African airlines are expected to see a reduction in air traffic of 55% in 2021 occasioned by the impact of COVID-19 to the continent’s carriers.
This is a sharp decline from 2019 when capacity grew by 21.5% according to statistics provided by the International Air Transport Association (IATA) at it’s ongoing Annual General Meeting (AGM). The statistics equally shows that African carriers are projected to lose $1.7b in 2021; a situation that underscores the heavy losses encountered by global airlines.
The aviation industry is set for a $118.5 billion net loss in 2020 or $66 per passenger according to IATA’s Chief Economist, Brian Pearce. This is coming amid disappointment from IATA that African airlines have also received little government support and there have been a number of failures.
The problem of African airlines predates COVID-19. The truth of the matter is that many airlines in the region have struggled to survive churning out profits barely enough to sustain a very capital intensive airline business. COVID-19 pandemic only serves to nail the coffin in a more devastating manner that offers little hope of existence as many carriers are at the verge of calling it a day.
To this end, IATA is unrelenting in its campaign that African governments must support their airlines to have any hope of survival. Senegal recently announced $128 million in relief for the tourism and air transport sector in the face of coronavirus pandemic. Other countries that have chosen to bail out their airlines include Nigeria, Angola, Botswana, Chad, Egypt, Cote D’ Ivoire, Ghana, Jordan, Kenya, Morocco, Oman, Qatar, Saudi, Senegal, South Africa, and Tunisia.
The sector has also seen a number of relief measures in terms of Airport and ANSP charges from ASECNA (ANSP covering 17 states in Central West Africa and Madagascar), Namibia Airports Company (8 airports), Ghana Airport Company (6 airports), Seychelles, Oman airports, AMM airport, DXB & DWC airports.
Director-General of IATA, Alexandre de Juniac lamented that the crisis is devastating and unrelenting, adding that airlines have cut costs by 45.8%, while revenues are down 60.9%. “The result is that airlines will lose $66 for every passenger carried this year for a total net loss of $118.5 billion. This loss will be reduced sharply by $80 billion in 2021. But the prospect of losing $38.7 billion next year is nothing to celebrate. “We need to get borders safely re-opened without quarantine so that people will fly again. And with airlines expected to bleed cash at least until the fourth quarter of 2021 there is no time to lose,” he added.
The COVID-19 crisis according to him challenged the industry for its very survival in 2020, stressing that in the face of a half trillion-dollar revenue drop (from $838 billion in 2019 to $328 billion) airlines cut costs by $365 billion (from $795 billion in 2019 to $430 billion in 2020). “The history books will record 2020 as the industry’s worst financial year, bar none. Airlines cut expenses by an average of a billion dollars a day over 2020 and will still rack-up unprecedented losses. Were it not for the $173 billion in financial support by governments we would have seen bankruptcies on a massive scale,” said de Juniac.