The International Air Transport Association (IATA) and regional airline bodies are upbeat about African commercial aviation prospects for the next decade, as Africa remains the only region in the world to experience strong growth in this area.
African carriers saw traffic growth rates of 12.6% for October and 16.4% for November 2010 compared to the same period in 2009, according to data released by IATA. Africa’s carriers moved 11% more people in November 2010 than during the pre-recession peak in early 2008. All other regions recorded a slowing down in year-on-year growth rates from October to November, IATA says.
Africa also experienced an increase in freight transport, as all regions around the globe except Africa saw dramatic drops in year-on-year freight transport growth from October to November, IATA reports.
The African Airlines Association’s 2010 report projected average traffic growth to be higher than the world average for the foreseeable future. During the first half of 2010, African airlines showed 3.4% better passenger traffic than the global average for the same period.
The Centre for Asia Pacific Aviation in late December 2010 made note of several ‘hottest airlines’ in Africa, mostly in North Africa. Air Arabia Egypt is part of the Air Arabia group and should see strong growth due to its proximity to the Middle East, lack of surface transportation, little competition and strong tourist industry. Air Arabia Maroc based in Morocco will take advantage of Morocco’s open skies agreement with the European Union.
Ethiopian Airlines is planning a large long-haul expansion, with roughly 45 aircraft on order, to create the largest fleet in the region to coincide with the growth of the important Addis Ababa hub. Other airlines to watch out for are Kenya Airways, which captures a lot of Middle Eastern traffic, and 1Time, according to the Centre for Asia Pacific Aviation.
North Africa is showing positive growth as it is linked to the economies of the Middle East, as well as Europe. In central and western Africa, air transport development is minimal due to political conflict, according to Brazilian manufacturer Embraer’s 2010 annual report.
Southern Africa is a mixed bag of results, with healthy growth in South Africa – for example, last week the South African Civil Aviation Authority (CAA) confirmed it was evaluating an air operator certificate application for a new airliner, rumoured to be called Velvet Sky Airlines.
Domestic airlines in South Africa were busier during the 2010/2011 summer holiday period than the same time last year. For instance, bookings with low cost airline 1Time were up 4% in December 2010 compared to the previous year. Traffic was heavy between the popular local destinations of Cape Town, Johannesburg and Durban, but also between South Africa and Mozambique. This is according to Rodney James, managing director of 1Time.
The route between South Africa and Mozambique has, until recently, been reserved for South African Airways and TAP, Mozambique’s national airline. Kulula.com is aiming to secure air traffic rights to fly this increasingly lucrative route.
South Africa is also expanding into neighbouring Zimbabwe as that country’s infrastructure and fleet crumbles due to political interference and mismanagement. Air Zimbabwe is technically insolvent and is US$64 million in debt, the Sunday Times reported this week.
Further compounding the issue is the brain drain of pilots and technicians from Zimbabwe due to poor salaries and working conditions. In 1988 there were 1 206 active pilots in Zimbabwe and 380 active aircraft, but today there are around 167 pilots and 65 aircraft, according to the Sunday Times.
Zimbabwe’s two airlines, Air Zimbabwe and Fly Kumba, are being muscled out by South African carriers (including South African Airways, South African Airlink and Comair), which control 87% of the market in Zimbabwe, the Sunday Times says. South African airlines earn US$62 million a year on Zimbabwean routes whereas Zimbabwean carriers only earn US$9 million a year. This situation will most likely get worse for Zimbabwe as the government threatens to cut its monthly US$3 million subsidy to Air Zimbabwe.
One of the main reasons for the growth in Africa is economic expansion in developing countries, according to the Centre for Asia Pacific Aviation. Because Africa is less integrated with the global economy, it has been affected less by the recession than developed countries. The International Monetary Fund (IMF) is predicting a growth rate of 4.2% for the global economy in 2011, which is less than 2010 but much more than the recession-hit rates of 2008/9. In contrast, the IMF predicts a growth rate of 4.9% for Sub-Saharan Africa in 2011, following growth of 2.9%. This is largely due to the worldwide recovery, demand for African exports and imports to the continent.
IATA forecast a 2010 airline industry profit of $15.1 billion. Slowing growth resulted in a projected $9.1 billion profit for 2011. In Africa, the 19 airlines that provided financial data to the African Airlines Association (AFRAA) (out of 98 scheduled airlines on the continent) posted an operating profit of $393 million and net profits of $137 million.
While Africa records strong airline growth, the rest of the world continues to fall behind. Although international year-on-year passenger air traffic grew by 8.2% for November 2010 and freight transport grew by 5.4%, these figures are misleading because of exceptionally rapid rises in traffic volumes recorded in 2009, according to IATA. In absolute terms, air travel fell by .8% and air freight fell by 1.1% between October and November 2010. Some of the reasons for the poor performance of European and American airlines were the Icelandic volcano and the exceptionally adverse weather in Europe and the United States that saw huge delays and lost revenues. However, overall growth for the global airline industry continues at between 5-6% per year.