By Ekelem Airhihen
As the world welcomed the new year 2025, there was optimism that the global aviation industry would post some positive numbers. Revenues were expected to exceed one trillion dollars for the first time while more than five billion travellers were expected to take to the skies on over forty million flights. Also, there was expectation that air cargo would carry some 72.5 million tonnes of goods from report by IATA, the global body that represents, leads and serves the airline industry.
Airlines are not just barometers of travel-they are frontline indicators of economic health. With declines in booking it signals shifts in consumer confidence long before GDP numbers do. Today, that signal may be flashing red.
Almost all industries are positively impacted by connectivity. So, where there is growth aviation connectivity will provide an important lever for the economies of the world. As passenger numbers increase due to growth, industry experts expect that retail, and hospitality will immediately meet with this rising number of customers – and so will other businesses too. And for airlines it was seen as a pointer to increased profitability.
As is usual with planning, some downside risks were anticipated such as geopolitical uncertainty. Aside from the possibility of escalation in conflicts, the new US Administration under Trump could provoke trade wars if it imposes tariffs. Experts saw it as a possibility in the new year. Trump’s attitude toward climate change could also affect the industry’s decarbonization efforts, the industry also anticipated.
It was anticipated that across regions, the outlook would be positive across the board and all regions should post a profit in 2025. Like it had been, profitability was expected to vary widely by carrier and by region. For example, the collective net profit margin of African airlines was expected to be just 0.9% while carriers in the Middle East were expected to make a healthy 8.2%.
Presently, in what will make strategists in the industry revisit their scenario plans, the combination of mounting US tariffs, escalating visa problems, and increasingly stringent border security checks is derailing this optimism fast.
Airlines which had made plans on international connectivity to drive profits are reportedly revising forecasts, as US tariffs spark retaliatory trade measures, making aircraft deliveries and cross-border logistics more expensive. At the same time, visa problems-including prolonged processing delays, frequent denials, and abrupt policy changes-are discouraging inbound United States travelers and frustrating outbound U.S. passengers too. In addition to this troubling scenario, border security checks have reportedly become longer, more complex, and less predictable, leading to missed flights, strained airport operations, and reduced traveler confidence.
As global travel brands eye growth in Africa’s online travel agency market, concerns have been raised about the impact of the increased competition on local businesses. Foreign travel agencies have continued to dominate the market, leaving local operators struggling to keep up as they hold the shorter end of the stick. This is partly due to the challenge of trapped airline funds in the continent.
Now keeping industry strategists awake is this combination of US tariffs, visa problems, and border security check. It is not only derailing the airline industry outlook in North America-it’s disrupting global travel corridors and at the same time negatively impacting passenger demand, and threatening to reverse hard-won gains in aviation recovery worldwide.
There are pointers that international carriers, tourism economies, and logistics providers are reeling from the cascading effects. So, the entire aviation sector is gravitating towards a crisis management mode. Looking ahead, it seems that without intervention, the US risks becoming a bottleneck in the global travel system-and aviation’s recovery could stall for some time. This is cause for concern to the aviation sector in Africa.
Thinking through the emerging headwinds, one feature of the travel market in the continent is that South Africa has some level of maturity. East Africa is growing, West Africa is trying to catch up, and Central and North Africa offer many opportunities. Here, in Africa, the market is quite big. It is a strategic lever.
Tariffs and trade wars can significantly impact African countries’ budgets and aviation industries. African countries may face decreased demand for their raw materials, leading to lower export revenues and increased fiscal pressures. Tariffs can lead to higher prices for imported goods, including those essential for economic development and infrastructure projects.
Countries in the continent may struggle with reduced revenue and increased costs, potentially reversing fiscal consolidation efforts. African countries have continued to meet with the challenge of trapped funds and declining export revenues is a source for concern to aviation strategists.
In looking ahead, the possibility of currency devaluation should be on the radar as fiscal pressures mount because of tariffs and trade war. The effect of these would be higher costs, reduced profit margins and possibly losses. These will be due to the cascading effect of exchange rate fluctuations, reduced consumer spending, and increased risk and uncertainty.
To mitigate these effects would lead to not just airlines but airports and concessionaires and businesses impacted by the aviation sector to consider exploring alternative sources of income. Here airports in Africa will need to improve upon their non-aeronautical sources of income.
Some other issues to consider will be hedging against currency risks, renegotiating contracts, exploring possibilities for local production, and Implementing cost-saving measures and optimizing operations to maintain profitability. The aviation sector in the continent may need to consider duty free shops that put to the international market locally produced goods at world class standards of quality.
This is one area where governments and policy makers will be required to intervene so that the aviation sector and all in the industry value chain work collaboratively towards local production for the international market. Perhaps a strategy of airports as energy cities for affordable energy costs to local producers may not be too far away in putting this strategy in place. Offering tax breaks, subsidies, or other incentives to encourage local production and reduce imports is another area for government intervention.
African airlines rely on leasing aircraft and sourcing parts from the US and Europe, so increased tariffs can lead to higher costs and longer delivery times. Maintenance, repair, and overhaul operations in Africa may face delays and cost hikes due to imported spare parts. African airlines may need to rethink partnerships, diversify suppliers, and strengthen regional cooperation to mitigate dependency on Western aircraft and parts.
Strengthening regional trade through AfCFTA can help African countries reduce reliance on external markets and build resilience against global trade shocks. Aviation policies like SAATM need to be aligned with economic and trade policies. Where they are aligned most government officials need to have the necessary understanding of the socio-economic benefits of aviation policies like SAATM.
The imperative is to create awareness regarding the benefits of SAATM and create Inter-Ministerial Cooperation to involve the high-level political leadership and acquire the political will to execute aviation policies.
In so doing, African countries can explore new trade partnerships and agreements to reduce dependence on specific markets. To accelerate the realization of Africa’s integrated market, the continent must prioritize the collaborative implementation of SAATM and AfCFTA, with a focus on removing barriers to the free movement of people and trade. African governments and aviation authorities must ensure that their regulatory frameworks are conducive to growth and investment in the aviation sector.
Trade wars and tariffs can disrupt global supply chains, making African aviation more competitive in certain markets. Industry stakeholders need to explore the opportunities that begin to present themselves and invest in them. Airlines may need to explore alternative routes and hubs, potentially benefiting African airports and airlines.
The continent should be open to Investment and partnership opportunities as the global economy contends with the tariffs challenge.
While events unfold, the industry strategists should stay informed about trade policies and their impact on global aviation. They should foster partnerships with airlines, airports, and logistics companies to enhance competitiveness and market reach. The fears of the continent’s travel agents for instance of being squeezed out of the game by international players who leverage global operating licenses, cheaper airfares and other factors that favour them should not be downplayed while thinking through how to navigate the current global headwinds.
This is a wake-up call for the continent to consider travel across multimodal hubs. The continent needs to outthink the competition. In so doing diversification is key in order to survive amidst increased competition and headwinds. Airports should be easy to get to and exit for the traveller.
Family and friends should be able to return home without much stress when the passenger has embarked on a plane. Upgrading regional infrastructure, such as rail systems and road networks, can enhance intra-African trade and economic integration and so ensure the continent is able to meet with the current emerging. challenges.