Are African airlines now resilient to the COVID-19 pandemic?

The African air travel industry is grappling with the persistent effects of the COVID-19 pandemic, as evidenced by a recent report from the International Air Transport Association stating that passenger traffic plummeted by 56.8% in November of the previous year compared to 2020. Despite a gradual recovery, the sector continues to face challenges as it navigates the uncertainties posed by new virus variants and government responses to them. To shed light on these issues, Tayo Ojuri, the Managing Partner at Aglow Aviation, offered insights in a recent interview with CNBC Africa. Reflecting on the past year, Ojuri highlighted the severe impact of the pandemic on the aviation industry in Africa. With global restrictions and flight cancellations, the sector, which contributes only 3% of the global air transportation market, faced significant disruptions. The closure of flight routes and restrictions on commercial air travel had a direct impact on African airlines, given that a considerable portion of their traffic originates from North America, Asia, and Europe. The interview then delved into the specific case of Nigeria, where travel restrictions caused by the emergence of new virus variants have further complicated the recovery process. Although some restrictions were lifted before Christmas, uncertainties remain as the industry braces for potential downsides such as increased cancellations and reduced passenger traffic in the coming months. Shifting focus to domestic airlines, Ojuri discussed the sector's response to the challenges posed by the ongoing crisis. He highlighted the role of government intervention, including a significant support fund injected into the industry by the Central Bank of Nigeria. While the relief provided by this fund aided in the rebound of domestic operations in the third quarter of 2021, Ojuri acknowledged that it was insufficient to address all the sector's needs. Looking ahead to 2022, he emphasized the impact of global developments on domestic travel while noting an anticipated increase in air travel due to upcoming elections in the country. The conversation then turned to the dynamics within the domestic airline market, with a focus on both established players and new entrants. Ojuri underscored the capital-intensive nature of the industry and the challenges associated with maintaining profitability in the current environment. While acknowledging that profitability remains elusive for most domestic airlines at this time, he highlighted the importance of operational stability and cost management in ensuring continued operations. Furthermore, Ojuri pointed out the significance of foreign exchange rate stability in enabling airlines to manage their operational costs effectively. He noted that a fixed exchange rate between the dollar and the Naira over the past year had provided a degree of predictability for airlines, allowing them to plan and operate with greater certainty. This stability, coupled with an expected increase in passenger traffic and movement, is viewed as key to sustaining the sector's recovery and opening opportunities for new market players. In conclusion, while the African aviation industry continues to face challenges stemming from the pandemic and evolving global dynamics, the resilience and adaptability demonstrated by industry players offer a glimpse of hope for a more stable and sustainable future. As stakeholders navigate the turbulent skies ahead, strategic government interventions, operational efficiency, and market adaptability will be crucial in determining the sector's trajectory in the post-pandemic era.