You would have to have been living under a stone not to know that this year is expected to be the worst in the history of the aviation sector. The general grounding of air transport means airlines in all regions are expected to record operating losses this year, leaving many at risk of bankruptcy. Airline trade association IATA’s latest biannual report on the economic performance of the global industry, released in June, projects a net loss of US$84.3bn for 2020, with losses continuing into 2021 although to a lesser extent.
Even before Covid-19 struck, airlines in Africa collectively reported US$300m of net losses in 2019, according to IATA, with only a handful capable of generating a profit. Job losses in aviation and related industries in Africa as a result of the pandemic could amount to 3.5 million – more than half of the region’s 6.2 million aviation-related jobs. With no end in sight to the disruption, coordinated government action is needed to avoid a catastrophe not just in Africa but also in many parts of the world.
According to a recent issue of African Skies, the journal of the African Airlines Association, South Africa, Nigeria, Kenya and Mauritius have felt the most impact, and their national carriers are struggling to survive. Air Mauritius, which was already in difficulties before the pandemic, entered voluntary administration in April in hopes of saving the airline. Kenya Airways has asked for government support to avoid bankruptcy, while South Africa’s South African Airways, SA Express and Comair are all in business rescue.
Amid the chaos, only Ethiopian Airlines remains a relative success story. Having started out on a firmer footing when the pandemic struck and then quickly switched over from passengers to cargo, it has avoided the need to seek financial aid. It still expects to turn a profit, even if less than expected prior to the pandemic.
It’s a depressing picture overall, but could there be a bright side? In my view, the heavy negative impact on the continent’s airlines may ironically prove positive for open skies in Africa. Initiated in the late 1980s with the Yamoussoukro Declaration, Africa’s open skies commitment was supposedly given new impetus with the African Union’s launch of a single African air transport market in 2018. The hope was that air services liberalisation would drive growth and boost economic integration and intraregional connectivity.
The reality, however, is that many African countries have continued to shield their nascent state-owned airlines with protectionist policies. The Covid-19 disruption will most likely see many of these struggling airlines unable to get back up and running. Considering how the pandemic has hit economies so badly, handing out large subsidies to airlines will not be a priority for many.
If this structural change happens, it will be good news for the African open skies commitment. Countries will have more to gain from liberalising to attract the fewer airlines that will in future be operating in Africa’s air space than from shutting out rivals to shaky domestic carriers.