Africa aviation sector to grow faster, says IATA chief

Raphael Kuuchi, the International Air Transport Association (IATA) for Africa, was in Rwanda last week. Kuuchi talked to Business Times’ Peterson Tumwebaze about a range of issues, including how Rwandan and African aviation industry can be improved to become more competitive: RwandAir has now joined the club, what does it mean for Africa’s youngest airline? It means international recognition… IATA provides the airline a powerful, unified, and experienced voice to support and promote its members operations and aspirations. IATA is a global trade association for airlines with 25 member airlines, including RwandAir, in 48 countries. Members also benefit from industry advocacy supported by 50 offices worldwide. IATA actively lobbies governments and other international bodies on key issues such as safety, security, taxation, liberalisation and environmental responsibility. In other words, we engage policy-makers globally to understand the value of air transport so they can enact supportive laws and regulations. What are some of the priority issues championed by the association? We seek to ensure aviation safety, besides protecting the interest of the industry. We also make sure aviation activities did not exacerbate environmental degradation. To this end, we encourage our members to build and use efficient infrastructure, invest in new technologies, including sustainable aviation bio-fuels. We also work with sector stakeholders to improve the industry’s infrastructure and human capital. What safety initiatives is IATA putting in place? Our main target is to reduce the rate of accidents in Africa by 50 per cent by 2015 as set out under the Abuja Declaration. We also want to encourage airlines on the continent to adopt of IOSA. This will be achieved under the Africa safety strategic improvement action plan and Other essential steps include lobbying the European Union to remove African airlines from the list of banned carriers and establishing runway safety teams at airports. We also encourage the promotion of the concept of information sharing to enhance safety through global data management programme. IOSA, which is now mandatory for IATA membership, is a critical component of IATA’s safety programme. Regional airlines have for long complained about high taxes and other charges. Is this affecting the industry? Taxes are increasingly becoming a burden on the airline industry. The periodic tax increases by continental governments significantly affect the industry’s profitability and growth. How are you tackling the question of efficiency and innovation? The association has several initiatives and programmes to ensure operational efficiency besides helping airlines to develop cost-efficient solutions so they can improve their performance. We also offer a number of financial services at competitive rates to help them cut costs, improve cash flow and efficiency. Members can get discounts up to 30 per cent on a number of IATA products and services, including consultancy services. IATA is also has programmes that help to strengthen the capabilities of aviation industry professionals. What is your outlook of the industry in Africa? The economy is fragile but improving and the outlook is “cautiously” positive. This year, sub-Saharan Africa is projected to grow by 4.5 per cent, North America, 3.2 per cent, Western Europe 1.4 per cent, while Eastern Europe one per cent, the Middle East And north Africa at 3.5 per cent and Asia and Australia at 2.2 per cent. This therefore means that airlines in sub-Saharan Africa have a chance to tap into this growing economy to become profitable. What about the profitability of the industry? Presently, fuel costs for now and prices seem to have gone down by 50 per cent since mid-2014. However, profits are still inadequate in most regions with Africa registering a net profit of only $0.19 billion and revenues percentage of 1.13% in 2014. On the other hand, Asian carriers, for instance, registered net profit of $5.04 billion, while North America recorded $13.2 billion. This presents African aviation a challenge to become innovative to improve their balance sheets. That’s why it is important for African airlines to join hands and embrace initiatives, like code share arrangements, to reduce the cost of operation and, ultimately, increase their profitability. What are some of IATA achievements? We have been able to ensure value creation and innovation, as well safety and profitability in the global aviation industry. What are the key drivers of aviation business? The key drivers of aviation growth are mainly demographics, wealth, price, connectivity, urbanisation. There is, therefore tremendous potential for Rwanda and Africa generally as population expand and their incomes and wealth increase. Other growth drivers to watch include safety in Africa. What is the industry growth outlook for the next five years? Passenger numbers are projected to increase by 4.8 per cent, while the number of freights will grow 3.5 per cent in the next five years. However, the number of airline passengers in Africa is expected to increase by 4.2 per cent and the number of freights by 4.4 per cent. The growth in the number of freights will be far better than that of Europe, which will grow by 3 per cent, while passengers will inch up 2.6 per cent. The highest growth in passenger numbers will be in the Asia Pacific region at 6.3 per cent, and 3.8 per cent increase in the number of freights.

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Africa aviation sector to grow faster, says IATA chief