COVID 19: Challenges And Opportunities For African Airlines

Roland Ohaeri Uncategorized Leave a Comment

By Monday Ukoha

 

It is commonplace to say that African airlines situation has been complicated by the COVID 19 Pandemic which is regarded as the single most negatively impactful event on the global air transport industry since World War II.

 

For Africa, COVID 19 met many African airlines already in precarious situation though the airlines industry was witnessing improvements in terms of safety and its economics. The industry’s loss due to COVID-19 has been put at USD$10.21Billion according to the African Airlines Association, AFRAA. This loss is due to fewer passenger numbers. Hardest hit are small Island countries airlines with little or no domestic travels and who depend majorly on international tourist arrivals.

 

While the bigger African carriers such as Ethiopian, Kenya Airways, RwandAir and cargo carriers like Astral Aviation and Allied Air participated in repatriation and COVID 19 cargo flights, many other carriers have not been that fortunate.

With the onset of large-scale vaccination across the world, there was hope that an industry on its knees was on its way to recovery, but this has not materialised in the continent as vaccination rates in Africa remains lowest of all region. According to data from the Africa Center for Disease Control as of Mid-September 2021 only 3.18% of the continent’s over I.3 billion population have been fully vaccinated.

 

Financial Challenges

The financial implications of COVID-19 has been huge. Air Mauritius is in administration while Air Namibia is in liquidation. Air Malawi was on the brink of bankruptcy but for the late but positive intervention of its shareholders to recapitalize the airline. As of April 2021, West African regional carrier Asky was still holding out for support from its shareholders.

The much-anticipated assistance to airlines has come in trickles rather than in the quantum required by the airlines. Assistance required from multilateral institutions are yet to arrive thus begging the question: ‘when is the right time for this intervention?’

 

The bulk of government assistance where they have come have been provided more to the national carriers for obvious reasons, but this remain insufficient. Senegal has provided over USD 138 million to Air Senegal and others in Senegal’s travel and tourism industry. Despite government financial support, Kenya Airways remains in grave financial difficulty with reports quoting the board as seeking quick nationalization of the national carrier. Nigeria, without a running national carrier, has provided about 5Billion Nigerian Naira (USD 13 million) to its private airlines and other players in its travel ecosystem.

 

Reuters reported in March 2021 that “EgyptAir will seek 5 billion to 7 billion Egyptian pounds ($318 million – $447 million) in government support this year to help to pay for salaries, foreign loans and aircraft rental fees”. In Southern Africa, the sale of SAA to the Takatso Consortium may have preserved one of Africa’s legacy carriers as the Consortium is expected to inject over $221 million into the airline.

While it is commendable that governments across the continent have availed financial support to their airlines, however available evidence from Cape to Cairo and Kenya to Togo indicates that more financing is needed for African airlines.

 

Low vaccination

The low vaccination rates in Africa should be equally be of concern for African governments and continues to impact the ability of the industry to recover. With the lowest vaccination rate of all regions, Africa’s air transport faces the grim prospect of a slower and longer recovery from COVID-19.

The appeal to ensure that vaccine passports are not made a sole prerequisite for travel may not hold for long as across many climes governments and industry are relying on vaccine certificates to reopen tourism and travel.

The veritable option for African governments is to speed up the acquisition of vaccines and putting those shots on the arms of their citizens as quickly as possible. For instance, in Nigeria, the second phase of vaccination commenced in August after the arrival of new vaccine batch.

 

The gulf between African airlines and airlines from other world regions may be further widened depending on how long it takes Africa to vaccinate its population.

 

Worsening COVID situation in Africa

A further challenge facing African airlines is the worsening case of COVID-19 which has had disproportionate impact in Africa in the third wave obviously without the benefit of the vaccination. Presently, Africa has a rising infection rate of COVID-19 compared to other regions. No doubt the continent’s struggles with vaccinating its population has come to haunt it. South Africa may have just exited a recent lockdown. Uganda, Nigeria amongst others are seeing an uptick in COVID-19 infections.

 

Unbalanced Tourism Industry

One phenomenon that has become so glaring, and indeed hurting, for Africa in the age of COVID-19 is the dependence on external tourism and little intra Africa tourism. Africa depends mostly on tourists from Europe and the US for its tourist arrivals and with many parts of the world still in lockdown and African countries implementing quarantine and assorted, stifling control measures, it is little wonder many African tourism economies are hardest hit.

 

The focus for governments and those in the tourism value-chain should be how to make Africa attractive to Africans in terms of tourism marketing.

With so many challenges, the airline industry in Africa still has so much prospects if well harnessed and supported.

 

Cargo

One immediate area that presents opportunity for airlines is the cargo sector. According to IATA June 2021 figures, Cargo continues to buck the trend of growth for the air transport industry. According to IATA  “Air cargo continued to perform well in May 2021, as industry-wide cargo tonne-kilometres (CTKs) rose by 9.4% compared to pre-crisis levels in May 2019.” For Africa, IATA notes: “Growth in international CTKs registered by African airlines moderated in May to 24.5%, but that was down from a brisk 34.0%.”

Even as there are projections that cargo may not continue its growth, African airlines must be sufficiently nimble to take advantage of opportunities in the segment especially as the trajectory of the pandemic continue to be somewhat uncertain.

 

African Continental Free Trade Area

The Continental Free Trade Area (AfCFTA) holds growth opportunities for African airlines. Touted to be the single largest free trade area based on the number of participating countries, it promises immense opportunity for African airlines if properly harnessed.

However, for the benefits to be meaningful for Africa and its airlines, the industrialization of the continent must be hastened. Otherwise, the sad outcome will be competition amongst primary producers and dumping of produce which will be recirculated as Free Trade Area products.

 

Government Support

The future for African airlines lies more in government providing the environment for the airlines to thrive. The recent efforts by the West African sub-regional leadership to streamline and harmonise taxation is noteworthy and encouraging. African governments will need to provide or engineer more financial support for their airlines if they are to survive post COVID-19.

 

Collaborations

It is no novelty saying that African airlines have been unable to compete internationally due to their small size among other limitations. Therefore, more cooperation between African airlines will be key in the future growth of the airline industry post COVID-19. Recently, Kenya Airways and Congo Airways signed an agreement for training, aircraft maintenance and codeshare. These types of agreements should go beyond scratching the surface and metamorphose into concrete and long-term partnerships that will assist the airlines compete. Allan Kilavuka, Managing Director Kenya Airways and Yvonne Makolo of Rwandair like others believe that cooperation is the way to go for African airlines.

For the future of African airlines, collaborations must be intentional rather than circumstantial. At a recent AFRAA Workshop Mr. Kilavuka opined that “Consolidation and collaboration are essential ingredients for resilience and sustainable business operations of airlines.  The ripple effect of strengthened collaboration amongst airlines will be an increase in the industry’s contribution to the sustainable development of Africa and therefore we must elevate the tenor of discourse and make the airline industry matter in and for Africa.”

 

Responsive and Nimble Management

Cash preservation, sustenance and responsiveness amongst others have become the regular terminologies for the airlines industry. African airlines management must focus on measures to sustain their operations until the return of passengers projected for 2024. Management must be agile and nimble enough to respond swiftly as the pandemic throws up challenges and opportunities. As AFRAA DG, Mr. Abderahmane Berthe said, African Airlines “need to devise new approaches of doing business in the face of increasing concerns on the sustainability of African Airlines”.

 

The Future

The airline industry has gone through phases of turbulence. The phase of COVID-19 turbulence has been rather battering and unmerciful for Airlines not sparing the ones in Africa. But opportunities in a large population and growing economies ensure that the future of the African airline industry is assured. Of course, for only those that survive the pandemic.

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