High Operation Costs Weigh Down Airline Sector Recovery-AFRAA

The global rise in cost of jet fuel is threatening to wipe the gains made in the aviation sector despite lifting of restriction measures by a majority of countries.

This is according to the continental Aviation body African Airlines Association (AFRAA).

The rising jet fuel has hiked air tickets impacting on the airlines cash-flows.

Industry figures show that airline revenues remained low and the African airlines revenue loss for 2022 is estimated at   Sh410 billion ($4.1 Billion), equivalent to 23.4 percent of the 2019 revenues.

In 2021, African airlines cumulatively lost Sh860 billion in revenues due to the impact of the pandemic, representing 49.8 percent of 2019 revenues.

According to S&P Global Platts a market data and analysis firm that offers a full view of the energy markets, from energy transition to supply, the average jet fuel price continues to rise globally impacting on airline operating costs.

“From the mid-May average price of 146.5/bbl, Platts estimates the impact on airlines 2022 fuel bill is Sh12.1 trillion ($121.1 billion),” AFRAA said in a statement.

In the month of May 2022, AFRAA estimates that African airlines’ capacity deployed reached 76.6 percent of 2019 capacity and the traffic recovery is now at 66.3 percent of 2019 pre-Covid level.

However, the Kenyan markets remain dominant in both capacity and actual passenger carried.

Domestic demand at 42.1 percent outperformed intra-Africa and intercontinental which remained subdued at 30.2 percent and 27.7 percent for intra-Africa and intercontinental respectively.

The percentage of international routes operated by African airlines is estimated to reach an impressive 92.2% in May 2022 compared to Feb 2020.

The Intra-African passenger traffic recovery is estimated at 74% in May due to the easing of anti-covid19 restrictions in several African countries.

Generally, across Africa, passenger traffic volumes remain low because of the high ticket cost and travel apathy. It is hoped that with the continued relaxation of lockdown and Covid-19 restrictions in many countries, traffic will increase as we approach the summer holiday peak season.

“Airline revenues remained low with many operators battling with cash-flow issues,”

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