South Africa is hosting the African Airlines Association’s (AFRAA’s) 44th Annual General Assembly in Johannesburg, which is being attended by African airlines executives, industry manufacturers, service providers and other aviation stakeholders from Africa and the globe.
The theme of the AGA (18-20 November) is “Business together in the era of growing opportunities”. It has attracted more than 350 aviation delegates from all over Africa, Asia, Europe, the Middle East, North and South America. Issues of safety, security, the environment, liberalization and cooperation among African airlines will take centre stage at this year’s summit. AFRAA has 33 member airlines, representing over 80% of total international traffic carried by African airlines.
The AGA will evaluate the growing air transport opportunities in Africa and how operators can take advantage by providing safe, reliable, efficient and profitable operations, according to AFRAA. Special focus will be on the emerging middle class, with disposal income and an affinity to travel. “This market segment is estimated to increase to about 300 000 people, spending approximately 3 trillion US dollars annually by 2030,” said the Secretary General of AFRAA, Dr Elijah Chingosho. He added that, “By taking stock of the market realities, African airlines will, after this summit mobilize the necessary resources and forge partnerships to tap into the vast air transport opportunities in the continent.”
Addressing the media on this year’s AFRAA AGA and summit, Chingosho said, “The AGA is the largest gathering of aviation top executives, held annually on the continent of Africa. Its focus is to take stock of the industry development, review progress, assess set-backs (if any) and plan the future together. This is vital in ensuring that African airlines continue to act as the continent’s economic bridge – moving people, goods and capital and facilitating regional integration and development.
“Airlines role in the continent’s development is indispensable and this is why we must ensure the viability and success of African airlines.” He called on governments to create a conducive environment where airlines can compete effectively by liberalizing the internal African market, investing in infrastructure and avoiding over-taxation of airlines and passengers.
The 44th AFRAA AGA is expected to conclude with the adoption of a number of vital resolutions urging airlines, governments and other stakeholders to work together to advance the course of African aviation and facilitate the role of airlines in contributing to the development and integration of the continent.
The summit will be complemented by two days of exhibition of equipment, component, supplies, IT solutions, training resources, consultancy, financial and aircraft leasing services by some of the industry’s renowned service providers and partners. Also participating in the 44th AFRAA AGA will be the African Union Commission, ICAO, IATA, AFCAC, civil aviation authorities, airport companies, air navigation services providers as well as aircraft and engine manufacturers, component suppliers, and many other service providers.
AFRAA’s AGA comes at a difficult time for the global aviation industry. Chris Goater, manager of corporate communications for the International Air Transport Association (IATA), said that peak profitability for the airline industry was in 2010 following the 2008 financial crisis. “Since then, profitability has halved to $4.1-billion for the entire [world] industry this year…The profit margin for the year is forecast at 0.6%,” he said.
IATA, which represents about 80 percent of global carriers said that this year’s profits for the airline industry are less than half the $8.4 billion achieved in 2011. IATA said in its first forecast for 2013 that industry profits will rise further next year to $7.5 billion, helped by passenger traffic expansion of 4.5 percent and cargo expansion of 2.4 percent as global economic growth quickens to 2.5 percent from an expected 2.1 percent this year. Profit margins will remain razor-thin at 1.1 percent in 2013 versus an expected 0.6 percent in 2012, the association added.
In South Africa, airlines face a tough climate due to low demand, high fuel prices and airport charges. South African airport taxes account for more than 10% of an airline’s costs, according to IATA. The high cost of fuel severely impacts on the industry as it accounts for 40% of an airline’s costs. This year the price of oil has hovered at around $110 a barrel – IATA has warned that anything over $100 per barrel is risky for airlines.
Airports Company of South Africa (Acsa) data has revealed a drop in passenger numbers. Local travel saw double digit growth between 1999 and 2007, but this dropped dramatically during the recession, with negative growth of 1.1% in the 2009/2010 financial year. Passenger numbers grew by 6.1% in 2010-2011 and by 2.7% in the 2011/2012 financial year, but data from April to September 2012 predicts a possible 1.8% drop in numbers if the trend continues.
The tough domestic environment has already seen two airlines (Velvet Sky and 1time) go out of business this year and South African Airways absorb R5 billion in state loan guarantees.
The previous AFRAA AGA was held in Marrakesh, Morroco in November 2011. The last time AFRAA held its AGA in South Africa was in 2005 and according to the President of AFRAA and Acting CEO of South African Airways (SAA) Vuyisile Kona, during that Assembly, a number of resolutions were adopted aimed at addressing the aviation safety challenges confronting Africa, and forging collaborations among airlines.
“While much has been done to improve our operating environment and commercial relations, we still have a long way to go in ensuring that we effectively serve the air transport needs of the continent. Collaboration rather than competition is the surest way to achieving our goal of contributing to the socio-economic development and integration of the continent,” Kona said.