In 2020 a handful of African airlines secured US$ 2.04 billion in government aid. Most of this (US$ 2.02bn) was distributed through direct government loans, equity financing and cash injections. Despite this, 8 airlines in Africa filed for bankruptcy or entered business administration over the past 12 months.
Over US$ 30bn has been pledged for air transport and tourism in Africa by International finance agencies and other institutions including the African Development Bank, African Export Import Bank, African Union and the International Monetary Fund (IMF). However, most of this relief is yet to reach the airlines and other aviation stakeholders in need. On top of this $ 601 million in airline funds remains blocked in Africa across 17countries (Algeria, Angola, Benin, Burundi, Central African Republic, Eritrea, Ethiopia, Equatorial Guinea, Malawi, Mozambique, Nigeria, Sudan, Gabon, Cameroon, Chad, Congo and Zimbabwe) putting further pressure on airlines as they struggle for survival.
“African airlines posted a combined US$2bn loss in 2020. This year we expect only a slight improvement (US$1.7bn loss) as the struggle with COVID-19 continues. Looking ahead it’s unlikely that traffic will return to post COVID-19 levels until 2023. Financial relief measures are still desperately needed, particularly those that do not increase the industry’s debt burden. Additional relief measures and activating existing pledges are essential,” said Kamil Al Awadhi, IATA Regional Vice President Africa and the Middle East.
Government relief comes in many forms. Cost reductions in terms of taxes and charges will help. And the release of the $ 601 million of airline revenues that are currently blocked from repatriation in certain governments would be an immediate boost in some markets. Governments will need a financially viable air transport sector to energize economic recovery from COVID-19. Many of Africa’s airlines were weak even before the crisis. Reducing costs and freeing blocked cash has long been a priority for African aviation. If ever there was a time for decisive government action on these issues, it is now,” said Al Awadhi.
The African Union has taken leadership in preparing for the safe restart of aviation in Africa through its “Saving Lives, Economies, and Livelihoods" campaign. This promotes collaboration between different sectors of governments involved in the crisis including Ministries of Health, Transport and IT. IATA supports the AU’s efforts and urges governments in Africa to: replace quarantine measures with testing, accept a reasonable validity period of five (5) days for COVID-19 testing for travel and avoid COVID-19 vaccination as a mandatory pre-entry and exit criteria.
Preparing the industry to safely restart after a year or more of disruption will take careful planning and advanced preparation. Governments need to develop the benchmarks and plans that would enable a safe, orderly and timely restart. That means working with governments in at least two areas: establishing operational restart plans, putting tools in place to manage new COVID-19 testing and vaccine requirements and testing and vaccinations will play a role as the pandemic comes under control and economies ramp up, including the travel sector.
IATA has developed IATA Travel Pass to manage health credentials, protect against fraud and enable a convenient travel process. It is being trialed by a number of airlines and airports around the world, including Ethiopian Airlines and RwandAir in Africa. Another major African carrier is expected to come on board soon. IATA Travel Pass compliments the work being done by the AU to safely manage travel.
African Aviation - 2020 in Numbers:
- A 69% drop in passenger demand in Africa compared to 66% globally. Passenger demand is back to 1998 levels.
- A 61% drop in capacity in Africa compared to 57% globally.
- Air cargo was a bright spot for African carriers, cargo volumes increased by 1% in Africa, this translates into high cargo revenues, which provided needed support to airlines.
- African airlines lost US$2bn.
- Airlines in Africa lost $49.63 for every passenger they flew in 2020 compared to a loss globally of $66.04.
- Connectivity fell by 90% at the low point of the crisis. Before the crisis there were 970 unique international routes at the low point of the crisis there was 100. And the density of those connections has become much thinner.
- Job losses could grow to 4.5 million in Africa in aviation and related industries.
- GDP could fall by up to $37billion supported by aviation in the region.
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