IFLY Aviation: Why Africa’s national carriers should consider merging to boost aviation

In a bid to enhance African trade and support the struggling tourism sector amidst the pandemic, several African nations are contemplating the merger of their national carriers to capitalize on economies of scale and enhance competitiveness in the global market. Derek Nseko, the Managing Director of iFly Aviation, discussed the feasibility of this proposition in an interview with CNBC Africa. The aviation industry in Africa faces unique challenges marked by fragmentation, limited global market share, and the dominance of foreign carriers. With over 54 countries and numerous small airlines operating in Africa, Nseko poses a critical question: do we need all these airlines to thrive in the challenging aviation sector? The answer, according to Nseko, is a resounding no. The industry demands large, financially robust airlines like Ethiopian Airlines to effectively compete at a global scale. Key Points: 1. **Fragmentation in the African Aviation Industry:** Nseko highlights the fragmentation in the African aviation sector, stating that numerous small airlines across the continent struggle to survive. Unlike Ethiopian Airlines, Africa lacks globally competitive carriers in terms of size and scale. This fragmentation adversely impacts the sector's growth and global market share. 2. **Need for Consolidation and Collaboration:** Drawing from past multinational airline ventures in East Africa, such as East African Airways, Nseko emphasizes the significance of consolidation and collaboration among African carriers. By pooling resources and expertise, African airlines can optimize operations, enhance profitability, and navigate the challenging aviation landscape more effectively. 3. **Opportunities Through African Continental Free Trade Agreement (AFCFTA):** Nseko underscores the potential of AFCFTA in fostering airline mergers and enhancing aviation cooperation across African regions. By aligning with initiatives like the Single African Air Transport Market, African nations can leverage free trade policies, open skies agreements, and streamlined travel protocols to boost the aviation industry's growth and competitiveness. Nseko asserts that AFCFTA serves as a pivotal avenue for fostering greater collaboration and unity among African nations, particularly in the West African region. While challenges like geopolitical constraints and restrictive ownership policies hinder consolidation efforts, Nseko remains optimistic about the transformative potential of regional airline mergers and strategic partnerships. Leveraging AFCFTA and initiatives like the Single African Air Transport Market could pave the way for a more integrated, efficient, and sustainable aviation ecosystem across Africa. In conclusion, as the aviation industry grapples with the aftermath of the pandemic and seeks long-term sustainability, the prospect of national carrier mergers emerges as a compelling strategy to drive growth, enhance competitiveness, and bolster Africa's position in the global aviation market. Through strategic collaboration, regulatory reforms, and continental initiatives like AFCFTA, African nations have a unique opportunity to reshape the aviation landscape, foster greater connectivity, and unlock the industry's full potential.