African Air Carriers In Dire Straits as Virus Impacts Passenger and Freight Movements

AFRICA – The fear of the Covid-19 virus running amok throughout the continent is one of the big eared elephants in the room. It seems however that the pandemic is already having a catastrophic effect on the air carriers which link the panoply of countries which stretch from Algiers to Cape Town and the Gambia to Somalia.

Although the principal losses are due to the fall in passenger traffic, this of course has a knock on effect for freight as the vast majority of cargo is carried in the belly holds of the commercial carriers, as opposed to dedicated freighter aircraft.

Now the International Air Transport Association (IATA) has renewed its plea for governmental assistance as the impact of the pandemic worsens. IATA says the region’s airlines could lose $6 billion of passenger revenue compared to 2019. That is $2 billion more than was expected at the beginning of the month.

Job losses in aviation and related industries could grow to 3.1 million, half of the region’s 6.2 million aviation-related employment, as against the previous estimate of 2 million. Full-year 2020 traffic is expected to plummet by 51% compared to 2019. Again the previous estimate was a fall of 32% with GDP supported by aviation in the region predicted to halve to $28 billion, as opposed to the former estimate of $17.8 billion.

IATA has based these estimates on a scenario of severe travel restrictions lasting for three months, with a gradual lifting of restrictions in domestic markets, followed by regional and intercontinental. Countries hardest hit include:

• South Africa: 14.5 million fewer passengers resulting in a $3.02 billion revenue loss, risking 252,100 jobs and $5.1 billion in contribution to South Africa’s economy
• Nigeria: 4.7 million fewer passengers resulting in a $0.99 billion revenue loss, risking 125,400 jobs and $0.89 billion in contribution to Nigeria’s economy
• Ethiopia: 2.5 million fewer passengers resulting in a $0.43 billion revenue loss, risking 500,500 jobs and $1.9 billion in contribution to Ethiopia’s economy
• Kenya: 3.5 million fewer passengers resulting in a $0.73 billion revenue loss, risking 193,300 jobs and $1.6 billion in contribution to Kenya’s economy
• Tanzania: 1.5 million fewer passengers resulting in a $0.31billion revenue loss, risking 336,200 jobs and $1.5 billion in contribution to Tanzania’s economy
• Mauritius: 3.5 million fewer passengers resulting in a $0.54 billion revenue loss, risking 73,700 jobs and $2 billion in contribution to Mauritius’ economy
• Mozambique: 1.4 million fewer passengers resulting in a $0.13 billion revenue loss, risking 126,400 jobs and $0.2 billion in contribution to Mozambique’s economy
• Ghana: 2.8 million fewer passengers resulting in a $0.38 billion revenue loss, risking 284,300 jobs and $1.6 billion in contribution to Ghana’s economy
• Senegal: 2.6 million fewer passengers resulting in a $0.33 billion revenue loss, risking 156,200 jobs and $0.64 billion in contribution to Senegal’s economy
• Cape Verde: 2.2 million fewer passengers resulting in a $0.2 billion revenue loss, risking 46,700 jobs and $0.48 billion in contribution to the economy

To minimise the impact on jobs and the broader African economy IATA says it is vital that governments step up their efforts to aid the industry. Some governments in Africa have already taken direct action to support aviation, including Senegal announcing $128 million in relief for the Tourism and Air Transport sector, the Seychelles waiving all landing and parking fees for April to December, 2020 and the Cote d’Ivoire waiving Tourism Tax for transit passengers.

Also, as part of its economic support intervention, South Africa is deferring payroll, income and carbon taxes across all industries, which will also benefit airlines domiciled in that country. However IATA insists more help is needed including a mixture of direct financial support with loans, loan guarantees and support for the corporate bond market and tax relief.

IATA has also appealed to development banks and other sources of finance to support Africa’s air transport sectors which are now on the verge of collapse. Muhammad Al Bakri, IATA’s Regional Vice President for Africa and the Middle East, commented:

“Airlines in Africa are struggling for survival. Air Mauritius has entered voluntary administration, South African Airways and SA Express are in business rescue. Other distressed carriers have placed staff on unpaid leave or signalled their intention to cut jobs.

”More airlines will follow if urgent financial relief is not provided. The economic damage of a crippled industry extends far beyond the sector itself. Aviation in Africa supports 6.2 million jobs and $56 billion in GDP. Sector failure is not an option, more governments need to step up.

“As governments struggle to contain the Covid-19 pandemic, an economic catastrophe has unfolded. Re-starting aviation and opening borders will be critical to the eventual economic recovery. Airlines are eager to get back to business when and in a way that it is safe. But starting up will be complicated.

”We need to make sure that the system is ready, have a clear vision of what is needed for a safe travel experience, establish passenger confidence and find ways to restore demand.”

Photo: The hopeful message to customers from Air Mauritius which seemingly now has little or no meaning.