Airline industry grows SA's GDP by R74bn

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Cape Town – Aviation contributes R74bn to South Africa’s annual gross domestic product (GDP) and sustains around 230 000 jobs across the entire value chain in the country.

That's according to Tony Tyler, director general and CEO of the International Air Transport Association (Iata).

The industry body represents around 240 airlines from around the world, including South African Airways (SAA).

Addressing the Cape Town Press Club on Thursday, Tyler touched on the value aviation brings to a country.

“Aviation is a sizeable industry—with $671bn in revenues expected this year from transporting some three billion passengers and delivering nearly 50 million tons of freight globally.

"The impact of this activity (including the catalytic effect of aviation on tourism) is 57 million jobs and $2.2 trillion in economic activity. Put in an African context, that’s 6.7 million jobs and $68bn in revenues.

"And if we drill down to South Africa, the parallel figures are a R74bn contribution to GDP and over 230 000 jobs.”

Tyler is in Cape Town doing preparation work for the Iata annual general meeting (AGM) that will be held in the city later this year. The event, which attracts more than 200 global airline leaders and top politicians, is seen as the premier airline industry event globally.

This year marks the first time the Iata AGM will be held on African soil since 1991 when it was held in Nairobi, Kenya.

Tyler says holding the event in Africa is significant.

“It’s significant for many, but let me highlight two: the political and economic reforms that we are witnessing across Africa have put the continent in the global spotlight.

"Secondly, South Africa, as a member of the Brics group, is symbolic of the emerging economies that are driving global growth - including those in the aviation industry.”

Tyler said African airlines have greater growth potential than most other airlines, given the higher growth rates in developing African economies.

“But aviation is a tough business. This year we estimate that airlines globally will turn a combined profit of some $10.6bn. That sounds like a lot - but that is on expected revenues of $671bn.

"So, it’s a net profit margin of just 1.6%. And this is a relatively good year.”

Tyler said if one looks back over the past decade since 2003, airlines have basically broken even on revenues of some $5 trillion.

He said African industry performance parallels the global trend.

“For 2013 we expect the continent’s airlines to earn about $100m profits. And this equates to an earnings before interest and taxes margin of just 1%.”

The Iata AGM will be held from 2-4 June.

 - Fin24

*Follow James-Brent Styan on Twitter at @jamesstyan.

 
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