African aviation must correct profitability record

Aviation is a business that requires intensive investment and that means it has to turn a profit, says IATA’s Tony Tyler.

“Unfortunately, African airlines in particular do not have a strong profitability record,” says the association’s director general and CEO. “Our June profit forecast for the industry calculated airlines in this region would make a collective profit of $100 million this year, for a margin of only 0.8%, the lowest of any region of the world. Over the last five years, African airlines have, at best, broken even.

“A large part of the reason for this has been that the cost of doing business here is too high. Fuel, for example, costs on average around 20% more than elsewhere in the world. When you consider that fuel accounts for approximately 30% of airline operating costs, then the scale of the problem becomes clear. Fuel is more expensive because many African states tax it and restrict competition in the market, including, I’m afraid to say, here in Brazzaville. In fact, governments across Africa levy some 15% of all the aviation taxes worldwide.

“In addition to jet fuel taxes, there are passenger taxes, solidarity taxes, tourism taxes, fiscal stamp taxes, value-added taxes, sales taxes, and transportation taxes. It all adds up to a costly burden on airlines in this region. And that’s before we get to the issue of charges, which at some African airports are among the highest in the world,” he concluded.