IATA Projects $100m Profit For Nigeria, 11 Other Countries’ Airlines In 2015

The International Air Transport Association (IATA) has projected that African airlines, including those in Nigeria, are expected to return a profit of $100 million in 2015.

This, the international airline body said would be on a net profit margin of 0.8 per cent, the thinnest of all aviation regions in the world, which it said was the major finding of a Value of Aviation for Africa econometric report commissioned by IATA. 

The report examines the impact of liberalised air transport for Nigeria and 11 other major African economies.

According to IATA’s Vice President for Africa, Raphael Kuuchi, “African airlines are expected to return a profit of just $100 million in 2015, on a net profit margin of 0.8 per cent, the thinnest of all aviation regions.   While other regions are experiencing robust growth this year, demand for air travel within the regulatory-constrained intra-African market is only expected to grow by 3.2 per cent this year.  Smarter regulation, giving African carriers greater access to all intra-African markets, would stimulate competition and with it demand for travel as businesses and traders were able to expand into that market. The net result is much stronger growth, not only for the airlines, but for the economies of those countries that embrace the “open skies” framework.”

The 12 nations studied in the report were: Algeria, Angola, Egypt, Ethiopia, Ghana, Kenya, Namibia, Nigeria, Senegal, South Africa, Tunisia and Uganda. 

 “Employment and economic growth are just the tip of the iceberg in terms of the benefits of connectivity. Aviation plays a major role in helping to fulfill the African Union’s mission of an integrated, prosperous and peaceful Africa,”Kuuchi said.

The Yamoussoukro Decision of 1999 committed 44 signatory countries to deregulating air services and to opening regional air markets to transnational competition.

He said that the implementation of this agreement, however, had been slow among Africa countries and that the benefits have not been realised.

 Africa, he stated, was well-placed to enjoy sustained economic growth thanks to a young, expanding and urbanising population, combined with abundant natural resources.

He, however, regretted that because intra-African aviation connectivity and the economic health of its airlines are weaker than they could be, opportunities for job creation, business growth and innovation are being lost.

He disclosed that the IATA commissioned research found that liberalisation would cause airfares to fall by between 25 per cent and 37 per cent in the 12 countries under review, making air travel more affordable to more people.

This, he  explained would in turn help to stimulate an 81 per cent increase in traffic flows between the 12 countries within two to three years, adding that in terms of passenger trips, this translates to an increase from the present 6.1 million passengers to 11.0 million passenger trips, which is an additional 4.9 million passenger trips.

The study further noted that the additional jobs and economic activity created directly by the airlines and indirectly by an open skies framework facilitating increased trade, investment, business, tourism and productivity, would drive faster Gross Domestic Product (GDP) growth, an additional $1,296.5 billion across the 12 countries, of which $94.2 million, or a 0.56 per cent increase, projected for Namibia.

The IATA backed report further stated that this would be accompanied by wide-spread prosperity for people in the participating countries, adding that aviation already supports 6.9 million jobs and more than $80 billion in GDP across Africa.

The InterVistas research pointed out that the additional services generated by liberalization between Namibia and the other 11 key markets would provide an extra 155,000 jobs and $1.3 billion in annual GDP.

The jobs and GDP impact for the 12 countries in the study are listed in the table below.

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