Events    |    AASA AGA 2015    |    Press release

Where: Fancourt, George, Western Cape, South Africa
When: 8 to 11 October 2015

Published: 9 October 2015 

Southern African airline industry facing a crisis - governments urged to align policies to promote air transport, trade, tourism, jobs and economic growth

George, South Africa. Southern African airlines are battling slackening demand and the evaporation of already slender profit margins, mirroring lacklustre economic growth in many States across the region. As a result, their ability to create and support jobs and stimulate economic growth are under threat, warned the Airlines Association of Southern Africa (AASA). 

“Our industry – specifically in our region – is staring down the barrel of a gun. While airlines in the rest of the world are seeing rebounding growth and healthier 4 percent average profit margins, most African airlines have been unable to follow suit and remain stuck in an on average 0.8 percent (USD1,59 per passenger) profit margin band with IATA forecasting a combined return of around USD100m across the continent again this year. When one considers the size of the potential market, it is clear that this performance is hardly the basis for a sustainable industry,” said AASA CEO, Chris Zweigenthal addressing the association’s annual general assembly taking place at Fancourt, George, today. 

What is missing is an alignment of governments’ policies and strategies to let airlines safely, efficiently and affordably carry more people and goods on more routes linking more towns and cities, more frequently, across the continent. This is how we can stimulate economic growth and with it create the jobs and prosperity that are craved in the region.  Chris Zweigenthal

The past 12 months have seen the industry overcome the devastating social and economic impact of the West African Ebola outbreak. At the same time, oil and aviation fuel prices have plummeted, except in some African oil-producing countries. In theory, for airlines that honed the art of lean and efficient operations over the previous decade, 2015 should be a bumper year. 

“But it’s not going according to plan. Economic uncertainty characterised by labour disputes, electricity shortages, weakened currencies in some markets, a rampant US dollar in others, such as Zimbabwe, and more recently, the downturn in China’s fortunes have pushed those of the airlines and of the region back over the horizon,” Mr Zweigenthal added. 

So much for a year that seemed full of promise when Africa’s transport and aviation ministers gathered in Pretoria where they acknowledged their governments’ recognition of air transport’s strategic role as an enabler of trade, business, tourism, economic growth and a driver for creating desperately needed jobs. They also reaffirmed their governments’ commitments to opening up their markets to other African carriers so that the entire region could reap these socio-economic rewards.

“All this is well and good. But year in, year out for the past quarter of a century we’ve attended talk shops where speaker after speaker laments the weak performance and lost opportunities while policy makers express renewed commitments to opening up markets and connectivity across the region. AASA and its members are appealing to governments to find the political will to make the necessary changes. After all this time, surely it’s time to walk the walk?” queried Mr Zweigenthal. 

“Instead, we continue to see obstacles to growth strewn across the runways. Government departments do not set out to sabotage airlines or their economies, but a siloed approach to policy making leads to unintended harmful consequences even if policies and implementation strategies are conceived with the very best intentions. South Africa’s new visa and immigration regulations are a prime example,” he explained. 

AASA called on governments, regulatory authorities, airlines, airports and service providers to form much closer engagements. “We need to understand each other’s roles and responsibilities and have a common appreciation of the importance of quick, fair and reasonable decisions, approvals, implementation and enforcement so that airline passenger and cargo transport remains safe, secure efficient and sustainable,” Mr Zweigenthal said.