African airlines struggle amid strong USD

Kampala, Nov 18 (IANS) Although passenger numbers are expected to slightly increase for African airlines in 2017, the carriers are likely to remain under pressure from a strong USD, the IATA has said.

The airlines, according to the International Air Transport Association (IATA), are expected to make a combined loss of about 100 million dollars in 2017, making Africa the only region that is currently not profitable for airlines, Xinhua news agency reported.

The aviation association pinned the loss on economic hardships the region has been facing for the last two years, partly due to the gain in strength of the dollar.

"The entire global economy has not been good for about two years, due to the strength of the U.S. dollar, and Africa like the rest of the world, has felt the impact. The drop in global GDP therefore comes with a drop in aviation traffic, and because aviation is not very developed in Africa, airlines have been operating at loses," IATA Africa Vice President Raphael Kuuchi said in a recent interview.

The IATA is a global association of airlines based in Montreal, Canada, that represents over 270 members and is responsible for setting aviation standards.

Kuuchi said African airlines made a 9.6-dollar loss on every passenger carried in 2016, with a high expectation that the loss will climb to 10 dollars in 2017.

He said the American airlines on the other hand made 22 dollar profit on each passenger carried in 2016, although the margin is expected to drop to 19 dollars in 2017.

According to IATA statistics, global airlines collected 186 dollars in revenue per passenger and spent 178 dollars on costs, leaving a margin of 7.54 dollars per passenger in 2016.

Kuuchi said 60 per cent of the profits made were collected by American airlines, followed by Asia Pacific and Europe, while the rest struggled to make ends meet.

The African governments in order to change the narrative must focus on liberalizing the region's airspace so as to increase both intra region and outside air travel, he added.

Kuuchi said the region must also improve in visa openness to attract more tourists, who contribute significantly to aviation traffic.

"The East African Community has done it fairly well and now it is credited for having the highest openness to visa index compared to other areas of the world. This is what the entire continent needs."

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