AFRICA AIR TRANSPORT

ISSUES

Kigali 27-28 February 2019

CONTENT

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Ø KEY FACTS

Ø ISSUES

Ø CHALLENGES

Ø OPPORTUNITIES

Ø STEPS FOR SUCCESS

KEY FACTS� 16.6% world population

� < 3% world traffic

� 6.2 millions jobs

� 55.8 billion GDP

� 349 commercial airports

� 161 airlines

� 1,277 aircraft in service

� 36 ANSPs

3

� 1,130,000 flights

� 236 billion RPKs

� 98 millions passengers

� 968,000 tonnes of freight

� Average regional LF: 68%

� $1.66 loss per passenger carried

(worldwide average $9.27 profit)

Source : ATAG 2018 / Worldometer

AFRICAN PASSENGER AND CARGO MARKET EVOLUTION 2008 – 2017

In 10 years, passenger market has evolve by 67%, despite a small regression in 2011. The average annual growth rate is 6.13%.Intra African traffic is almost steady.

560 580

689 705788.5 781 777 817

866968

0

200

400

600

800

1000

1200

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Thou

sand

s of

tons

Cargo

year

The cargo market grew up to 72,85% between 2008 and 2017.The average annual growth rate is 6.44%.

Source : AFRAA

KEY FACTS

27.0 29.3 33.9 32.8 36.243.1 42.6 41.7 42.0 44.7

53 53.261

5663

73.8 76.6 79.5 83.8988.54

0

20

40

60

80

100

120

140

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Mill

ions

PassengersTotaltraffic

Intra-Africa

year

4

TOP 5 AFRAA AIRLINES PER RPK 2017 TOP 5 AFRAA AIRLINES PER TONS 2017

35

20

18

17

10

0 10 20 30 40

Ethiopian Airlines

South African Airways

Egyptair

Royal Air Maroc

Kenya Airways

Billions of RPK

386

143

113

56

25

0 100 200 300 400

Ethiopian Airlines

Egyptair

South african

Kenya Airways

Royal Air Maroc

Thousands tons

Ethiopian Airlines is leading both rankings.Source : AFRAA

KEY FACTS

5

21.2

16.0

10.7

10.2

9.4

7.8

7.3

6.2

5.8

5.5

0 5 10 15 20 25

Johannesburg

Cairo

Cape Town

Addis Ababa

Casablanca

Algiers

Nairobi

Lagos

Tunis

Durban

Millions Passengers

TOP 10 AIRPORTS PER PASSENGERS 2017

Source : ACI Africa

AFRICAN PASSENGER SPLIT 2017

Domestic23.4%

Regional27.2%

Intercontinental49.5%

Source : AFRAA

Intercontinental market segment remains the biggest with 49.5% of all passengers.

South Africa has a strong position in terms of passengers traffic with 2 airports on the top 10.

KEY FACTS

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ISSUES

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• Market elements= people, goods, capital, services• Single market = free movement • African countries have more economic and trade

relations with non African countries.• Intra Africa trade is only 15% (Source: Afreximbank)

• Poor intra-Africa connectivity• 50 to 80% connectings passengers across Africa• Huge waste of time and money

MARKETACCESS

CONNECTIVITY

ISSUES

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• Average higher fares compared to other regions• No viability for LCCs in high cost environment• Main reasons = high cost of operations

ü Fuelü Taxes and charges

• Need for adequate infrastructure • Cost commensurate with service provided• Recommend users consultation• Encourage investment models which do not

create a huge burden on users

HIGH FARES

INFRASTRUCTURE

ISSUES

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• SAATM launched in January 2018• 2018 SAATM implementation action plan (6 pillars)• 28 states have signed so far

ü 2 states implemented the 8 concrete measures

• Legal instrumentsü Power and functions of the Executing Agencyü Consumer protection rulesü Competition rulesü Dispute settlement mechanism (not yet)

SAAT

M

ISSUES

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BENEFITS EXPECTED• Better connectivity• Lower fares• Increase Air traffic • Increase Economic growth (GDP)• Create more JobsSA

ATM

ISSUES

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Need to establish:• Dispute settlement Mechanism• Eligible airline criteria• Subsidies – State aids guidelines• Economic regulation to address any

issue that can create a distortion in competitionSA

ATM

ISSUES

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• CORSIA is not well known by some stakeholders

• Airlines need to report emissions for international flights since January 2019

• IATA / AFRAA wokshops to assist airlinesCO

RSIA

CHALLENGES

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• Fuel (+24.7% 2017 on 2016)

• Taxes and charges

• Customs regimes

• Monopolistic environment

• Traffic to double every 15 yrs

• 20 yrs projection:

ü 29,000 Pil, 29,000 Eng, 28,000 Cc

• Training and retention of professionals

• Youth Development in Aviation

HIGH COST

HUMAN

RESOURCES

CHALLENGES

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• Shared responsibility of stakeholders:ü Abuja targets(jan 2013) - revised 2017 (ANS)ü Windhoek targets (Jul 2017)ü 2018 Jet operations: 0 hull losses, 0 fatalitiesü 2018: 2 fatal turboprop accidentsü Improvement needed on turboprop fleetü IOSA registration

• Infrastructure (facilitation and cost)• Aircraft (ageing fleet)• Private Equity (to sustain growth)

SAFETYSECURITY

AVIATION FINANCING

CHALLENGES

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• Foreign currency shortages due to economic challenges

• Airlines cannot repatriate their sales revenues• Hampers airlines performances

BLOCKED FUNDS

OPPORTUNITIES

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• Growing African Economies (World Bank)ü 3,6% average projection 2019-20

• Emerging middle and upper middle classü Falling level of povertyü Literacy rate among the young exceeds 70%

• Growing population (to double by 2050) ü Share of global population in 2050 = 50%ü Share of under 14 years in 2100 = 48%ü Medium age below = 20

EXTERNALFACTORS

OPPORTUNITIES

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• Aviation advantage over other modes of transport• Potential future air transport demand

ü Double every 15 years• AU flagship projects

ü SAATMü CFTAü Free movement protocol - African Passport

EXTERNALFACTORS

STEPS FOR SUCCESS !

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AUCAFCAC

• Liberalization (SAATM implementation)• Continental Free Trade Area (CFTA)• Protocol on Free Movement of Persons – Afr. Passport• Enforce economic regulation capacity of the EA

ü Propose regulatory guidelines to YDü Remove any market distortionü Taxes and charges

• Need to review the African Civil Aviation Policy

STEPS FOR SUCCESS !

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STATES

• Commit to SAATM and CFTA• Enact concrete immediate 8 measures• Put aviation development as a priority in

their policies• Review visa regimes• Review taxation regimes• Strengthen civil aviation oversight capacity

STEPS FOR SUCCESS !

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AIRLINES

• Need to better cooperateü Networkü Commercialü Technical

• Improve leadership and management • Build human resources capacity• Improve and keep safety level

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