By Isaac Tersoo Agber
The International Air Transport Association is currently in talks with the African Development Bank to support funding of the airlines in the region, IATA’s vice president for Africa, Raphael Kuuchi, revealed this during a roundtable with African journalists at the closing day of IATA’s 2016 annual general meeting in Dublin, Ireland on Friday.
Kuuchi said this after IATA announced that African Airlines are expected to post a US$500 million loss in 2016, a slight improvement on the US$700 million that the region’s carriers lost in 2015. This is despite the fact that the global aviation industry profitability is expected to improve to US$39, 4 billion in 2016.
However, IATA’s chief economist Brian Pearce said African airlines’ capacity growth of 5,3% is anticipated to outpace demand growth of 4,5%.
This, according to Kuuchi, is a clear indication that if the AfDB can help fund African airlines, they will improve their operational capacity, and thus growth.
“IATA is in discussions with the AfDB to sign a memorandum of understanding regarding the funding of African airlines,” he reiterated.
According to him, IATA was concerned with the fact that the AfDB has been funding infrastructure projects over the years, and not airlines.
“We came to a point to tell them you (AfDB) have been supporting infrastructure projects, but how about struggling airlines themselves?” he asked rhetorically, adding that it is about time that the development bank supports airlines.
In its revised 2016 financial outlook for the global air transport industry, IATA stated that African airlines continue to confront a plethora of challenges, including intense competition on long−haul routes, political barriers to growing intra−Africa traffic, high costs and infrastructure deficiencies.
The report further revealed that many major economies on the continent have been hit hard by the collapse of commodity prices, and the impact that has had on revenues and the inflow of hard currencies.
Unresolved foreign exchange crises are also said to be adding to the economic difficulties facing airlines in this region.