Home » Aviation: Ethiopian Airlines, South African Airlink may emerge post-pandemic winners in Africa – experts

Aviation: Ethiopian Airlines, South African Airlink may emerge post-pandemic winners in Africa – experts

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Following the challenges posed by the coronavirus pandemic to the global aviation industry, experts in the sector have said Africa’s largest carrier, Ethiopian Airlines and South Africa’s Airlink are well positioned to emerge as continent’s winners from the Covid-19 pandemic.

According to theafricareport.com, the outlook for South African Airways (SAA) and Air Mauritius, meanwhile, is bleak.

No African airline will emerge from the pandemic unscathed, says Indigo Ellis, associate director at Africa Matters in London.

Passenger numbers are less than half their pre-2020 levels, and industry losses to January 2021 are estimated at more than $10.5bn. This, Ellis notes, is despite a return to relative normalcy in some domestic markets over the past three months.

Travel restrictions to the UK and the US for most arrivals from Southern Africa mean the picture is “bleak” for many carriers, with limited prospects for government bailouts, says Ellis.

Neither SAA nor Air Mauritius have enough cash to stay afloat. Ellis explains: “Governments are simply not able to offer the kind of liquidity that the aviation sector requires.” It is unlikely that some of the smaller pan-continental carriers like Kenya Airways or RwandAir will resume the volume of flights to Europe they had before, she adds.

Who will be strongest?
Airlines with diverse revenue streams are in a stronger position:
Ethiopian Airways is strengthened by the fact that it capitalised on cargo opportunities early on, says Marcel Langeslag, director of African aviation at Netherlands Airport Consultants in Johannesburg.

Ethiopian has also been able to keep a relatively high number of international connections running through its hub in Addis Ababa, he says.

Ethiopian may be content with its new partnership with smaller South African player CemAir rather than riding to the rescue of SAA, but it is still in the running for a takeover of Air Mauritius, Ellis says.

In South Africa, Langeslag argues that Airlink will perform well on the basis of its code-sharing agreements.
In January, Lufthansa and Swiss International Air Lines partnered with Airlink on domestic South African routes.

Survival by Default
One point in favour of African airlines is the distances to be covered and the lack of usable infrastructure for alternatives such as train and car, says Andrea Baroni, an aviation consultant in Switzerland. People needing to travel long distances within Africa have to go by air or water. “This fact will probably save many of the small airlines from extinction”, says Baroni.

Baroni expects flag carriers to survive, especially in Francophone African countries that still have good relationships with Paris. Letting airlines fail would open another door to increased Chinese influence, argues Baroni.

Availability of spare parts will be critical to resuming a reliable service, explains Baroni.

Some African airlines suffer from frequent groundings due to lack of spares, and Baroni hears of cases of violations of minimum requirements stipulated by aircraft manufacturers.
Ellis says that effective communication and collaboration on the harmonisation of health and safety measures will be “crucial to the sector’s long-term recovery”.

Warning from Namibia
The political dangers of letting airlines go to the wall have been demonstrated in Namibia, where protesters in February took to the streets after the liquidation of state-owned Air Namibia. The airline received an estimated N$11bn ($740m) in bailouts over two decades.

The loss of direct air routes to destinations in Africa and Europe will probably be taken up by other operators, including Airlink and Lufthansa, according to analysts at NKC African Economics.

Ellis argues that the most far-reaching impact of Covid-19 on the industry has yet to become apparent. “A shift in mindset away from airlines as public utilities will be required,” she says. “Governments must be willing to liberalise their traditionally protectionist aviation markets and lower the barriers to entry for private and foreign ownership.”

Given the likely resistance to such a shift, it is far from clear if African governments are ready to make the leap, says Ellis. Langeslag agrees that consolidation on a regional or continental level is not likely soon as the political challenges are “simply too large. Many African governments show protectionist tendencies and continue to support market-distorting national carriers.”

Bottom Line
Analysts argue that now is the ideal moment for African governments to make a virtue out of necessity and liberalise their aviation markets.

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