Trade group says pandemic shutdowns will cost airlines billions in losses and millions of jobs lost
The International Air Transport Association (IATA) a global trade group representing the world’s airlines is calling for additional aid to be given to airlines in Africa or will see billions of dollars lost and millions of jobs erased as a result of the COVID-19 pandemic that has killed more than 200,000 worldwide.
The region’s airlines could lose US$6 billion of passenger revenue compared to 2019. That is US$2 billion more than was expected at the beginning of April. Job losses in aviation and related industries could grow to 3.1 million. That is half of the region’s 6.2 million aviation-related employment and more than the previous estimate of 2 million. Full-year 2020 traffic is expected to plummet by 51 percent compared to 2019 compared to the previous estimate of 32 percent. GDP supported by aviation in the region could fall by US$28 billion from US$56 billion compared to a previous estimate of a US$17.8 billion decline. 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 likely to be hardest hit include:
- South Africa: 14.5 million fewer passengers resulting in a US$3.02 billion revenue loss, risking 252,100 jobs and US$5.1 billion in contribution to South Africa’s economy.
- Nigeria: 4.7 million fewer passengers resulting in a US$0.99 billion revenue loss, risking 125,400 jobs and US$0.89 billion in contribution to Nigeria’s economy
- Ethiopia: 2.5 million fewer passengers resulting in a US$0.43 billion revenue loss, risking 500,500 jobs and US$1.9 billion in contribution to Ethiopia’s economy.
- Kenya: 3.5 million fewer passengers resulting in a US$0.73 billion revenue loss, risking 193,300 jobs and US$1.6 billion in contribution to Kenya’s economy.
- Tanzania: 1.5 million fewer passengers resulting in a US$0.31billion revenue loss, risking 336,200 jobs and US$1.5 billion in contribution to Tanzania’s economy.
- Mauritius: 3.5 million fewer passengers resulting in a US$0.54 billion revenue loss, risking 73,700 jobs and US$2 billion in contribution to Mauritius’ economy.
- Mozambique: 1.4 million fewer passengers resulting in a US$0.13 billion revenue loss, risking 126,400 jobs and US$0.2 billion in contribution to Mozambique’s economy.
- Ghana: 2.8 million fewer passengers resulting in a US$0.38 billion revenue loss, risking 284,300 jobs and US$1.6 billion in contribution to Ghana’s economy.
- Senegal: 2.6 million fewer passengers resulting in a US$0.33 billion revenue loss, risking 156,200 jobs and US$0.64 billion in contribution to Senegal’s economy.
- Cape Verde: 2.2 million fewer passengers resulting in a US$0.2 billion revenue loss, risking 46,700 jobs and US$0.48 billion in contribution to the country’s economy.
To minimize 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 US$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.
Looking Ahead
In addition to vital financial relief, the industry will also need careful planning and coordination to ensure that airlines are ready when the pandemic is contained.
IATA is scoping a comprehensive approach to re-starting the industry when governments and public health authorities allow. A series of virtual regional summits, bringing together governments and industry stakeholders have been taking place. The main objectives will be:
- Understanding what is needed to re-open closed borders, and
- Agreeing solutions that can be operationalized and scaled efficiently
“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.
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