Why Africa’s airline industry is one of the few regions to record growth - CNBC Africa

Why Africa’s airline industry is one of the few regions to record growth

Special Report

by Trust Matsilele 0

The African airline industry posted positive growth in 2015. PHOTO: Wikipedia

The International Air Transport Association (IATA) says Africa remains one of the only three regions to record positive year-to-date growth in 2015.

According to IATA, demand is holding up despite the underperformance of Nigeria and South Africa.

“What also fuelled growth in Africa is the continent’s growing middle class and low oil price,” said Pekun Sowole, Aviation Lawyer at JurisLaw Legal Practitioners.

"The African airlines sector has a lot of potential for growth but it is definitely not growing enough. The indices are not what we expected especially if we consider IATA predictions." 

David Minty, Head of Aviation Finance at Investec told CNBC Africa that Africa has been underserved over the past couple of years.

“There are a number of airlines that have introduced their fleets like the Ethiopian and Kenyan airways. These two airlines have introduced new deliveries which have started feeding through as far as traffic volumes are concerned,” said Minty.

“There has been a low base growth over the past few years; a lot still needs to be done to stimulate air travel. There is need to invest more in infrastructure to ensure this potential growth is realised.”

Minty also added that one of the big growth areas was the intra-African travel that remains one of the underserved markets. He urged airlines sector to tap into this space.

Sowole warned that African government policies were playing a huge role in undermining growth in the airlines industry.

“Governments need to look at their policies and reduce some of the bottlenecks the airlines sector is facing. The cost of doing business in this sector is too expensive and if this trend continues many will continue making losses and failing to break even,” he said.

“We need to liberalise the airline industry in Africa, currently governments are protecting domestic airlines. What governments need to look at are joint ventures and strategic alliances.” 

Comments