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June 2018

May 23, 2018

The full magnitude of the damage done to the broader southern African economy, and the airline industry in particular, by the Zuma regime is only beginning to be realised.

At the recent Aviation Africa conference in Cairo, I chatted to Hadi Akoum, the Airbus Vice President for Sales in sub-Saharan Africa. I was pleasantly surprised to find that things are looking up for Africa, and that South Africa will soon be playing catch-up, and likely to show strong growth, to make up for the eight disastrous Zuma years.

Akoum says that Airbus has added 28 new African operators since 2010. Ethiopian Airlines has now signed up for no less than 24 A350s and Air Mauritius received its first of six A350-900s last year and will receive its first A330neo this year. In west Africa, Air Cote d’Ivoire received its first of two A320ceos last year and Air Senegal recently ordered its first A330neo widebodies. 

In a heartening show of faith and commitment, Akoum emphasises that southern Africa remains an important market for Airbus, with SAA, Global Airways and Air Namibia all operating significant fleets of Airbus single-aisles and widebodies.

 

 

 

However, the usual problems persist: high taxes, fees and airport charges, and inadequate or inappropriate infrastructure. This is because many African governments have invested hundreds of millions of dollars in ‘white elephant’ airports. This is money they need to pay back, so they impose high airport user charges, which makes air transport too expensive for the still emergent middle class and dampens aviation growth. It is broadly accepted in the rest of the world that lowering taxes and charges will reduce the cost of travel, stimulate demand and result in more passengers, while still generating the required revenues to fund those investments in infrastructure and services.

In addition to high costs, poor flight connectivity and expensive, state-owned, poor-service airlines have restricted access to air travel. African passenger volumes have not been as hoped, so we have seen gauge downsizing. With around 75 small airlines in Africa, it now seems that the market cannot really support widebodies.

Akoum nonetheless says that Airbus is optimistic the African Union’s recently-announced Single Africa Air Transport Market and Africa Continental Free Trade Area initiatives will uncork the bottle.

Unsurprisingly, Airbus says it is “agnostic” on the great debate of state vs private ownership of airlines. Agnostic is an interesting choice of words, as it implies that you need to have a religious conviction to believe in the one or other ownership model. 

For the long-term, Airbus says it is still very optimistic. For South Africans this is part of the good news – we see a new and reportedly competent management team at SAA wield the chainsaw to cut away the rotten and dead wood as necessary. And that usually excellent predictor of the future, the forward currency exchange rates and stock market futures, are all expecting a better 2019. Given the low levels South Africa has been hammered down to, the rebound should be spectacular.

 

 

 

 

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