is because of airlines ability to exercise 5th freedom traffic rights under SAATM. Secondary cities that are poorly connected or not connected at all due to low volumes of traffic will get improved connectivity because of multi-destination flight schedules airlines will launch leveraging on 5th freedom rights.

 

Q: A growing number of African Airlines has attained the IOSA and ISSA; how do you think these Airlines could retain these certifications given their cost to the Airlines, especially now that most airlines are cash-strapped?

A: IATA has taken measures to assist airlines that are affected from the COVID-19 outbreak.

 

Q: In what specific ways is IATA supporting the recovery of African Airlines and by extension the aviation industry amidst the COID-19 challenge?

A: IATA is supporting African airlines through its advocacy efforts with governments to provide urgent relief to airlines and the industry including direct financial support to passenger and cargo carriers; financial relief on airport and air traffic control (ATC) charges and taxes; and reduction, waiver or deferral of government-imposed taxes and fees.

 

In a further request for help for Africa, five international air transport and tourism bodies launched an appeal to international financial institutions, country development partners and international donors to support Africa’s Travel & Tourism sector. These organizations are jointly calling on international financial institutions, country development partners and international donors to support the African Travel & Tourism sector through these tough times by providing$10 billion in relief to support the Travel & Tourism industry and help protect the livelihoods of those it supports directly and indirectly; access to as much grant-type financing and cash flow assistance as possible to inject liquidity and provide targeted support to severely impacted countries.

 

They also for the provision of financial measures that can help minimize disruptions to much-needed credit and liquidity for businesses. This includes the deferral of existing financial obligations or loan repayments; and, ensuring that all funds flow down immediately to save the businesses that need them urgently, with minimal application processes and without impediment from normal lending considerations such as creditworthiness.

 

Q: Do you think African Airports should give African Airlines any waivers or support to encourage them back into service given that airlines and aviation are one of the worst hit by the COVID-19?

A: We have called on airports and other partners in the value-chain such as ANSPs for waivers and postponements on charges.

Q: Do you think partnerships among African Airlines would help the recovery process?

A:Cooperation and harmonization across borders will be essential to restart aviation. Partnerships are key among airlines to speed up recovery once the industry restarts.

 

Q: If there is one area of major challenge you expect or foresee in the recovery of the air transport industry in Africa from COVID-19, what would it be?

A: Safety will be the number one priority in the industry restart. During the crisis, many airlines were unable to renew their IOSA certification or were not granted extensions of crew licensing by their respective governments, so the challenge will be to bring these airlines up-to-speed.

 

Q: Would you say aviation industry would be permanently changed by the effects of the COVID-19 or do you see the industry in Africa running as usual as before COVID-19?

A: I don’t think any industry has been unchanged from the effects of COVID-19 and these changes will continue in the foreseeable future. Aviation will not look the same as it did pre-COVID-19 as the industry restarts and recovers. Operations, safety measures and traffic have been and will continue to be impacted.

 

The damage to air travel from COVID-19 extends into the medium-term, with long-haul/ international travel being the most severely impacted. In our baseline scenario, we don’t expect 2019 levels to be exceeded until 2023.

Quarantine measures on arrival would further damage confidence in air travel. A risk-based layered approach of globally harmonized biosecurity measures is critical for the restart.

 

Q: For African Airlines, if there is one major lesson to learn from the COVID-19 Pandemic, what would it be?

A: Connectivity for Africa is not only essential for the economic and social development of Africa, it is non-negotiable in the post-COVID-19 world as we’ve been witnessing the severe damage of closed borders.

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