Relief from rising statutory charges and taxes on fuel and aviation would be far more effective than bailouts
An Arik airline flight takes off from the domestic wing of the Nnamdi Azikiwe International Airport, Abuja, Nigeria. Picture: REUTERS/AFOLABI SOTUNDE
Simultaneously, across the board in the industry and governments, hundreds of thousands of staff were retrenched, retired or furloughed to cut costs and preserve cash. Many industry players are now trying to rehire or hire new people, but for various reasons — such as the slow pace of security vetting of new airport-based workers in the UK — they are ill-equipped to take full advantage of the surges in demand as markets reopen.
For most African carriers this is an arduous journey with no relief or support from any of the continent’s governments, despite public acknowledgment of the vital social and economic contributions airlines make. And so those African airlines that have survived Covid-19 are once again being pushed to the brink, with at least one carrier, Comair, going into bankruptcy.
By far the biggest headache for every airline is the sharp increase in fuel prices. Even though Africa only accounts for 1.9% of the global air travel market, the continent’s carriers are not immune to this geopolitical shock.According to the most recent analysis of global air transport industry body the International Air Transport Association , the global average jet fuel price in mid-July was $146.4/barrel. At this level airlines worldwide will incur an extra $134.
This compounds the challenge many African carriers face. They generate most of their revenues in weaker home currencies but incur their input costs, often including fuel, in dollars and euros. Every time the dollar price of fuel goes up or the dollar strengthens against softer local currencies, the revenue-cost gap widens.
The floods around Durban triggered a jet fuel supply crisis at Johannesburg’s OR Tambo International Airport that is unlikely to be resolved before the fourth quarter this year. At its onset this caused some airlines to cancel flights, with others incurring additional expenses as they diverted flights to refuel at other airports, or carrying extra fuel .
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