Africa Aviation Banking Coronavirus Debt DFI Finance Report Travel

Air passengers travel confidence key to salvaging African airlines

If African airlines are to survive the covid-19 pandemic onslaught, then the immediate injection of cash is needed to avoid insolvency or bankruptcy of the airlines.

Carriers on the continent are expected to lose US$8.1B in revenues this year in the severe and an unprecedented event which is forcing players under the African Airlines Association (AFRAA) to seek more avenues for support to the industry.

The Afreximbank has however assured that there are existing opportunities for African airlines under the bank’s Pandemic Trade Impact Mitigation Facility (PATIMFA).

AFRAA’s Secretary-General, Abdérahmane Berthé notes that the impact of the pandemic is enormous and it could lead to insolvency or bankrupting African airlines in 2020.

The continental airlines’ body headquartered in Nairobi has proposed setting up an aviation sectorial covid-19 recovery fund for the support of the airline industry.

“We will continue to seek more avenues for support to the industry from development finance institutions, country development partners and international donors as we navigate through these tough times,” added Berthe.

On June 2, AFRAA released an analysis of the impact of the pandemic on the airline industry in Africa which reveals an estimated revenue loss of US$8.103B this year.

The analysis is the first in a series of studies that will be published by the Association examining the toll of the pandemic on Africa’s air transport sector.

The impact assessment analysis further shows a 90.3 per cent year on year passenger traffic reduction for the month of May with recovery expected to start from Q3 2020 with domestic operations, followed by regional and intercontinental flights.

“On cargo operations, there is currently a shortage of cargo capacity in Africa due to needs for the carriage of medical equipment and essential goods. In the wake of this lack of capacity and rising prices, AFRAA is assisting its members to adapt in a bid to keep supply chains operational,” notes the report.

From the analysis, the evolution of the number of covid-19 cases indicates that the most impacted countries in Africa are South Africa, Egypt, Morocco, Algeria and Ghana, each with a total of more than 5,000 cases of infection.

“While the rate of infections in other continents is beginning to ease off, in Africa the rate of infections is still on the rise. However, the recovery rate in Africa is higher, with an average death rate of 9 per cent compared to the global rate of 19 per cent.”

Survival and recovery of Africa’s air transport

Berthé stated that the availability of liquidity is the main issue to be addressed for airlines to survive and restart their operations. Without it, airlines can simply not survive this pandemic long enough to restart their operations.

AFRAA urges African governments to consider a bailout and stimulus package that compensates for the significant losses, reduces the burden of ongoing operating costs, and subsidizes the industry’s survival and recovery.

“We also call upon international financial institutions and development partners to support Airlines with facilities that can help ensure the availability of much-needed credit and liquidity,” Berthe added.

Berthe encourages passenger confidence to resume air travel adding that communication with passengers on the health and safety measures in place is crucial to reassure them of a safe and sterile travel experience with appropriate measures in place.

To put the airline industry on the recovery path, AFRAA has a recovery plan defining a framework of various areas of intervention measures to be taken as part of urgent, immediate and consistent actions for the survival and rebound of the industry.

AFRAA is also working closely with leading aviation industry organizations under the framework of the High-Level Task Force that is undertaking various actions to ensure that the African civil aviation industry is well positioned on a strong trajectory for recovery during and post covid-19 pandemic.

Already, some airlines have started resuming operations though cautiously as the effects of the pandemic fight.

Source: The Exchange

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