Insecurity Hurts African Carriers As Global Airlines Reap Big Profits

Insecurity Hurts African Carriers As Global Airlines Reap Big Profits

Written by Wangui Maina | From Mail&Guardian Africa

Airlines are expected to earn a net profit of $18 billion worldwide in 2014, but the share of Africa’s carriers is projected to be only $100m, according to data from the International Air Transport Association (IATA) availed at its just-ended 70th Annual General Meeting in Doha, Qatar.

IATA’s director general Tony Tyler said, “In Africa taxation is a major problem with fuel being 21% more than other parts of the world because of taxes”. In addition to the fuel costs driven by high taxes, IATA also says security is another factor affecting the health of Africa’s aviation sector.

Africa only holds about three per cent of passenger traffic and about two per cent of cargo in the global air transport equation.

“The share of [the global] market African airlines have is diminishing. African airlines are mainly small, weak and under capitalised with poor management,” said African Aviation Services Limited chief executive Nick Fadugba.

Speaking in an interview on the sidelines of the AGM, Fadugba said 25 years ago there were close to 50 African carriers that were members of IATA; that number has now dwindled to about 20.

Investments in fuel-efficient aircrafts are among the reasons for a 1.7% improvement in fuel efficiency the industry has seen lately. LAM Mozambique, Air Rwanda, Kenya Airways and Ethiopian Airways have all embarked on aircraft modernisation, acquiring newer models including the fuel efficient Boeing 787 Dreamliner.

Fuel headache

Fuel remains a major headache for the aviation industry, representing almost 30 per cent of total operating costs. The total fuel bill this year is expected to reach $212 billion, with the average price of 2014 standing at $123.3 per barrel.

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