Recently IATA announced that Africa’s airlines are expected to earn a collective net profit in 2024 for the second year in a row. That is a welcome and hard-won result reflecting the sector’s resilience in its post-COVID recovery. The expected $100 million profit, however, translates into just 90 cents per passenger—well below the global average of $6.14.

“Africa’s airlines are making a collective profit. That is good news. But it is razor-thin and well below the global benchmark. And there are wide variations across the continent where many individual airlines still struggle with losses. The demand to travel is there. To meet it, the African airline sector needs to overcome many challenges, not least of which are infrastructure deficiencies, high costs, onerous taxation, and the failure to broadly implement a continent-wide multilateral traffic rights regime,” said Kamil Alawadhi, IATA’s Regional Vice President for Africa and the Middle East.

“The challenges facing African aviation are significant, but they are not insurmountable. IATA’s Focus Africa initiative is by no means a panacea, but it does lay out a framework to build a stronger aviation sector that will provide even better support to economic growth and social development. The prize for working together across the continent for safe, efficient, and sustainable air connectivity is well worth focused policy efforts across the continent,” said Alawadhi.

2024 Financial Outlook Highlights

▪           Net Post-Tax Profit: African airlines are projected to achieve a net post-tax profit of $100 million, the second year of profits following the COVID crisis.

▪           Per Passenger Profit: Profit per passenger is expected to reach USD 0.9, nearly doubling the 2023 figure of $0.5, reflecting improved operational efficiency and increased demand, but well behind the global average of $6.14.

▪           Profit as a Percentage of Revenue: Profit margins are anticipated to be 0.6% of revenue, up from 0.4% in 2023. This remains significantly lower than the global net profit margin of 3.1%.

▪           Revenue Passenger Kilometers (RPK) Growth: RPK growth is forecasted at 8.5%, indicating continued strong passenger demand across the region. This does, however, lag behind the expected growth in capacity of 9.1%.

▪           Load Factor: The load factor is expected to reach 61.9%, slightly ahead of the 59.8% breakeven load factor for African Airlines.

Focus Africa Priorities

Focus Africa aims to address key challenges and opportunities within the continent's aviation sector. The initiative emphasises six priority areas: Safety, Infrastructure, Connectivity, Finance and Distribution, Sustainability, and Future Skills.

▪           Safety

Africa had no jet hull losses in 2023, for the second year in a row. Moreover, the continent recorded no fatalities in commercial aviation accidents in 2023, as presented within the IATA Annual Safety Report. The all accident rate for Africa was 6.38 per million sectors which is an improvement on the five-year average of 7.11.

IOSA registered carriers continue to outperform non-IOSA registered carriers both on the continent and globally. There are currently 31 operators in Africa on the IOSA registry.

The priority for Africa continues to be the implementation of safety-critical ICAO Standards and Recommended Practices (SARPS) for safety. Under the Focus Africa initiative IATA introduced the Collaborative Aviation Safety Improvement Program (CASIP) to help deliver this.

The Global Aviation Safety Plan (GASP) and the AFI Regional Aviation Safety Plan are targeting SARPS implementation at 75% for Africa. Currently, only 12 out of Africa's 54 states meet this standard.

▪           Connectivity

The Single African Air Transport Market (SAATM) seeks to liberalise civil aviation across the continent by removing restrictions on traffic rights for African airlines. SAATM provides Africa with a ready-made mechanism to drive economic growth, but few governments have taken the steps needed for its implementation. Moreover, an IATA analysis of 607 bilateral air service agreements (BASA’s) in Africa revealed limitations on the development of intra-Africa connectivity because the implementation of over half of these agreements was being compromised.

Non-compliance of by African governments BASA’s is a major obstacle to achieving seamless regional connectivity and growth in the African aviation sector. To develop economy-boosting intra-Africa connectivity Africa’s governments must back SAATM with actions. This is another key element Focus Africa is addressing.

▪           Blocked Funds

The development of connectivity in Africa also requires certainty that markets will abide by global standards with respect to the repatriation of funds from sales activities. Airlines still struggle with the inability to repatriate blocked funds efficiently and in line with international agreements and treaty obligations in several African markets.

The amount of blocked funds in African countries in June 2024 stood at $880 million, just over 52% of the $1.68 billion in blocked funds globally. This is an improvement following Nigeria clearing 98% of the total funds blocked ($831 million).

“The potential for aviation in Africa is huge. It has 17% of the world’s population yet only contributes about 2% of total global travel. While there are hurdles to overcome, through collaborative initiatives like Focus Africa with our partners including AFCAC, AFRAA and AASA we are addressing critical challenges hindering the advancement of aviation across Africa. Our goal is a safer, more efficient, and better-connected continent, driven by a diverse, skilled workforce to unleash aviation’s potential and unlock the economic and social opportunities,” said Al Awadhi.

Particular focus is for the ‘critical’ drive for economic growth and job creation.

"South Africa’s aviation industry is poised for significant growth over the next 20 years, adding 345 million additional passenger journeys by 2043. With aviation generating $6 in economic activity for every $1 spent, this expansion will inject billions into South Africa’s GDP and create thousands of new jobs. It is important for the new government to keep this as a strategic focus. The economic and social benefits of aviation will be maximised with a sharp policy focus on keeping costs low, providing sufficient capacity to grow, monitoring the cost-effectiveness of regulations, and achieving net zero carbon emissions by 2050," said Kamil Alawadhi, IATA’s regional vice president for Africa and the Middle East.

Priorities to strengthen South Africa’s aviation industry are being addressed at IATA’s Wings of Change Focus Africa Conference (WOCFA) underway in Johannesburg.  It has brought industry leaders and representatives of governments and aviation safety and training entities together with the purpose of identifying concrete actions to strengthen aviation in Africa and optimise it for broader sustained economic growth.

Specifically, IATA urged the new government to focus on:

Infrastructure Costs: Ensure continuous consultation between Airports Corporation South Africa (ACSA) and Air Traffic Navigation Services (ATNS) and their airline customers. Such consultation must ensure that the services provided are aligned with airline needs, efficient, and cost-effective.

Safety Leadership: Maintain a leadership role in southern Africa on safety, particularly with respect to the implementation of ICAO Standards and Recommended Practices. South Africa’s Civil Aviation Authority (SACAA) has already shown a great example of leadership on global standards by recognising the IATA Operational Safety Audit (IOSA) as an acceptable means of compliance in alignment with South Africa’s aviation safety regulations.

Skills Development: Continue to develop the world-class skills needed to support the aviation sector. A recent training agreement between IATA and ATNS is a good example of the cooperation that will position South Africa’s aviation sector to expand connectivity while creating quality jobs in the sector.

Sustainability: Focus on policies that will support aviation’s net zero carbon emissions by 2050 commitment—a goal that is shared with governments globally.

“This is a win-win agenda for the new government—facilitating trade, encouraging investment, and addressing unemployment. South Africa’s aviation sector has had challenging times in recent years. But that has not changed the fundamental fact that aviation is a critical enabler for economic growth and prosperity. If the new government keeps a focus on safety, sustainability, skills development and costs, it will chart a course to renewed strength in aviation that will have a positive impact across the economy,” said Alawadhi.

Under the agreement APG will be enhancing LOT Polish Airlines’ presence in Saudi Arabia by providing the airline with comprehensive sales development, agent and passenger help desk as well as wide-ranging marketing activities.

Front End and Chinese manufacturer EHang worked together with the General Authority of Civil Aviation (GACA), in collaboration with the Ministry of Transport and Logistics Services, the Ministry of Hajj, and the Ministry of Interior, marked a pivotal step towards a faster, more efficient, and sustainable Hajj.

Abdulaziz Al-Duailej, president of GACA said: “The trial marks a major advancement in integrating advanced air mobility (AAM) solutions into Saudi Arabia’s aviation landscape. We are committed to the highest safety standards and seamless integration into existing air traffic systems. T

‘his trial acts as a proof of concept for multiple use cases and contributes to various AAM roadmap initiatives. We appreciate the instrumental support of Front End and EHang to mark this historic milestone for Saudi Arabia."

The annual Hajj pilgrimage presents unique logistical challenges. This innovative demonstration aims to streamline transportation during this sacred event, by efficiently moving pilgrims faster between key locations, ensuring a smoother and safer Hajj experience.

Majid Alghaslan, chairman and CEO of Saudi technology integrator, Front End, said: “We are at the forefront of this trailblazing trial, paving the way to a new era in smart mobility solutions, potentially revolutionizing Hajj transportation. Aligned with Saudi Vision 2030, our purpose is to foster a ‘Connected Kingdom,’ serving as a gateway for our partners to access growth opportunities in Saudi Arabia and the wider region. This achievement stands as a testament to the power of government-private partnerships in accelerating new technology adoption. Partnering with EHang made this pioneering solution a reality."

Conducted in a low-risk area within protected airspace, the trial was designed to help assist authorities in setting the right regulatory environment for the deployment of eVTOL aircraft which will redefine the Hajj experience by enhancing mobility, reducing congestion, and promoting sustainability.

“These eco-friendly marvels offer a cost-effective solution for urban transportation, tackling congestion while aligning perfectly with the Kingdom’s goals for a sustainable future. This advancement underscores Front End's dedication to national progress and its commitment to shaping a greener, more efficient tomorrow in mobility”, Majid said.

The event was formally opened by Dr Vandana Aggarwal, former senior economic advisor, ministry of civil aviation for the Indian Government.

Conference Chair, Alan Peaford MBE, gave his opening speech by saying: “With a commercial aviation history going back some 113 years, India is hardly an emerging market, I would argue it is re-emerging.

"No wonder too, as many of the ingredients are right to stimulate a growth for the air transport and the aviation support business. The growth is attributed to increased per capita income levels; increase in urban migration numbers and a shift of customers from other modes of transport. Increased spend on consumables has seen eCommerce boom that feeds down to the air freight sector."

He added: "Indians will quite rightly point to the achievement of moving to a third place spot for domestic connectivity behind the United States and China. However, there are significant issues facing the business in this renaissance.  Is MRO up to scratch? Is the government creating the right environment to support this industry or are government charges and taxation restricting growth?

“There are some world class airports here, or in the pipeline, but away from the main metropolitan first-tier cities are there sufficient landing and parking places for the business aircraft industry.

“And to get business jets, do we have the right MRO support, landing strips and freedom to support?  Are the country’s own HNWI’s able to base an aircraft here with ease?

"Airlines, GA, maintenance and other aviation services all face a similar challenge.  Retaining staff and training new ones

“Poaching is prevalent, not just from domestic competitors but from the nearby Gulf States as well. At the same time, we are facing pressures brought about by global warming both for the impact on operations and the future regulatory restrictions."

Peaford concluded: "These issues, and others, will be addressed here on the platform over the next two days.”

Already the inaugural event has attracted over 500 registered delegates.

Mark Brown, managing director of Times Aerospace Events, said of the conference: “This may be the first of the Aviation India events but it won’t be the last.”

This attributed to by the introduction of new routes and increased flight frequencies. During the same period, ASKs (Available Seat Kilometers) surpassed May 2023 levels by 12%.
 
African carriers accounted for 48.7% of the international capacity and 35.4% of the intercontinental capacity.
 
AFRAA projects a 15% rise in passenger traffic for African carriers in 2024 compared to 2023. Regarding capacity allocation between African and non-African operators on International routes (regional and intercontinental), AFRAA estimates a split of 51.3% and 48.7%, respectively. However, in regards to intercontinental routes, Africa accounts for only 35.4% of capacity, with non-African operators holding the majority share at 64.6%.
 
In this season, intra-Africa connectivity surged across regions, with major hubs such as Addis Ababa, Nairobi, Abidjan, and Lome witnessing a notable uptick in connectivity.
 
African airlines are experiencing enhanced revenue performance, following the growth in traffic. AFRAA's estimate shows operating revenue for March 2024 at US$1.74 billion, a significant increase from US$1.39 billion in March 2023, marking a 26% growth.
 
Global price of Jet A1 continues to fluctuate from week to week. The global average jet A1 price ended the week of 24^th May 2024 down 0.7% at $99.85/bbl.
 
Regulatory and industry affairs

In Nigeria, the Nigerian Aviation Handling Company (NAHCO) has raised concerns over the detrimental impact of excessive airline taxes, which have made Nigerian airports some of the most expensive globally for foreign airlines to operate.
 
Egypt is making strides towards sustainable aviation with the Egyptian Petrochemicals Holding planning to launch the country’s first sustainable aviation fuels (SAF) production facility by 2025.
 
In Kenya, the Kenya Civil Aviation Authority (KCAA) is leading efforts to validate draft aviation regulations aimed at enhancing safety and efficiency, with active stakeholder consultation. However, the Kenyan government’s proposed Finance Bill 2024, which includes VAT on aviation equipment and supplies, is causing concern as it deviates from global best practices where aviation is typically VAT-exempt.

In South Africa, the clarification received on the Broad-Based Black Economic Empowerment (B-BBEE) Act is that the Act is targeted at enhancing and encouraging procurement of goods and services from B-BBEE compliant companies and the requirement to have foreign operators to be B-BBEE certified is impractical. Foreign operators in South Africa are encouraged to seek further clarification with the BEE Chambers on applicability to their respective airline. Additionally, the Department of Forestry, Fisheries, and the Environment is reviewing aviation meteorological service tariffs for the next three years, with new rates effective from April 2024 to March 2027.
 
The latest report on Blocked Funds is that Nigeria has settled and released all funds that had been blocked in Nigeria to the airline operators.
 

Deals included national air service agreements, aircraft orders, cargo and logistics, advanced air mobility, human capability, information technology, maintenance, repair and overhaul sector deals.

Saudia Airlines announcement to purchase 105 Airbus A320-Neo and A321-Neo aircraft set the stage alight on the first morning, as more than 5,000 attendees from 100 countries assembled in the Saudi capital.

The host, Saudi Arabia’s General Authority of Civil Aviation signed Air Service Agreements with Mozambique and the Kingdom of Eswatini, with further agreements signed with Cambodia and Brunei Darussalam.

GACA also launched its inaugural State of Aviation report, finding the Saudi aviation sector made a $53 billion contribution to the Saudi economy and supported around 958,000 jobs across the country. The regulator also used the forum to release its General Aviation Roadmap to develop Saudi Arabia's business jet and private industry tenfold to $2 billion by 2030, with six dedicated general aviation airports and nine terminals – forecast to create 35,000 new jobs.

Minister of Transport and Logistics, Saleh Al Jasser said: "Saudi Arabia is enabling huge opportunities for the private sector and creating thousands of jobs for Saudi Arabia’s people. This Forum is bringing together the top leaders and brightest minds from the global aviation sector to collaborate and develop innovative solutions that will drive the sector into the future."

GACA President HE Abdulaziz Al-Duailej added: “The first day of the Future Aviation Forum has been a tremendous success, in terms of commercial deals, policy initiatives, and agreements to elevate global connectivity. Today’s announcements are a clear vote of confidence in the growth and investment opportunities being created across the Saudi aviation sector, and in Saudi Arabia’s global aviation leadership."

Speaking at the Airport Show held in Dubai this week, the organisation’s director general, Mohammed Abdulla Lengawi said the agency’s success had attracted a lot of interest from industry visitors.

“They have been keen to understand DCAA’s role in advancing Dubai's aviation industry and its shift to fully digital, paperless services”, he said. “This digital transformation simplifies customer access, enabling them to complete transactions anytime and anywhere via the Authority’s website which offers a superior customer experience with instant, self-service options.”

One of the key achievements showcased was the significant growth in commercial activities in the aviation sector during the first quarter of 2024, totalling 11,990 activities, a 21% increase compared to the same period in 2023. This growth has led to a surge in permit requests by 72% and permit renewals have grown by more than threefold.

While requests for landing permits for aircraft (private, passenger, and cargo) at Dubai International Airport and Al Maktoum International Airport to operate all types of non-scheduled and designated flights (commercial and non-commercial) have also increased, reaching more than 4,000 permits in the first quarter of 2024. Building and elevation permits in air easement zones have increased significantly as the emirate's construction industry has grown, reaching two and a half times the previous level.