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Flarepath December 2016 By: Tom Chalmers

AGAINST A somewhat morbid background of world economic strife; civil wars; growing unrest in many parts of the globe and massive refugee migration and other problems, the Secretary General of the Africa Airlines Association (AFRAA), Dr Elijah Chingosho, was able to paint a silver lining or two when he presented the association’s report to its annual assembly held at Victoria Falls, Zimbabwe, last month.

Pointing out that, in 2015, airlines had generated a global aggregate profit of $35,3 billion, according to IATA, he explained that this was on the back of lower oil prices, though tempered by hedging and exchange rates. Load factors were at record levels; new value streams were increasing ancillary revenues; joint ventures and other forms of cooperation were improving efficiency and increasing consumer choice, while fostering robust competition.

“North America contributed most of the profits at $21,5-billion, followed by European carriers ($7,4 billion), then Asia-Pacific carriers ($7,2- billion) and $1,4-billion for Middle East carriers. However, only Latin America and Africa had made significant losses at $1,5-billion and $700-million respectively,” he said.

Presenting another silver lining, Chingosho said: “The tourism sector in Africa is growing. According to the African Development Bank, in 2014, a total of 65,3-million international tourists visited the continent, about 200 000 more than in 2013. In 1990, about 17,4 million tourists visited Africa abroad. The sector has therefore quadrupled in size in under 15 years. “However, 2015 registered a decline in tourism in Africa of about 3% due to largely to weak results in North Africa. However, 2016 is expected to register growth of two to five percent.

“While all regions experienced positive traffic growth in 2015 with carriers in the Asia-Pacific region accounting for one-third of the total annual increase in traffic, African airlines represented 2,2% of the market share carrying 79,5-million passengers carried.

This was up by 1,8% from 2014. Since 2011 when the passenger numbers dipped as a result of the ‘Arab Spring’ in parts of North Africa, passenger numbers by African carriers have grown consistently year on year,” he continued.

“Scheduled domestic passenger numbers carried by all African airlines in 2015 increased by 4,83% to 31,2-million. The rising middle class, high rate of urbanisation and the aggressive route expansion by some African airlines to enhance intra African connectivity continue to stimulate demand. The demand is further stimulated by Low Costs Airlines that continue to aggressively promote and attract more passengers.

“On international routes, passenger numbers carried by African airlines increased to 48,23 million in 2015 representing a 3,09% increase from 2014. For AFRAA member airlines, the intercontinental passenger market segment remains the biggest with 47,6% of all passengers travelling between Africa and other regions of the world. The domestic market segment represented 26,82% while the intra-Africa market represented 25,7%,” Chingosho said.

Despite these improvements, the AFRAA annual report revealed that there was slow traffic growth for African airlines in 2015 which was mainly attributed to the Ebola epidemic, acts of terrorism, political instability in some states, and slower economic growth due to lower oil and commodity prices.

“Many African airlines continue to record low load factors due the imbalance of capacity and demand, limited commercial cooperation and uncoordinated intra- African networks with other African operators and this has seen the average load factors for African airlines being the lowest globally.

“Average passenger load factors for African carriers scheduled passenger traffic in 2015 was 68,2%, as was recorded in 2014. This compared unfavourably to the global average that rose to 80,4% in 2015. Passenger load factors for African carriers on domestic routes was 73,8% while intercontinental routes recorded 67,4%...................................... To read the full article please subscribe to our E Magazine Here.

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