African airlines risks $100 million losses in 2018
by MIKE OCHONMA
June 14, 2018 | 11:44 am| | | Start Conversation
African airlines may encounter as estimated combined losses of $100-million this year according to Gad Wavomba, Embraer Commercial Aviation sales director in a keynote address on the outlook for the industry he delivered to participants at a 3-day Aviation Development Conference, AviaDevin Cape Town, South Africa.
Investigations show that African airlines have notched up an encouraging number of new routes, but are still in a poor financial position overall.
The industry has improved from its lower position in 2013, but has continued to battle. “There are a lot of challenges to overcome before driving profitability for airlines in Africa,” Wavomba said.
However, connectivity into Africa has increased by five percentage points, while 70 new routes had been added in Africa alone, both within the regional and locally.
The Embraer Commercial Aviation sales director highlighted several trends in the industry, including right-sizing, which focuses on choosing the right aircraft for the right markets. He said, in Africa, 95 percent of flights were less than half-full. Some countries were getting it right.
He said Tanzania had decided to right-size and replaced its aircraft with smaller ones, while in Zimbabwe, right-sizing had led to a 65 percent increase in revenue.
He hoped the Single African Air Transport Market (SAATM) initiative would boost the development of routes. So far, 23 member states have signed the commitment.
Wavomba said more route competition would lead to lower fares and stimulate additional traffic volumes, adding that collaboration between airlines was also essential.
He mentioned the synergies South African Airways, Kenya Airways and Air Mauritius were working on and commended Cape Town Air Access for developing routes.
“Things are better in the industry in Africa but profitability continues to remain a challenge. We need to mitigate that through right-sizing, information technology and airport infrastructure investment and collaboration across the industry.”
Representatives and leaders from major airlines across Africa travelled to Cape Town for the three-day AirDev conference.
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