Green shoots in Africa’s post-pandemic aviation space
Like the rest of the world, Africa’s aviation sector has been hard hit by the COVID-19 pandemic. This week for example, Kenya Airways announced that passenger numbers in 2020 were down more than 60% with losses of USD 330 million[1]. Despite this and similar figures being replicated across the continent, noteworthy bright spots are now visible on the industry’s road to recovery. They include:
Ghana’s US-backed MRO: At a ceremony held in Accra on 30 June, the United States Trade and Development Agency announced grant funding for a feasibility study into a potential maintenance, repair, and overhaul (MRO) facility at the country’s main international airport – Kotoka International (KIA)[2]. The study will be undertaken by an American firm, Alton Aviation Consultancy, hired by Aerojet Aviation Limited, the Ghanaian recipient of the grant. If found to be viable, this would be the first MRO base in West Africa and could save regional airlines significant costs. Currently, aircraft must be removed from the schedule and repositioned to another country (usually in Europe) for even routine maintenance. There have been previous attempts at the establishment of MRO bases in Ghana, but none have come to fruition. The backing of the US Embassy, however, may add a layer of confidence and pique the interest of potential investors.
Qatar Airway’s increasing operations: The Gulf airline, voted the world’s best in 2021 has deepened its ties with the continent throughout the pandemic, launching six new routes during the period. It now serves 27 destinations across 21 countries in Africa, the second behind Turkish Airlines for a non-continental carrier. In an interview with CNBC, Qatar’s Vice President for Africa said that remains a key growth market for them as it is on track to be the fastest growing airline market over the next 20 years[3]. The airline is also in the process of purchasing a 40% stake in RwandAir, the state airline of Rwanda, which includes investment (and 60% stake) in the construction of a new airport in Kigali that is expected to cost around USD 1.3 billion and be completed by end-2022, according to the Rwandan Minister of Infrastructure. There are also reports that Qatar is in talks with several West African countries to establish a similar hub in the subregion – likely boosting transatlantic flights, currently underserved.
Growth of private airlines in Southern Africa: In the absence of the (former) regional giant, South African Airways (SAA), private airlines based in South Africa but serving the region have been allowed to thrive. See: What can we expect from South African Airways? Airlink[4] is one of these beneficiaries, rebranding in November 2020 and growing to become the third largest carrier within Africa in 2020. To augment this, it has also signed partnership agreements with international airlines such as Emirates, Qatar, Lufthansa, Kenya Airways and Astral Aviation (cargo) to extend its reach beyond the region. Similarly, the low-cost-carrier (LCC) Lift launched in December 2020, serving three domestic destinations initially. Despite drastic cuts to its schedule in July due to a resurgence in the pandemic, Lift has survived and is now starting to offer a premium service on its flights. Working in its favour are attractive, no-frills fares that are sometimes more than 50% cheaper than its competitors.
Outlook – Stakeholder interest
It would be wrong to assume that the clouds have passed, and African aviation will now inexorably bounce back stronger than it was pre-pandemic. The risk of continuing travel bans and global spikes in COVID-19 cases mean that the outlook in the short to medium term remains risk-prone. However, there are reasons for optimism in specific areas. Airlink and Lift show what can be achieved by private airlines when competition from state-backed airlines that are the recipients of endless government bailouts is removed. SAA is due to relaunch operations on 23 September and may lead to increased price competition. But the private airlines have had a running start, SAA will be operating a limited schedule, and still faces an unsure future[5]. Meanwhile, the potential establishment of an MRO in Accra is the fulfilment of a wish frequently expressed during the pandemic – an opportunity to expand on supplementary services such as engineering, marketing, accounting, and ticketing on the continent, in partnership where possible. Increased local ownership in these areas would significantly lessen the operational risk and cost for African airlines. Between here and there, lie the significant challenges defining public and political interests in airline operations, and balancing them against commercial realities[6].
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[1] More than its losses that in 2019
[2] https://gh.usembassy.gov/u-s-supports-ghanas-aviation-sector/
[3] https://www.youtube.com/watch?v=qVgqJTRHinU
[4] Which had previously been in a strategic partnership with SAA until 2006 and exited a franchise agreement with them in 2020.
[5] Within the industry, SAA is often viewed as one of the major hindrances to further growth currently. However, its return is nonetheless a confidence booster for the industry, as it shows a level of resilience.
[6] For example, rumoured (unconfirmed) reasons for Ethiopian Airlines walking away from its MoU with the government of Ghana include attempts by government to dictate route networks and management structures.
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