Flarepath February 2017 By: Tom Chalmers
WHY IS it that every region in the world, with the exception of Africa, is expected to see its airlines return a net average profit this year of $29,8-billion, whereas the International Air Transport Association (IATA) expects carriers in Africa to deliver the weakest financial performance with a net loss of $800- million (basically unchanged from last year)?
Look at it another way. Instead of assessing this loss as coming from airlines, what if it was incurred by factories and other industries each mass producing a particular product day in and day out, but instead of making a profit, these manufacturers are incurring a loss of an average $10 – $9,97 to be exact – per item. How long could they expect to stay in business and afford to pay the salaries of their staff, let alone contribute in the way of taxes to their respective country’s coffers?
Now assume that the same applied to each passenger flown by African airlines. According to IATA’s forecast for this year, each passenger aboard an African airliner is going to cost the carrier $9,97 in lost revenue. At the same time capacity in 2017 is going to increase by 4,7% ahead of a 4,5% demand growth (see page 24).
As IATA points out: “The region’s weak performance is being driven by regional conflict and the impact of low commodity prices.” Elsewhere the association has announced that infrastructure, taxes and charges, consumer protection and security topped its agenda for the Arab Air Carriers Association’s (AACO) annual conference held in Morocco recently.
At this meeting the association highlighted four priorities in the Middle East and North Africa (MENA) which must be addressed for aviation to deliver maximum economic and social benefits. These priorities also apply to most of the rest of Africa.
The priorities are: Sufficient and affordable infrastructure capacity (including air traffic management), aligned with user needs; curbing the spate of unprecedented increases in taxes and charges over the last year; aligning consumer protection regulations with global standards, and enhancing security efforts. Passenger demand in MENA is set to expand by 4,8% each year on average over the next 20 years, to become a market of 400- million passengers by 2035. If that demand is met, the number of jobs supported by aviation in the region will grow from 2,4-million to 3,9-million over the same period. And aviation’s contribution to regional GDP will increase from $157,2-billion to $359,5-billion.
"Aviation is the business of freedom. Its success generates prosperity. A safe, secure, efficient and sustainable air transport industry contributes to the welfare of nations. Strengthening aviation, in partnership with governments, pays huge social and economic dividends.
“Airlines in MENA face very different business challenges. But whether building or protecting competitiveness, cost-efficient infrastructure, global standards, reasonable costs and secure operations are critical," said Alexandre de Juniac, IATA’s Director General and CEO, during his opening remarks at the AACO annual general assembly.
De Juniac urged the region to address the four key areas. With regard to the first, he said: “Infrastructure in MENA and the rest of Africa reflects the foresight of Governments in the region to capture aviation’s economic and social benefits. However, to keep this competitive advantage, continuous consultation is needed so that capital expenditure aligns with industry growth, required service levels and acceptable costs.”.................................... To read the full article please subscribe to our E Magazine Here.
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