●Nigerian carriers’ foundation shaky
The anticipated bailout from the Federal Government is looking like a mirage
The harsh economic reality occasioned by COVID-19 could see many more airlines in Africa go into extinction just as many Nigerian carriers are already showing signs of insolvency.
The International Air Transport Association (IATA) had forecast that a full return to 2019 levels is not expected until late 2023.
The anticipated bailout from the Federal Government is looking like a mirage. Airlines are operating less than 50 per cent of their capacity because of near recession the country is facing in view of economic and socio crises.
There are indications that two of the airlines may cease operations before the end of the years as the signs are ominous to industry stakeholders.
Amid the current situation, four airlines across Africa have ceased operations due to the impact of COVID-19 and two are in voluntary administration, with many more in serious financial distress.
The International Air Transport Association (IATA) noted that without urgent financial relief more carriers and their employees are at risk, as is the wider African air transport industry, which supports 7.7 million jobs on the continent.
The governments of Rwanda, Senegal, Côte D’Ivoire and Burkina Faso have pledged a total of $311 million in direct financial support to air transport.
A further $30 billion has been promised by some governments, international finance bodies and other institutions including the African Development Bank, African Export Import Bank, African Union and the International Monetary Fund (IMF) for air transport and tourism. However, most of this relief is yet reach those in need.
“Hundreds of thousands of airline jobs are at risk if there is a systemic failure in African aviation. And this is not just in aviation but across industries that depend on efficient global connectivity. Much needed financial relief has been pledged, but little has materialized.
“The situation is critical. Governments and donor organizations need to act fast or the challenge will move from supporting an industry in severe distress to resurrection from bankruptcy,” said IATA’s Regional Vice President for Africa and Middle East, Muhammed Albakri.
The International Air Transport Association (IATA) downgraded its traffic forecast for Africa for 2020 to reflect a weaker-than-expected recovery.
Meanwhile, the clearing house for over 290 global airlines said it now expects full-year 2020 passenger numbers in Africa (to/from/within) to reach only 30 per cent of 2019 levels, down significantly from the 45 per cent that was projected in July.
In absolute numbers, the region is expected to see around 45 million travelers in 2020 compared to the 155 million in 2019, stressing that in 2021, demand is expected to strengthen to 45 per cent of 2019 levels to reach close to 70 million travelers to/from/within the region.
Forward bookings for air travel in the fourth quarter show that the recovery continues to falter. While domestic travel is picking up across Africa as countries re-open their borders, international travel remains heavily constrained as major markets including the EU remain closed to citizens of African nations.
Currently, residents from only two African countries– Rwanda and Tunisia – are permitted to enter EU borders.
“The further fall in passenger traffic in 2020 is more bad news for the aviation industry in Africa. A few months ago, we thought that demand reaching 45 per cent across the continent in 2020 compared to 2019 was as grim as it could get.
“But with international travel remaining virtually non-existent and a slower than expected pick up in domestic travel, we have revised our expectations downward to 30 per cent,” said Albakri.
Passenger traffic in the Middle East is recovering at a significantly slower rate than was projected during the summer, according to the International Air Transport Association’s (IATA) latest forecast, which suggests 140 million fewer passengers will travel in the region this year.
Passenger numbers in the Middle East this year are forecast to reach 30 per cent of 2019 levels compared to the 45 per cent that was projected in July, with a full return in passenger traffic not expected until late 2024