Costly operations impacting African airlines’ performance-AFRAA

The African Airlines Association (AFRAA) said its primary focus is to create a sustainable, interconnected and affordable African air transport industry.

The AFRAA Secretary-General, Abderahmane Berthé highlighted the areas of action for the airline industry to address the high cost of operations that is impacting the performance of the continent’s airlines.

He told Aviation Metric that while Africa’s aviation industry continues to perform strongly, with increased passenger traffic and improved operational efficiency with key drivers including expanded routes, and rising domestic and international travel demand, one of the most fundamental factors determining an airline’s success or failure is the cost structure associated with its operations.

He stated that If the cost is too high, the profitability is affected, making it more challenging to expand the network.

Noting that taxes and fees generally represent over 40% of airlines’ most affordable base fares and more than 20% of ticket prices, Berthé remarked that, for a given average trip length, ticket fares are more expensive in Africa.

“On average, they are twice or thrice as high as in Europe and Asia. Consequently, air transport is not affordable for African citizens with the lowest GDP per capita,” he said.

He further cited the disparities and non-harmonization across the continent, with West and Central Africa being the worst affected.

Since taxes and charges imposed on African aviation are among the highest in the world, this hinders the industry’s growth and development and significantly affects its competitiveness.

The current cost structure of most African carriers according to him will not allow them to compete with the increasingly fierce international competition.

Berthé called upon the governments to take various actions to address the challenge. “Aviation is not a luxury but a critical economic development and integration driver. This considers its direct links to economic growth, resulting from spillover effects by creating direct and indirect jobs in the industry and other auxiliary sectors, such as tourism, services, and logistics. As such, governments need to make the sector’s development a priority.”

“Governments must reduce levies targeting airlines to create a conducive environment for air transport development,” he added.

Understanding that the industry can only thrive in an environment where air travel is made affordable, and more Africans can travel, all actors, he said must ensure the sector is well-positioned for success.

He reiterated that high taxation is a significant obstacle to aviation development and Airline sustainability, industry stakeholders organised the Air Transport Sustainability Laboratory in 2022, hosted by AFRAA, in Nairobi.

The Laboratory developed a roadmap, including recommendations regarding taxes and charges.

He intervened by calling upon all stakeholders to play their role in implementing the roadmap of the Laboratory and the effective engagement of decision-makers in reducing taxes and charges on the continent.

“AFRAA will continue our lobbying efforts to reduce these taxes to ensure the continent reaps the full benefits of an efficient air transport industry.” Mr Berthé stated.

IATA’s regional vice president of Africa and the Middle East, Kamil Al-Awadhi had last year railed against the high costs of air travel in Africa, particularly in Nigeria.

Al-Awadhi also hit out at other African governments for unsustainable and unreasonable charges to the aviation sector.

Passenger cost via Lagos or Abuja was two and a half times greater than Doha or Dubai. African carriers -often owned by the government faced an environment of increasing charges, levies, taxes, and governments that do not invest in infrastructure.

“It costs almost 26.5% interest on any loan you take for aviation,” he said. MRO activities are also threatened and the hope for investment in MRO on the continent is at risk.

Wole Shadare