African airlines likely to lose $6 bn revenue in 2020 as Covid-19 impact deepens: IATA
IATA renewed its call for government relief measures as the impacts of the Covid-19 crisis in Africa deepen.
April 23, 2020: The International Air Transport Association (IATA) renewed its call for government relief measures as the impacts of the Covid-19 crisis in Africa deepen. The region's airlines could lose $6 billion of passenger revenue compared to 2019, i.e. $2 billion more than was expected at the beginning of the month.
The job losses in aviation and related industries is estimated to grow by 3.1 million, i.e. half of the region's 6.2 million aviation-related employment (previous estimate was 2 million). Full-year 2020 traffic is expected to plummet by 51 percent compared to 2019. Previous estimate was a fall of 32 percent. GDP supported by aviation in the region could fall by $28 billion from $56 billion (previous estimate was $17.8 billion).
These estimates are based on a scenario of severe travel restrictions lasting for three months, with a gradual lifting of restrictions in domestic markets, followed by regional and intercontinental.
Countries hardest hit include:
14.5 million fewer passengers resulting in a $3.02 billion revenue loss, risking 252,100 jobs and $5.1 billion in contribution to South Africa's economy.
4.7 million fewer passengers resulting in a $0.99 billion revenue loss, risking 125,400 jobs and $0.89 billion in contribution to Nigeria's economy.
2.5 million fewer passengers resulting in a $0.43 billion revenue loss, risking 500,500 jobs and $1.9 billion in contribution to Ethiopia's economy.
3.5 million fewer passengers resulting in a $0.73 billion revenue loss, risking 193,300 jobs and $1.6 billion in contribution to Kenya's economy.
1.5 million fewer passengers resulting in a $0.31billion revenue loss, risking 336,200 jobs and $1.5 billion in contribution to Tanzania's economy.
3.5 million fewer passengers resulting in a $0.54 billion revenue loss, risking 73,700 jobs and $2 billion in contribution to Mauritius' economy.
1.4 million fewer passengers resulting in a $0.13 billion revenue loss, risking 126,400 jobs and $0.2 billion in contribution to Mozambique's economy.
2.8 million fewer passengers resulting in a $0.38 billion revenue loss, risking 284,300 jobs and $1.6 billion in contribution to Ghana's economy.
2.6 million fewer passengers resulting in a $0.33 billion revenue loss, risking 156,200 jobs and $0.64 billion in contribution to Senegal's economy.
2.2 million fewer passengers resulting in a $0.2 billion revenue loss, risking 46,700 jobs and $0.48 billion in contribution to Nigeria's economy.
To minimise the impact on jobs and the broader African economy it is vital that governments step up their efforts to aid the industry. Some governments in Africa have already taken direct action to support aviation, including:
- Senegal announced $128 million in relief for the tourism and air transport sector.
- Seychelles has waived all landing and parking fees for April to December, 2020.
- Cote d'Ivoire has waived its tourism tax for transit passengers.
As part of its economic support intervention, South Africa is deferring payroll, income and carbon taxes across all industries, which will also benefit airlines domiciled in that country.
But more help is needed. IATA is calling for a mixture of:
- direct financial support
- loans, loan guarantees and support for the corporate bond market
- tax relief
IATA has also appealed to development banks and other sources of finance to support Africa's air transport sectors which are now on the verge of collapse.
"Airlines in Africa are struggling for survival. Air Mauritius has entered voluntary administration, South African Airways and SA Express are in business rescue, other distressed carriers have placed staff on unpaid leave or signaled their intention to cut jobs. More airlines will follow if urgent financial relief is not provided. The economic damage of a crippled industry extends far beyond the sector itself. Aviation in Africa supports 6.2 million jobs and $56 billion in GDP. Sector failure is not an option, more governments need to step up," said Muhammad Al Bakri, IATA's Regional vice president for Africa and the Middle East.
"As governments struggle to contain the Covid-19 pandemic, an economic catastrophe has unfolded. Re-starting aviation and opening borders will be critical to the eventual economic recovery. Airlines are eager to get back to business when and in a way that it is safe. But starting up will be complicated. We need to make sure that the system is ready, have a clear vision of what is needed for a safe travel experience, establish passenger confidence and find ways to restore demand. Cooperation and harmonization across borders will be essential to restart aviation," said Al Bakri.