African carriers’ low penetration creates space for foreign airlines’

Despite the presence of foreign airlines, the African market still offers substantial growth potential. This is particularly true for airlines looking to expand their reach and offer more options travelling to and from the continent, writes WOLE SHADARE

Foreign airlines are increasingly viewing the African aviation market as a lucrative opportunity. While European and Middle Eastern carriers have a strong presence, airlines from around the globe are recognising the potential for growth in the region. This is driven by factors like increasing demand for travel to and from Africa and the relatively low penetration of African airlines in certain key markets.

Expanding presence

Expanding presence International airlines have expanded their presence in Africa by increasing their capacity in the region, leveraging the continent’s economic potential, growing population, and rising demand for air travel.

This expansion reflects increasing demand for air travel, improved connectivity, and ongoing investments in infrastructure and airline collaborations, reinforcing Africa’s position as a key market for global aviation. Airline capacity, referring to the total number of seats available on an airline’s flights over a given period, is a crucial factor in airline operations. It impacts profitability, ticket prices, and overall efficiency.

The OAG’s TAKEOFF report for 2024 provides insights into airline capacity trends in 2023 and 2024, analysing growth and recovery. The report examines domestic and international capacity, flight frequency, ASKs (Available Seat Kilometres), and route operations, offering year-on-year comparisons.

The OAG report found that leading airlines increased their capacity in Africa, indicating a strengthened market. Investments in airport infrastructure, airline partnerships, and policy initiatives like the Single Africa Air Transport Market (SAATM) have enhanced competition, reduced fares, and improved connectivity, benefiting airlines like Emirates, Qatar, and Turkish Airlines.

With many African economies developing at a rapid pace, air travel is becoming increasingly commonplace in Africa. Over the past 20 years, the continent’s demand for flight seats has jumped to 100-150 million seats per year, from under 500,000 before the year 2000.

Foreign airlines are indeed increasing their presence and investment in the African aviation market, often referred to as a “scramble for Africa” due to the growing competition and opportunities. European and Middle Eastern airlines, in particular, are expanding their reach, while North American carriers have a smaller footprint despite their overall global capacity.

Airlines from Europe and the Middle East, like Emirates, Turkish Airlines, and Qatar Airways, have established strong regional presences and are actively expanding their networks in Africa.

Turkish Airlines, for example, has been actively pursuing expansion in Africa, including adding new destinations like Aswan (Egypt), Hargeisa (Somaliland), and Port Sudan (Sudan). There is competition among foreign airlines for routes and market share, but also between foreign and African airlines.

Part of the reasons for Africa’s under-served status, according to World Bank study, is that for long it refused to open its skies by not implementing the Yamoussoukro Decision, which was adopted by African states in 1988 aimed at libralising the continent’s airspace, as many African countries restrict their air services markets to protect the share held by state-owned air carriers that were established in the 1960s, many of which had gone under.  Some African airlines have expressed concerns about the dominance of foreign carriers in the African aviation market, particularly in regional routes.

Strong case

They argue that foreign airlines, especially those from Europe and the Middle East, control a disproportionate share of the market, often at the expense of African carriers. This dominance is seen as hindering the growth and sustainability of African airlines, impacting their profitability and ability to compete effectively.

Foreign airlines are reported to control a significant portion, sometimes estimated at over 80%, of the African aviation market. This means that African airlines control only about 20% of the continent’s air travel, a situation that has been a source of concern for aviation experts and policymakers.

Several factors contribute to this dominance, including the lack of well-developed national carriers in many African countries, the limited liberalisation of air transport in Africa, and the challenges faced by African airlines in terms of infrastructure, operational efficiency, and financial resources.

The dominance of foreign airlines can hinder the growth and development of African airlines, potentially leading to lost revenue, limited route expansion, and reduced opportunities for local aviation businesses.

This dominance is seen as hindering the growth and sustainability of African airlines, impacting their profitability and ability to compete effectively. The continent’s carriers are helpless and can offer little or no resistance as many of them cannot match them in terms of financing, structure and strategy.

Imbalance

African carriers face intense competition from well-established international airlines with greater resources and global networks. Despite concerns, the Single Africa Air Transport Market (SAATM) is seen as a potential catalyst for growth and development in the African aviation sector, creating a more unified and competitive market.

Experts’ views

Experts who spoke with Aviation Metric noted that out of $10 billion annual profit made by foreign airlines from Africa, only 20 per cent of that amount remains with dominant African airlines such as Ethiopian Airlines, Egypt Air, Kenya Airways, Air Maroc, Rwandair, South African Airways, Uganda

Airlines, among other airlines operating in and out of the continent.

Intrigues and interstate rivalries within Africa also hinder the full implementation of SAATM and the development of a robust intra-African aviation market. African airlines need to enhance their competitiveness through strategic partnerships, fleet modernisation, and improved operational efficiency.

Not a few believe that African governments need to implement policies that support the growth of local airlines, including providing a level playing field and addressing issues like infrastructure deficits. Overcoming the challenges associated with SAATM implementation and fostering greater cooperation among African nations are crucial for realising its full potential. Consistent and supportive aviation policies are essential for fostering a stable and predictable environment for airlines to operate and invest.

Equally worrisome is the disclosure that these carriers contribute only two per cent to the global aviation market. An airline operator, who spoke to our correspondent on condition of anonymity, described the problem as self-inflicted, adding that the refusal of governments in the region to liberalise their skies for free entry and exit for African airlines has cost them dearly, with a monumental effect on the sector.

He said: “African airlines are taking crumbs from the market they should control. But how can they control the market when they do not have good connectivity even within Africa?”

“They are bleeding just as they do not have the resources to compete, for instance, with the likes of Emirates, British Airways, Delta, United Airlines, Lufthansa, Qatar, Air France and many other mega carriers,” the source added.

Last line

Ironically, the main beneficiaries of Africa’s recent air traffic growth have been non-African airlines, adding that air transport is critical to Africa’s economic advancement.

Wole Shadare