FlightCom – August 2019

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Postal Address

E d' s n o t e ...

W

ORLDWIDE

the airline

industry is

having an

unprecedently

good run, as it

is now entering its tenth year of profits and

is covering its cost of capital – an excellent

achievement for a capital intensive industry

with thin margins.

However, in stark contrast, African

airlines are still failing miserably – and

if you take the privately owned airlines

and outlier Ethiopian airlines out of the

mix, then the picture is disastrous. African

airlines will deliver a $0.1 billion loss

(unchanged from 2018), continuing a weak

trend into its fourth year. A recent report by

the International Air Transport Association

(IATA) says that the whole African airline

industry – including Ethiopian and privately

owned airlines, will have record losses in

2019 as they have low load factors and a

high cost of operations from fuel surcharges,

poor management and high passenger taxes.

IATA calculates that African airlines

lose U$1.54 on every passenger they carry –

which contrasts badly with the almost U$

profit per passenger made worldwide.

The World Bank has revised its expected

African economic growth down from 5.

percent in 2018 to 4.3 percent this year.

Part of the reason for this downgrade is the

constraints on trade in goods and services

due to the capacity and connectivity

limitations of African airlines.

Adding to Africa’s woes is that the

world is heading for tougher times. Global

demand for airlines this year will grow

by 5.0 percent, down from 7.4 percent

last year. This can be expected to further

constrain African airline industry growth. If

the African airline industry cannot succeed

in good times it is probably fair to conclude

that it will fail abysmally in tougher times.

The problem is two-fold: Firstly; state

ownership of airlines and their resulting

interference in policy and management.

Secondly, the fragmentation of the African

airline industry. The United States has three

global carriers compared to Africa which

has 161 airlines.

Ethiopian Airlines is the only African

state-owned carrier which has been

recording profits in the past couple of years,

thanks to the state owner’s hands-off policy,

plus the airline’s effective exploitation of its

location as a hub and a new fuel-efficient

fleet. If the state is going to own an airline

and interfere with its management, whether

to protect jobs, or drive a political or

developmental agenda, it has to be prepared

to spend taxpayers’ money subsidising rich

travellers at the expense of the poor.

The South African government has

become spineless in its lack of support for

SAA. Without the political courage to take

tough decisions it will continue to bleed the

state for scarce funds. This is the swamp

which forced the CEO of SAA, Mr Vuyani

Jarana, to resign. I fear that his acting

successor, Ms Zuks Ramasia has accepted a

career ending job.

JULY 2019

Edition 129

Editor

Guy Leitch

Airline Ops - Mike Gough 5

Companies - SA Space Agency 9

Bush Pilot - Hugh Pryor 11

Airbus Celebrates 50 years 15

Defence - SAAF Acquisitions 23

African Airlines Safety 27

A Magic Veteran 31

Women Shine at IATA Awards 33

Federal Airlines Charter Directory 34

AEP AMO Listing 35

Companies 37

Daher Buys Quest Kodiak 39

Subscriptions 42

Gryphon Flight School Listing 43

AME Doctors Listing 44

Back Pages 47