High operation costs caused African airlines to post $100m losses in 2017

fdphalety
By fdphalety December 16, 2017 20:50

High operation costs caused African airlines to post $100m losses in 2017

According to the International Air Transport Association (IATA), due to high operating costs and restrictive aviation policies of most African countries, African airlines will post a collective loss of $100m by the end of this year, with a similar predicted deficit in 2018.

Raphael Kuuchi, IATA’s vice president for Africa, in an interview stressed out the various factors that made African airlines to operate at a loss unlike their counterparts across the world that make money. The transport operating costs of African airlines are among the highest in the world as revealed from the high taxation imposed on aviation fuel by most African countries.

In order to subsidise other fuels, many governments force high tax on the aviation fuel in order to subsidise other fuels or even supplement budgetary incomes at the expense of efficient aviation.

IATA’s vice president for Africa also pointed out the fact that airlines on the continent are served by costly monopolies at the different airports which include catering services, logistics management companies and fueling service providers, etc.

Also, the limitation of airports with many countries having one operational international airport means that airlines don’t usually have the luxury of operating away from an airport served by an expensive service provider.

Reports indicated that African airlines fly with 30% empty seats on average against the world average of 20%, which means that they are getting less returns on investment as compared to airlines elsewhere. This is blamed on the high ticket prices which are in turn blamed on high tax regimes and restrictive government policies on aviation.

Having signed a declaration championed by the African Union, 22 African countries will open up their skies unconditionally to airlines operating in Africa in January 2018.

fdphalety
By fdphalety December 16, 2017 20:50
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