African airlines are dying, may see losses topping R33 billion in 2020

(Getty Images)
(Getty Images)
  • The airline industry in Africa is dying and help is needed fast to prevent a total collapse.
  • As a consequence of the Covid-19 pandemic, African airlines are forecast to lose US$2 billion (about R33 billion) in 2020.
  • IATA continues to ask governments not only to provide financial relief but also to consider tax relief, like a reduction of charges.


The airline industry is dying and help is needed fast to prevent a total collapse, Muhammad Albakri, regional vice president for Africa and the Middle East at the International Air Transport Association (IATA), warned on Wednesday.

"We do not want to blame or shame anyone, but bureaucratic procedures maybe work in normal circumstances, while we are currently not in normal circumstances," he said during a webinar.

"We continue to ask governments not only to provide financial relief but also to consider tax relief, like a reduction of charges. Governments have tools that can be used. We want them to use whatever they deem fit, but to please come forward and help the industry." 

To date, the South African government has not allocated Covid-19 related aid specifically to the country's aviation industry.

State-owned South African Airways is in business rescue as well as JSE-listed Comair, which owns Kulula.com and operates British Airways domestically under a license agreement.

State-owned regional airline SA Express is in provisional liquidation.

SAA subsidiary Mango, as well as private airlines Flysafair and Airlink have started limited domestic flights since June as lockdown bans still only allow people to fly for business reasons.

As a consequence of the Covid-19 pandemic and associated restrictions, African airlines are forecast to lose US$2 billion (about R33 billion) in 2020, according to IATA.
 
"We say let's prepare and train people so that African nations can ensure air travel is reopened in a coordinated way. Aviation in Africa is much more vulnerable than in the rest of the world and the pandemic came just when progress was being made on the continent regarding costs and connectivity," said Albakri.

"That is why we plead with governments to step in and help African carriers to stay alive. The more African airlines we lose, the less trade there will be and the greater the devastating economic consequences. There is no magic bullet that will address it all in one go, but we have to start somewhere. Our concern is that help will come in too late."

Risk of collapse

He warns that there will be no point reopening borders and skies if there is no industry left to speak of that is capable of supporting trade and tourism, which are the key components of any thriving economy.

"Without urgent financial relief, the industry is at risk of collapse, putting about 3.3 million jobs and US$33 billion of Africa's gross domestic product in jeopardy. Our message to those reluctant to open their air space is that we base our guidelines for reopening on scientific research," said Albakri.

"We are not against governments protecting their citizens, but the airline industry has done everything in its power to work with governments to contain the spread of the virus, even if it brings additional costs."
 
He says US$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, much of the relief is yet to reach those in need due to "institutional bureaucracy, complex application and creditworthiness processes, as well as cumbersome conditions to secure finance".

Safety measures

Measures to prevent the spread of the virus have been drawn up and recommended by the UN International Civil Aviation Organisation together with the World Health Organisation, public health authorities, IATA and disease control institutions, with inputs from experts in Africa and around the world.

The measures include adequate physical distancing, wearing face masks or coverings, enhanced sanitation and disinfection, health screening, contact tracing and the use of passenger health declaration forms.

It also calls for testing, where rapid and reliable testing is available.

South Africa is not among the seven African countries, which have already allowed or announced the imminent resumption of scheduled international passenger flights.

"Containing the pandemic is the top priority. But without a lifeline of funding to keep the sector alive, and a roadmap to restart aviation safely as soon as possible, the economic devastation of Covid-19 could take Africa's development back a decade or more," concluded Albakri.

ZAR/USD
17.54
(+0.63)
ZAR/GBP
22.94
(+0.86)
ZAR/EUR
20.64
(+0.64)
ZAR/AUD
12.55
(+0.84)
ZAR/JPY
0.16
(+1.37)
Gold
1942.49
(-4.23)
Silver
27.03
(-6.98)
Platinum
959.00
(-2.53)
Brent Crude
44.95
(+1.33)
Palladium
2124.00
(-4.68)
All Share
57168.24
(+0.72)
Top 40
52831.61
(+0.76)
Financial 15
10215.75
(+3.21)
Industrial 25
75524.64
(+1.14)
Resource 10
58677.82
(-0.46)
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Do you think it was a good idea for the government to approach the IMF for a $4.3 billion loan to fight Covid-19?
Please select an option Oops! Something went wrong, please try again later.
Results
Yes. We need the money.
11% - 952 votes
It depends on how the funds are used.
74% - 6357 votes
No. We should have gotten the loan elsewhere.
15% - 1312 votes
Vote