IATA: Abuja, Lagos airports rank highest in multiple charges, taxes in Africa

  • Continent’s aviation losses put at $484 million in 2023
  • 25% interest loans horrendous
  • Africa accounts for 18% global population, but just 2.1% travel by air

 

The precarious situation of African airlines especially Nigeria was laid bare on Wednesday as the Vice-President of the International Air Transport Association (IATA) for Africa and Middle East, Kamil Al-Awadhi said Nigeria ranks as the country with the highest charges in Africa, describing high taxes in the continent as inimical to the growth of the sector in the country.

In a related development, carriers based in Africa are expected to generate a moderate combined loss of around $484 million in 2023, just as the continent remains a difficult market in which to operate an airline, with economic, infrastructure, and connectivity challenges impacting the industry’s performance.

 

 

Kamil Al-Awadhi

However, despite the challenges, the industry continues to move towards profitability following the COVID disruption and could be in the black as soon as next year.

The IATA chief who spoke at  Aviation Africa 2023 summit holding in Abuja listed the Nnamdi Azikiwe International Airport Abuja as topping the list of airports with the highest airport charges followed by the Murtala Muhammed International Airport, Lagos as coming second.

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Although, Al-Awadhi did not list other countries or airports coming behind the two aerodromes in terms of high airport charges noted that the African airlines have the same unique issues different from Asia, Europe, and other continents.

The issues that have conspired to affect the continent’s carriers he said are high-interest rates at over 25% which he further said are killing the carriers and one that has prevented them from competing with their counterparts in other parts of the world.

Equally worrisome to him is aircraft lease rental rates which he said is three times higher than in Europe, with charges he stated are killing.

His words, “Abuja has the highest charges followed by Lagos. How can you have such high taxes and expect to be profitable? Nigerian airlines can’t compete with others. African airlines have put themselves in a terrible situation to compete. They are not financially viable with excess charges.”

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“Fuel is higher by 20 percent. The loans are horrendous. The continent needs to review these issues. If you want to see Gross Domestic Product (GDP) change, just fix your aviation industry. Doha, Dubai, and the entire United Arab Emirates (UAE) grew from nothing. Airlines contribute to the growth of the economy”.

Working in silos, he reiterated was simply not efficient and places a big risk on safety, connectivity, and a viable air transport industry in Africa, lamenting that Africa accounts for 18% of the global population, but just 2.1% of air transport activities.

Closing that gap he noted can benefit from the connectivity, jobs, and growth that aviation enables, which is what Focus Africa is all about.

In a related development, IATA, the clearing house for over 200 airlines said for the second quarter of 2023 – and for two consecutive quarters- African carriers had one of the world’s highest annual passenger traffic growth rates, second only to Asia Pacific.

With total traffic up 38.9% compared to the same quarter in 2022, African carriers’ growth outperformed the industry-wide average for total and international traffic, even though the region has not fully recovered to pre-pandemic levels.  Q2 2023 RPKs were 9.2% below the same quarter in 2019.

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Despite this continued positive performance, the region still confronts economic challenges that severely limit the affordability of air travel, in addition to a range of infrastructure issues that curb capacity and hinder the development of consistent air service.

Looking further ahead, over the next 20 years, Africa’s passenger traffic, it noted would double, eclipsing 300 million passengers by 2040 at an annual average rate of 3.4%.

Two of Africa’s recognisable airlines, Ethiopian Airlines, and Egypt Air

“As you can see, the continent stands out as the region with the greatest potential and opportunity for aviation. But this potential is limited by safety incidents, infrastructure constraints, blocked funds, high costs, lack of connectivity, regulatory impediments, slow adoption of global standards, and skills shortages, among other factors”, it added.

Wole Shadare