Africa set to be fastest-growing aviation region

by Payload Asia

Glyn Hughes, global head of cargo, IATA.

Africa is set to be one of the fastest-growing aviation regions over the next 20 years, with annual expansion averaging nearly five percent. Th is opens up vast economic opportunities for the continent’s 54 nations. By transporting some 70 million passengers annually, aviation already supports some 6.9 million jobs and US$80 billion of economic activities on the African continent.

 

According to Glyn, Africa has a young and growing population who is mobile connected, an expanding economy and an increasing service sector. These factors all point to an increase in disposable income and the accompanying demand for more variety of imported food, medicines and drugs. This demand fits nicely into the value proposition of airfreight for timely and temperature-controlled goods.

 

Regarding the IATA e-Airway Bill (e-AWB) initiative, Glyn said that on a global basis, the African region has the second highest penetration rate at 60 per cent. Developed collaboratively with industry stakeholders, the e-AWB removes the requirement for a paper Air Waybill. In today’s electronic world, air cargo still relies heavily on paper documentation for the exchange of information. Each international airfreight shipment can require more than 30 different paper documents. As such, e-AWB brings accuracy, confidentiality, and efficiency.

 

“This is one of those situations where the industry has to come together. If we look at the history of the origin of air cargo, it was very much based on a piece of paper. The real problem with that is air cargo needs to move fast. When you are relying on a piece of paper, the cargo can only move as fast as the paper is moving. On the other hand, almost all other industries are embracing technology. So the air cargo industry really needs to optimize its processes and service offerings.

 

“And again, some people say that this initiative has been slow and would like to see it move faster. But the reality of the situation is the program is moving as fast as it can. When you consider the complexity of the supply chain, you have customs, ground handlers, freight forwarders, airlines, other regulatory authorities and so on. To actually make a change, everyone needs to be speaking the same language ; the technological solutions need to be connected to each other and the users need to be prepared to implement said solutions.

 

“We have been quite pleased with the progress of the program, particularly last year with the movement of the penetration rate. We are now at about 50 percent globally. And that translates into approximately 650,000 shipments every month that are being transported without a paper AWB. The benefits of this initiative are quite tremendous. It means the cargo can be quickly cleared, information is transparent, no risk of errors happening down the line and minimize risk of incorrect declaration. This is a huge factor in increasing efficiency,” said Glyn.

 

The safety record of African airlines has also improved tremendously over the last two years. According to Glyn, the factors contributing to this improvement are twofold. Both the governments and airlines realized the importance and need to enhance safety and are putting regulations and measures in place.

 

“The governments and airlines also realized that the air transport industry is a global industry. When you have regions where safety records are not as strong as other regions, and the consumers are aware of this fact, they will start speaking out and want their national carriers to be as good as any other carriers on the planet. You can tell this from the level of investment made by Ethiopian, South African, Kenyan and many others,” said Glyn.

 

Another factor that helped is the IATA Operational Safety Audit (IOSA) program, which is mandatory for all airlines that wish to join IATA. The IOSA program is an internationally recognized and accepted evaluation system designed to assess the operational management and control systems of an airline. All IATA members are IOSA registered and must remain registered to maintain IATA membership.

 

However, there are still major challenges to be overcome.

 

On the macroeconomic level, although Africa has a growing labor force, it is still very difficult to conduct business and this stifles foreign investment and local entrepreneurship. Glyn also cited the World Bank Logistics Performance Indicator (LPI), a benchmarking tool to identify each country’s opportunities and challenges in its performance on trade logistics. The LPI 2016 consisted of comparisons from 160 countries, where the bottom 20 included 13 from Africa. Only three African countries were in the top 50: South Africa at 20, Kenya at 42 and Egypt at 49.

 

In IATA’s latest Airline Industry Economic Performance report, in terms of financial performance, Africa is still the weakest region, as in the past three years. Losses were caused by regional conflict and the impact of low commodity prices. Breakeven load factors are relatively low, as yields are a little higher than average and costs are lower.

 

However, few airlines in the region are able to achieve adequate load factors, which average the lowest globally at 50.8 percent in 2017. Performance is improving, but only slowly.

Calling on Africa to harness the power of aviation

 

During the recent African Aviation Day, IATA urged African governments to prioritize the development of aviation nationally and at a pan-African level to bolster economic growth and development.

 

“Aviation has the potential to be a much greater strategic catalyst for growth if governments would stop milking the industry for taxes and enable it with smarter regulations focused on safety and the development of connectivity. The commitments are already there with the Abuja Declaration and the Yamoussoukro Decision. It’s time to achieve them in partnership with industry,” said Hussein Dabbas, IATA’s Regional Vice President for Africa and the Middle East.

 

In order to attract foreign direct investment and develop the economy, the governments in Africa need to take the lead in improving and regulating the air transport infrastructure and connectivity. Air transport is a prerequisite of international business and trade and there is a direct connection between better connectivity and economic prosperity.

 

Presented during IATA African Aviation Day, the following are some of the key elements essential to air transport development.

 

Safety

  • Safety in Africa is the top priority. Governments have committed to achieving world-class safety levels in the Abuja Declaration. While safety has improved, Africa had the highest accident rate among regions in 2015, at 7.88 accidents per million sectors.

 

  • IATA’s Operating Safety Audit (IOSA) has shown the power of global standards underpinning safety operations. The 32 sub-Saharan airlines on the IOSA registry are performing 3.5 times better than non-IOSA operators in terms of accidents.

 

  • IATA calls on African governments to improve safety oversight and adopt IOSA together with ICAO’s safety related standards and recommended practices (SARPs).

 

Connectivity

  • IATA welcomes the recent signing of a ‘Solemn Declaration’ by 21 African heads of state re-affirming their commitment to breaking down the artificial barriers obstructing air transport service expansion between African nations by implementing the Yamoussoukro Decision. IATA urges all African nations to expedite its implementation, which will stimulate economic growth and development with at least five million more passenger journeys a year on the continent.

 

Infrastructure development

  • Cost-effective and appropriate infrastructure development is critical to the sustainability and expansion of African aviation.

 

Consultation and collaboration among airlines and their infrastructure partners during planning and development is crucial. No one knows better than the airlines the level of airport charges that enable a route to be viable, and the kind of amenities they need to support their passengers and aircraft efficiently.

 

All too often in Africa there is no real engagement with the airlines prior to development. This leaves airlines burdened with paying for excessive and unsustainable development costs.

 

  • The International Civil Aviation Organization (ICAO) has very clear guidelines on infrastructure funding.

 

Development should be guided by principles of non-discrimination, consultation, transparency, cost-benefit and no pre-financing.

 

  • IATA is concerned about the viability of some planned airport developments, including Ndjamena in Chad, Addis Ababa in Ethiopia and Dakar in Senegal. IATA calls on the governments in these countries to take the lead in consulting the users of the infrastructure to ensure that the end product provides maximize benefits and rationalizes costs for all.

 

Fuel surcharges

  • IATA is urging African governments to tackle the excessive surcharges on fuel, which can make fuel purchases on the continent up to 20 percent more expensive than the global average. Airlines operating to Ethiopia, Gabon, Ghana and Kenya are particularly affected by above market fuel costs. These surcharges increase airlines’ cost burden when they are already operating in a challenging environment. They also hinder growth in an industry that delivers extensive socio-economic benefits.

 

Sustainability

  • The aviation industry is committed to achieving carbon-neutral growth from 2020, and cutting net emissions 50 percent by 2050 compared to 2005. The industry is working hard to achieve these goals with improvements in technology, operations and infrastructure. However, to be fully successful a global market-based measure (GMBM) is needed and that must be agreed by governments through ICAO.

 

  • The aviation industry is calling for a mandatory global carbon off set scheme as its preferred measure. Already many African nations, including Nigeria, have rallied for the establishment of an equitable set of market-based measures to offset carbon emissions.

 

IATA 2017 policy priorities for Africa

 

  • Safety and security. Safety remains IATA’s number one priority. The safety and wellbeing of passengers, crews, aircraft and infrastructure are non-negotiable. IATA will continue its efforts in partnership with all stakeholders to maintain momentum in safety, through the IATA Operational Safety Audit (IOSA), IATA Safety Audit for Ground Operations (ISAGO) and the IATA Standard Safety Assessment (ISSA) amongst numerous other initiatives. On security, IATA is working in line with international best practices (e.g. ICAO SARPS) and through diff erent campaigns and initiatives to ensure that security targets in the region are achieved.

 

  • Smarter regulations. IATA continues to advocate for the improvement of the aviation regulatory environment; either in line with international treaties or in accordance with international best practice e.g. consumer protection regulations, taxes and charges, ratification of International Treaties including Montreal Protocol 2014 (MP14) and Montreal Convention 1999 (MC99).

 

  • Connectivity and mobility. The deadline for the commencement of a Single African Air Transport Market (SAATM) remains June 2017. IATA, the African Union Commission, Regional Economic Community’s,

African Airlines Association (AFRAA) and African Civil Aviation Commission (AFCAC) will continue to sensitize states to create awareness among stakeholders on the benefits of air transport connectivity and the need to fully implement the Yamoussoukro Decision and the establishment of the Single African Air Transport Market (SAATM).

 

  • Environment. IATA will continue to partner with key industry stakeholders to ensure that ICAO’s work on the adoption of SARPs, policies and guidance material on Monitoring Reporting and Verification (MRV), Emissions Units criteria and Registries for the ICAO Carbon Off set and Reduction Scheme for International Aviation (CORSIA) takes into account the interests of the airline industry.

 

  • Infrastructure. The need to modernize air traffic management where regional cooperation is key.

 

  • Skills development. Capacity building for the industry has to be developed both at the government and industry level. IATA is working to ensure that there is adequate training available for aviation personnel in the region to support the sustainable growth of aviation. In 2017 IATA will also undertake a campaign to promote youth involvement and development in aviation.