African aviation 'trapped in its own bubble' | Fin24
  • Covid-19 Money Hub

    The hub will help answer your business and money questions during the coronavirus crisis.

  • Cigarette Ban

    British American Tobacco says the ban harms the 'emotional well-being' of smokers.

  • Rand Rigging

    The Competition Commission has revived its case against banks accused of currency manipulation.


African aviation 'trapped in its own bubble'

Oct 21 2016 16:03
Carin Smith

Cape Town - The airline industry in Africa is still punching well below its weight - at around the breakeven band on average - and is not able to match the industry's global performance, according to Chris Zweigenthal, CEO of the Airlines Association of Southern Africa (Aasa).

This is despite Africa's airline industry being expected to show a moderately improved performance.

"We can again ask the question: Do we just battle along, accepting our lot, or do we cast a vision for a prosperous and positive future?" Zweigenthal asked at the opening of Aasa's 46th annual general assembly taking place in Swakopmund, hosted by Air Namibia and SA Express.

"African aviation seems trapped in its own bubble, trying to deal with and resolve its own parochial issues just to survive."

In his view concerns include the growth of strong international competition on the continent; weak local currencies which contribute to higher operating costs; and intense competition between all airlines whether they are state or privately owned, full service, legacy or low cost carriers in domestic and regional markets.   

In addition, many regulatory and bureaucratic constraints remain. These include very restrictive visa regulations in some states, which are hindering growth and development of our industry and tourism, causing jobs to be shed instead of created.

"The net result is a stymying of broader economic growth and the desperately-needed broader spread of opportunity and prosperity," said Zweigenthal.    

"The lack of enthusiasm to effect liberalisation and the associated reservations of many states and airlines on a fully implemented Yamoussoukro Decision (YD) are also an impediment to our industry’s ability to compete."

Central to the ongoing discussion are concerns with measuring, monitoring and enforcing fair and equitable competition. He would like to see African states work together as regional economic communities in Africa to have more influence.

"I remain firmly of the view that we have to burst this bubble and adopt a visionary approach to realise a successful, self-sustaining aviation industry in our region and across our continent. Such a vision must be founded on support for the achievement of the UN Sustainable Goals for 2030, how we approach business and what we have collectively achieved in Africa," said Zweigenthal.

"Much more work needs to be done on the detail and to assess its impact on airlines, but the base has been set and this association, together with member airlines, will work with the authorities to create the awareness and ensure we play our part in achieving the climate change goals we are striving for, which, in a nutshell, is the halving of our 2005 carbon emissions by 2050."

READ: African aviation warms to carbon reduction – Iata

Infrastructure is a second important aspect he raised.

"We have seen the recent development of airport, air navigation and weather service infrastructure and services across many parts of Africa," said Zweigenthal.  

"Because the increasing norm is to fund these developments through 'user charges', it is necessary to ensure that construction and installation of new facilities and additional capacity is justified and appropriate. This requires robust consultation between service providers, users and regulators."

He pointed out that, once agreement is reached, it is important for the regulator to make a decision for business to proceed.

"As many will be aware, unfortunately there is a significant delay to finalisation of the decision for the Airports Company SA (Acsa) and Air Traffic Navigation Services (ATNS) permission in South Africa and the arising uncertainty is not in the interest of any party, including the airlines," cautioned Zweigenthal.

"A very important initiative arising from both the liberalization and infrastructure development discussion is the need for Africa to improve air connectivity. It is a well-established fact that air connectivity reflects gross domestic product (GDP) and also stimulates economic expansion.

READ: African airlines set to lose $500m in 2016

As for the safety aspect, Zweigenthal said closer cooperation and coordination between regulatory authorities, airlines and safety officials has yielded improved safety results from 2010 to 2013 with no jetliner hull losses in Africa for a zero incident rate for 2013.

"However, the upward trend from 2014 serves as an important reminder that we cannot take our eyes off the 'safety' ball," he cautioned.

A positive trend he mentioned is that African airlines are embracing the benefits of investing in new equipment and technology. This includes procuring new passenger-and airline management-appealing aircraft with modern engines and improved operating and fuel efficiencies.

Read Fin24's top stories trending on Twitter:

aasa  |  iata  |  africa  |  airlines  |  aviation


Company Snapshot

Voting Booth

How has Covid-19 impacted your financial position?

Previous results · Suggest a vote