The International Air Transport Association (IATA) has projected that Africa’s airlines are expected to continue making a combined loss of $100 million in 2018, the same as 2017.
But the Zambian government says it is determined to have Zambia Airways return to the skies by October 25th 2018.
According to IATA’s 2018 global airline Economic Outlook report which was presented by IATA’s Director-General and CEO, Alexandre de Juniac, in Geneva, Switzerland recently, the slow pace of wider economic improvement in Africa is hampering the financial performance of the continent’s airlines.
This is in spite of an anticipated 8% growth in demand and capacity expansion of 7.5%.
The report added, “While traffic is growing, passenger load factors for African airlines are just over 70% which is over 10 percentage points lower than the industry average.
With high fixed costs this low utilization makes it very difficult to make a profit. Stronger economic growth will help in 2018, but the continent’s governments need a concerted effort to further liberalize to promote growth of intra-Africa connectivity”.
IATA says the combination of low utilisation and high fixed costs make it difficult for airlines to make a profit.
Stronger economic growth will help in 2018, but Africa’s governments need to make a concerted effort to free up intra-African access to their markets as the increased connectivity will stimulate wider economic growth.
The biggest challenge to profitability in 2018 is rising costs, IATA cautions.
Oil prices are expected to average $60/barrel for Brent Crude in 2018 (up 10.7% from $54.2/barrel in 2017).
Labour costs have been accelerating strongly and are now a larger expense item than fuel (30.9% in 2018).
All regions are expected to report improved profitability in 2018 and all regions are expected to see demand growth outpace capacity expansion.
This week, Transport Minister Brian Mushimba told Journalists in Lusaka that the process of relaunching Zambia Airways has reached an advanced stage.
Mr Mushimba revealed that government is confident that Zambia Airways will return to the skies on October 24th, on the occasion of Zambia’s 54 Independence anniversary.
In September, Ethiopian Airways revealed that it was set to enter into a deal with the Zambia Government over the Zambia Airways project.
Ethiopian Airways CEO Tewolde Gebremariam said the tentative joint-venture carrier would feature the Zambian government and private-equity investors as additional shareholders.
The signing of an outline plan in the coming weeks would then set to stage for a final agreement which could be concluded by November.
The Zambian domestic market is currently home to Proflight Air Services, Royal Air Charters and the recently relaunched Mahogany Air.
Zambia Airways folded in 1994.