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African airlines under the aegis of African Airlines Association (AFRAA) have listed imposition of taxes by governments, poor intra-Africa connectivity, high cost of jet A1 which prices is three per cent higher in Africa than in other region as some of the factors stunning the growth of the continent’s carriers.
Meanwhile, the clearing house for over 290 global airlines, the International Air Transport Association (IATA) had at IATA 75th Annual General Meeting (AGM) and World Air Transport Summit (WATS) held in Seoul, South Korea with Aviation Metric in attendance put the high cost of Jet A1 in Africa at 35 per cent higher than the rest of the world.
IATA noted that Africa was the region with the greatest aviation potential, but punitive taxes, and high infrastructure and fuel costs were curtailing air transport’s benefits on the continent.
Other debilitating factors according to the carriers include increasing number and dominance of African airlines in Africa, unfavourable business environment for investors and the COVID-19 pandemic which they said has had greater impact on their operation.
The carriers expressed their frustration at the recently concluded 9th Aviation Stakeholders’ Convention (ASC), a two-days webinar hosted by the AFRAA and the Ethiopian Airlines Group, heavyweights of the aviation industry worldwide to brainstorm on plethora of issues bedeviling the sector and slowing down the recovery of the industry and proffering solutions to the issues.
The event titled, “Building Blocks For The Air Transport Industry Recovery”, had in attendance the Secretary-General of AFRAA, Abdelrahmane Berthe, Minister of Transport, Ethiopia, Mrs. Dagmawit Moges, Ethiopian Airlines Chief Executive Officer, Tewolde GebreMariam and the International Air Transport Association (IATA) Regional Vice-President, Middle East and Africa, Mr. Kamil H-Al-Awadhi among others.
According to Berthe, AFRAA’s market analysis, 2021 airline capacity and traffic are projected to reach 60 per cent and 45 per cent respectively of those of 2019, the aviation industry is expected to lose $8.35 billion this year.
It had been said that Nigerian and African airlines would find it extremely difficult to be profitable as long as taxes, charges and high cost of aviation fuel persist.
The African aviation industry loses $1.50 for each passenger it carries, with many airlines struggling to break even.
Aviation fuel costs more in Nigeria and other oil producing countries than their counterparts that do not produce oil.
For instance, in Nigeria, despite the stability in the lifting of aviation fuel across the country and the deregulation of the commodity, JET A1 has hit an all-time high of N270 per litre.
The skyrocketing price of JETA1 in Nigeria has added more to the pains of airlines, which use 30 per cent of their revenues for fueling aircraft.
Aviation fuel is central to the operations of an airline, as it constitutes between 35-40 per cent of an airline’s cost. The price of the commodity – laden with taxes – in the West African sub-region, is the highest in Africa.
While the specialised fuel is sold for about $2.30 cents per gallon in Nigeria, $2.30 in Benin and $1.94 cents per gallon in Cameroon, it is sold for close to $3.14 cents in Ghana, which also produces oil. In Luanda, Angola (also an oil producing country), it costs $3.75 per gallon; Libreville $2.05 per gallon; Khartoum, Sudan $2.44 per gallon.
It is only Equatorial Guinea that sells JET A1 for $0.46. Jet fuel prices in some African capitals are double the global average and it is posing a threat to its aviation sector development
The high cost of jet fuel in Africa compared to other regions due to distribution inefficiencies and infrastructure constraints, has held back the development of airlines and fare reduction.
Apart from the issues of highly priced jet fuel, Africa’s jet fuel shortfall is expected to triple from 1.8 million mt in 2013 to around 5.2 million mt by 2025. As a result of the high fuel price, ticket prices are relatively high. If the fuel price comes down and costs of operations reduce, airlines are likely to bring down their fares.
‘Today, fuel prices globally average per 1.3 dollar. In Africa, it ranges between $2 and $3.77. In some places, more than twice what it is globally.Google+