The International Air Transport Association (IATA) says African carriers are expected to continue to make small losses of $100 million in 2018 following a collective net loss of $100 million in 2017.
Stronger forecast economic growth in the region is expected to support demand growth of 8.0% in 2018, slightly outpacing the announced capacity expansion of 7.5%.
The wider economic situation is only improving slowly in Africa, which is hampering the financial performance of its airlines.
The key Nigerian economy is only just out of recession and growth in South Africa remains extremely weak. While traffic is growing, passenger load factors for African airlines are just over 70% which is over 10 percentage points lower than the industry average.
With high fixed costs, this low utilisation makes it very difficult to make a profit. Stronger economic growth will help in 2018, but the continent’s governments need a concerted effort to further liberalize to promote growth of intra-Africa connectivity.
Economic Impact of Aviation
- Unique city pairs served by airlines grew to over 20,000 in 2017 (+1,351 on 2016 and double the 10,000 city pairs served in 1996). This saves time for users and opens new links for tourism, trade and investment.
- Since 1996, the inflation-adjusted cost of air transport to consumers has halved.
- International tourists travelling by air are expected to spend more than $750 billion in 2018, a rise of 15% in just over 2 years.
- The value of goods carried by airlines is expected to exceed $6.2 trillion in 2018, representing 7.4% of world GDP.
- Direct employment by airlines will exceed 2.7 million worldwide in 2018. On average across the world we forecast that in 2018 each airline employee will generate over $109,000 of gross value added (the firm-level equivalent to GDP), which is considerably higher than the economy-wide average.