IATA: Setting up new airlines in Africa, risky business

 

  • Faults taxes, fuelling, charges

 

The Director-General, International Air Transport Association (IATA), Alexandre de Juniac, said setting up a new airline in Africa is a risky business, stressing that high level of operating costs prevents creation of new airlines in the continent.

The IATA boss, who disclosed this to Woleshadarenews on the sidelines of presentations at the just concluded IATA Media Day held in Geneva, Switzerland, attributed the risks to high cost of operations and poor air connectivity in the continent.

He further disclosed that piling up taxes, monopolistic situations, lack of supply, airport taxes and charges and high fuel cost were also some of the reasons airline business is not profitable and risky.

He noted that it was the responsibility of governments to lower fuel cost, especially, and airport taxes, stressing that these have cost untold hardship to airlines.

His words: “One of the main reasons is the level of operating cost that prevents the creation of new airlines. It is too expensive to operate airlines in Africa. Setting up a new airline in Africa is a risky business.

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“Piling up of tax, monopolistic situation, lack of supply may be because they are in the hands of a happy few usually in terms of airport taxes and charges. The most difficult thing is the airport because it is difficult to build airport of your own.’

Despite the critical role that air transport plays and its significant contribution to the economies of African countries, government policy makers continue to view air transport as a luxury service for the elite.

Directly and indirectly, air transport supports 6.7 million jobs in Africa and contributes $67.8 billion in Gross Domestic Product (GDP).

Despite this, many African government and airport service providers have tended to burden airlines and airline users with high taxes, fees and charges.

This, stakeholders said, was in complete disregard to the fact that airlines across the continent are going through periods of critical financial crisis and struggling for survival.

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Experts said the various taxes, duties, levies and charges on fuel contravened global norms and handicap the African aviation industry.

Globally, fuel accounts for about 36 per cent of an airline’s operational cost, while in Africa this ranges from 45 per cent to 55 per cent.

Fuel prices at some stations in Africa are over twice the world average. This has a very adverse impact on the competitiveness of African airlines.

The IATA chief took a swipe at air connectivity in the region, saying the situation had made travelling around the continent very difficult.

“Air connectivity in Africa is too low. It should be dramatically improving. It is worse in Latin America. What we think in Africa is there are many reasons for lack of connectivity,” he added

Kinshasa, the capital of the Democratic Republic of Congo, is one of the biggest cities in Africa, with an estimated population larger than London and a skyline that peers over the wide, snaking Congo River.

But if a traveler wants to go from there to Lagos, Nigeria’s commercial capital and Africa’s largest metropolis, it’s impossible to fly non-stop.

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Roughly 1,100 miles separate the two megacities—about the same distance as New York to Minneapolis.

There are no direct flights. Instead, a traveler will need to change planes at least once and pay a minimum of $1,200. There’s a good chance the journey will take well more than 12 hours.

Across Africa, the situation is similar. Commercial flights are infrequent, expensive, and circuitous. To get from one country to another, an African traveler may have to go thousands of miles out of their way and transfer through the Middle East or Europe.

The continent is home to roughly 12 per cent of the world’s population and will be responsible for most of the global population growth over the next three decades.

 

Wole Shadare