Full text of IATA’s Regional Vice President for Africa & Middle East, Mr Kamil Alwadhi,address at the Aviation Africa 2022 Summit in Kigali, Rwanda.
That we are gathered here today is a testament to the resilience of our industry and recognition of the vital importance of air connectivity that our societies, economies and so many livelihoods depend.
The pandemic and its impact created a worst-case scenario beyond anyone’s comprehension, with disruptions to everyday life on a scale not seen since World War Two.
As we reflect on the pandemic and rebuild, we will never again take for granted our ability to travel, meet and engage with colleagues, friends and family or doubt air cargo’s vital role at the heart of global supply chains.
Airlines had to take prudent and difficult decisions to stay afloat as revenues instantly dried up. While painful, those actions also saved hundreds of thousands of jobs. Our shareholders and financiers provided much needed loans and investment and some governments had the foresight to financially bridge many airlines through the crisis.
In Africa, our hosts, Rwanda, were followed by Senegal, Burkino Faso and Cote d’Ivoire, in providing $311 million in financial support to their air transport sector in their respective countries.
IATA helped to secure pledges for $30 billion to support air transport and tourism in Africa from some governments, international finance bodies and institutions such as the African Development Bank, the African Export-Import Bank, the African Union and the International Monetary Fund. Disappointingly, most of this relief failed to reach those in need.
And many African countries ignored our urgent pleas to provide other forms of relief through reductions and waivers of statutory charges, levies, taxes and user-fees. Airlines faced unprecedented losses, and some didn’t survive the financial pressures of the pandemic.
While airlines worldwide lost a combined $42 billion last year, IATA’s outlook for 2022 sees the global loss reduced to $9.7 billion for the year and a return to industry-wide profit in 2023. Africa is on track to follow by the end of 2024.
The outlook is positive, but the business environment is challenging. The unprecedented price of jet fuel, which is currently trading at a $50 a barrel premium over crude, is the biggest obstacle. For the year to date, the price of jet fuel has averaged $143 a barrel. This means airlines will spend $133 billion more for fuel in 2022 than they did last year.
Where are we on the post-pandemic recovery?
Global demand for air travel continues to recover and is now at 74.6% of pre-COVID levels. Africa’s passenger traffic for July was 73.8% of its July 2019 level. For Rwanda, passenger traffic for July 2022 was 106% of its July 2019 level.
If we zoom in on the recovery of capacity, which reflects demand, in the continent’s four main sub-regions, we see that it is moving at different speeds. OAG data indicates that:
- Here in Eastern Africa the industry has staged a robust recovery with capacity back to 93.4 percent of 2019 levels.
- It is a similar picture in North Africa where capacity is about 6.9 percent down on this time in 2019.
- It is quite different in Southern Africa where traffic remains over 36.5 percent lower than before the pandemic – although the reduced capacity can be attributed to three airlines having gone out of business, one suspending its operations and what was the sub-region’s largest, shrinking its fleet, network and schedule by more than 80 percent.
- However, in Western Africa capacity has outstripped 2019 levels by over 8.7 percent as demand for air travel has returned.
Although the relaxation of COVID-related travel restrictions has meant there are plenty of people who want to fly, over recent months we have seen challenges in Europe, the US and Australia due to a shortage of staff because airports did not plan well for the return in demand.
While we have not seen this kind of chaos in Africa, airports, air navigation services and civil aviation authorities across the continent must be prepared for the growing number of travellers as recovery continues in Africa.
A skilled and professionally trained workforce is non-negotiable. Investments in training and capacity-building must be a priority and we are ready to support, as we always have, in providing the needed training to build a generation of African aviation professionals who will grow the industry safely and effectively.
In addition to ensuring that we have a sustainable workforce in place we need to focus on three priorities in Africa:
- Safety
- Clearing blocked funds
- Increasing intra-African connectivity
Let’s unpack the major elements.
Safety
Safety is our main priority. There is no room for compromise. While no African IATA members or operators on the IATA Operational Safety Audit register have suffered hull losses since 2020, some have experienced incidents which received wide public attention because the region’s accident rate remains the highest. This should serve as sharp reminders that we need to work together towards:
- Enhanced safety oversight particularly in the areas of reporting and investigation of incidents and accidents
- Adopting a more aggressive approach to addressing the highest recurring operational risk – runway related accidents
- Safety data and information sharing by all stakeholders to build an accurate picture across the continent
- Understanding the critical importance of aeronautical information to aviation safety, the regional deficiencies, and a clear commitment to improve
Blocked funds
Blocked funds remain a severe blight for which there are no excuses. Governments must not withhold airline funds. Doing so contravenes international civil aviation protocol and is an act of economic self-harm.
We cannot explain it any more simply than this:
Airlines cannot be expected to fly if they cannot realize the revenue from ticket sales. Any loss of air connectivity harms the local economy, hurts investor confidence, jeopardises jobs, livelihoods and social fabric. The loss of air connectivity due to the pandemic was severe; there is no reason African countries should suffer further disruptions because of airline blocked funds.
And yet, despite these consequences, airlines’ funds remain blocked across the continent. At the end of June more than $1.3 billion of airlines funds were trapped across 12 African countries.
We continue to engage with governments withholding airlines funds. In late August we were very encouraged by Nigeria’s move to release $265 million of blocked funds – about half of what it was withholding. We urge other fund-blocking countries to follow Nigeria’s example and expedite the full release of all airlines’ revenues they are currently withholding.
SAATM
Strong air connectivity is reflected directly on a country or region’s economic growth. In Africa, weak intra-continental connectivity remains a challenge. In fact, Africa is better connected with Europe than it is with itself – a missed opportunity, I would say for greater intra-African trade and tourism.
The implementation of the Africa Continental Free Trade Area initiative and its supporting pillars, the Protocol on the Free Movement of People and the single African Passport and the Single Africa Air Transport Market (SAATM), together represent the best opportunity for social and economic sustainability.
However, for the African Continental Free Trade Area and SAATM to realise their full potential, they must be fully implemented. This requires greater collaboration between governments, which must follow-through with their commitments.
Our friends at the African Civil Aviation Commission are mandated with driving and implementing SAATM and I would like you to join me in congratulating Adefunke Adeyemi as AFCAC’s new Secretary General.
Prior to taking up her new position, Funke was IATA’s Regional Director, Advocacy and Strategic Relations in Africa and she takes with her to AFCAC, her deep appreciation and understanding of the industry’s frustrations, ambitions and its potential to leverage economic growth. We look forward to working with you to bring this much overdue programme to fruition.
Closing
In closing, I want to recap on those main lessons from the pandemic:
Connectivity is precious. The crisis has demonstrated that everybody suffers when aviation stops. COVID-19 has dispelled the myth that flying only benefits the rich. A financially viable air transport sector supports jobs and must be a driving force for Africa’s economic recovery from COVID-19.
We cannot treat aviation and tourism as easy targets for collecting taxes and charges without reinvesting in improved infrastructure, training or service delivery. Some of the most expensive airports in Africa are also ones with the lowest service levels and infrastructure. This disparity between cost and quality is unacceptable.
And finally, the implementation of SAATM is paramount for Africa’s air transport industry to flourish and for economies to grow.
The AU and AFCAC have demonstrated that effective regional coordination and harmonization is possible. They achieved it with aviation security and safety, although we all need to remain vigilant and on top of our games so that we do not undo the good work that went into raising safety standards in Africa. And we will continue to support them as they step up efforts again to realise SAATM.
We call on Africa’s governments and industry to work closely with each other to drive a harmonized agenda for air transport. In doing so, we will unlock even greater economic prosperity throughout the region.
