African carriers’ dismal performance is a problem for the African Airline Association (AFRAA). Experts attribute this to many factors, which include prohibitive aeronautical charges caused by public ownership of airports. To reverse the trend, they are canvassing ownership of airports by airlines, KELVIN OSA OKUNBOR reports.
Aviation business in Africa has come under global focus as airport infrastructure are becoming dilapidated for carriers. This has led to dismal performance by carriers.
Statistics from the International Air Transport Association (IATA) indicate that African airlines are struggling to remain afloat.
Experts say multiple taxes by governments across the continent have made if costlier to do business in Africa. They say many African governments see aviation as a luxury rather than a necessity. They also say a change in perception is needed as the value for the government is not in the tax receipts it gets from the industry. To them, the government should see aviation as a catalyst for growth, especially in job creation.
Investigations reveal that many African countries face infrastructure challenges, such as insufficient runways, terminals, airspace capacity to meet demands, technical and commercial service quality.
To solve the problem, a former African Airlines Association (AFRAA) scribe has called on governments to develop a policy that would enable their airlines own airports to reduce losses.
AFRAA former Secretary-General Aaron Munetsi spoke on the sidelines of the just-concluded African Travel Market (AKWAABA).
Munetsi pointed out that airlines on the continent, unlike their counterparts in Europe, America or Middle East, were making huge losses.
He attributed the problem to numerous charges, such as landing and parking, en route, aviation fuel and payment on aircraft lease.
Ethiopian Airlines is the only carrier on the continent, which owns an airport, while Kenya Airways is pushing for one.
Munetsi said the two most important components of aviation were airlines and airports, noting that unlike airlines, airports hardly closed shop, urging players in the sector to develop interest in airport construction.
He said: “Several airlines have collapsed in Africa in the past 10 years, but I want you to point to one airport that has collapsed within the same period. I still don’t know why people are not looking at setting up an airport rather than an airline.
“Airlines and airports are the most important components of the aviation industry; everything else is peripheral to these two.”
He canvassed the implementation of the Single African Air Transport Market (SAATM) by governments, saying it would lead to growth of the industry.
Munetsi lamented that only 19 per cent of air passengers were being airlifted by African carriers, while foreign airlines ferried the balance. He said Africa could not continue to allow foreign carriers to dominate its airports.
He said as at 2016, only Morocco and South Africa had received more than 10 million passengers and tourists, while Atlanta Airport alone in United States, welcomed at least 184 million passengers and tourists within the period.
He insisted that there was a level- playing field for airlines to thrive, but added that without cooperation, airlines would continue to remain unprofitable.
Service providers in the sector are making it difficult for airlines in Africa to flourish due to “prohibitive and excessive charges,” he added, noting that it was wrong to say African airlines could not be profitable.
Munetsi said $38 goes to airport authorities from a $100 ticket, adding that by the time airlines pay other charges to other service providers, they are left with 0.2 per cent profit.
The aviation expert regretted that of 54 African countries, only 31 had signed the SAATM, which he described as the bedrock of the African Free Continental Trade Agreement (AfCTA).
Quoting IATA, Munetsi said African airlines lost $140 billion to excessive charges. “Airport authority charges are so much, yet infrastructure are crumbling,” he observed.
He said there was the need to harmonise charges, saying: “Airports have different charges for the same aircraft, for the same crew. Airlines are losing money because they can’t operate to some airports. It is like a dog fight. Everybody who can charge an airline will charge them.”
He noted that airlines are catalysts to tourism growth, saying Africa cannot develop the tourism market without removing the barriers to free movement of goods and people.
He disclosed that research indicated that one in every 10 jobs in Africa is tourism-related. “If we don’t facilitate tourism growth, it means we are being starved of jobs. If airports are killing airlines, they are killing our youths,” he added.
He said last year, Africa, which has 62 airlines, 817 aircraft and 49 airports, airlifted 88 million passengers, adding the figure is small, compared to Europe, where France last year alone airlifted 89.4 million passengers. “Despite the number of airports, how can we have 88million passengers? It means something is wrong. SAATM is set to change this,” Munetsi said.
He urged African countries to explore another way of making money other than charging fellow Africans visa fees.
He continued: “Airports are charging so much from airlines, yet their infrastructure are crumbling. Airlines are losing money because they cannot operate in the airports. An airport in Malawi, Blantyre, has been shut for five months because they could not put its infrastructure in good working condition. So, if an airline wants to operate through Blantyre, it has to change schedule because it can’t fly to Blantyre.
When they were flying, they were paying a lot of money to get to Blantyre. What happens to the money the airports collect?”
“The amount of residual value that goes to the airport from airlines has risen from 21 per cent to 38 per cent in four years. So, if you pay for $100 for a ticket, $38 goes to the airport authority while the airlines are left with $62. Of that figure, they pay charges and by the time they finish, the airlines retain 0.2 percent.
‘’According to IATA, in the past 10 years, African airlines have lost $140 billion. What the airports charge these airlines are excessive.”
According to him, AfCFTA will only be successful if the airports are effective. He urged airports to provide the necessary infrastructure for airlines to grow. He called for partnership between airlines and airports.
“The airport should give the airline the frequency, availability, time and capacity to operate. In AFRAA, we are driving this. We are making it a task for airports to have these things so that the airlines can operate effectively. We are sick of hearing people say that African airlines are not profitable. It’s not their faults, it’s because the provider of these services are making things difficult for them. We want to make sure that when you are building an airport, you go to the airline, tell them about your plan and share ideas with the airline,” he said.
Also, Africa World Airlines Chief Operations Officer Sean Mendis advised the government to create an enabling environment for private airlines to thrive.
“The role of the government is to create an enabling environment where private airlines can thrive. If the government creates an environment where private airlines, they will have access to funding, capital, infrastructure and personnel. It will address unemployment. The private sector is, in reality, what will grow Africa as a whole.
If the governments can stop corruption, stop focusing on self-interest and start looking at the bigger picture, then prosperity will follow,” he said.
Belujane Konsult Chief Executive Officer Chris Aligbe stressed the need for airports concession, adding that it would help improve the infrastructure at airports.
He said: “We do not have an African-standard airport in our country. If we go ahead and we don’t create it, we will never make a headway. That is why concession of our airports is important. If we don’t build new airports, we may not have a world-standard airport.
There is no way we can make a headway. Even if we set up the best airline, the facilities would not be there. That is why a national airline and concessioned airport are mandatory for our country.”