The International Air Transport Association (IATA) has called on African governments to address the issue of blocked funds that is affecting the industry’s capacity to become profitable.
The International Air Transport Association (IATA) has called on African governments to address the issue of blocked funds that is affecting the industry’s capacity to become profitable. The appeal was made yesterday at the opening of the 49th annual African Airlines Association general assembly in Kigali.
The meeting was opened by Prime Minister Edouard Ngirente who underlined Rwanda’s commitment to the growth of the aviation sector and free movement of people across the continent.
Ngirente called upon African governments and airlines to harmonise their operations, including airport taxes, improve and expand the aviation infrastructure, and train the required personnel as a means to promote intra-Africa trade.
According to IATA, in Africa, airlines are experiencing varying degrees of difficulty repatriating revenues earned in most countries on the continent especially in Angola, Algeria, Eritrea, Ethiopia, Libya, Mozambique, Nigeria, Sudan and Zimbabwe. The repatriation is mainly hampered by monetary policies of some countries mainly because the industry largely trades in US dollars. "Practical solutions are needed so that airlines can reliably repatriate their revenues. It’s a condition for doing business and boosting connectivity,” said Alexandre de Juniac, IATA’s Director General and CEO. According to IATA, safety, connectivity, blocked funds, and human capital should top the agenda for Africa to drive the sector’s maximum economic and social benefits in Africa. Dr Elijah Chingosho, the outgoing African Airlines Association (AFRAA) Secretary General, said up $1 billion airlines’ cash is currently blocked, affecting the industry’s capacity to reinvest. According to Chance Ndagano, the acting chief executive officer of RwandAir, the habit of blocking funds has equally often affected the national carrier’s ambitious plans to expand its wings across the Africa. "Some governments, through their central banks, often don’t allow airlines to repatriate revenue, especially when earned in dollars, posing a challenge to airliners,” he said adding that, he remains optimistic about the airline’s strategy to continue expanding its footprint across the globe.
"Our growth will always be driven by demand,” he added.
Aviation currently supports 6.8 million jobs and contributes $72.5 billion in GDP to Africa. Over the next 20 years, passenger demand is set to expand by an average of 5.7 per cent annually.
Raphael Kuuchi, the IATA Vice President, Africa, said "Africa also faces great challenges and many airlines struggle to break-even. And, as a whole, the African aviation industry will lose $1.50 for each passenger it carries.’’
Promoting safety
Governments should be aware that Africa is a high-cost place for aviation taxes, fuel and infrastructure charges are higher than the global average and need to be addressed urgently, he added. Meanwhile, the aviation body lauded safety in Africa’s skies, which they said had greatly improved over the years. In 2016, there were no passenger fatalities or jet hull losses in Sub-Saharan Africa.
"African safety has improved, but there is a gap to close. Global standards such as the IATA Operational Safety Audit (IOSA) are key. Performance statistics for IOSA show that the accident rate of the 33 IOSA registered carriers in Sub-Saharan Africa is half that of carriers not on the registry. That’s why I urge African Governments to use IOSA in their safety oversight,” said de Juniac. Intra-Africa connectivity IATA urged the 22 states that have signed-up to the Yamoussoukro Decision (which seeks opening up of intra-Africa aviation markets) to follow through on their commitment. And it further urged governments to fast-track the African Union’s Single Africa Air Transport Market initiative. "African economic growth is being constrained by a lack of intra-Africa air connectivity. Opportunities are being lost simply because convenient flight connections are not available. While we cannot undo the past, we should not miss out on a bright future,” said de Juniac. The aviation body also urged industry consultation on air traffic management investment decisions. That will ensure alignment with airline operational needs and avoid over-investment, experts say. Experts believe "investments must improve safety and efficiency from the user’s perspective. Otherwise, they are just an additional cost burden. editorial@newtimes.co.rw