COVID 19 and the collapse of Aviation industry in Africa
The aviation industry globally has been impacted by the shutdown of air traffic due to the COVID 19 pandemic with the African region being the hardest hit. According to International Air Transport Association (IATA) reports, the COVID 19 crises will see global airline passenger revenues drop by 314 billion dollars in 2020, a 55% decline compared to 2019. Containment actions as a result of the pandemic, has seen many countries and regions imposing travel entry bans, or other restrictions for non-citizens or residents of a nation.
Air travel in Africa is driven by tourism and contributes 10% of GDP and 5% of jobs. Tourist reliant economies have come to a grinding halt as international travel restrictions have limited tourist visits. Many tourist attractions in Africa, such as wildlife parks, historic and cultural sites, and museums are closed. The significant reduction in passenger numbers have resulted in reduced revenues for airlines.
Majority of airline operators in Africa are government owned. A decline in airline revenue puts pressure on governments to inject capital to sustain a struggling industry. The combination of high running costs and insufficient revenue generation will eventually lead to the need for business rescue.
African governments have had to implement economic interventions to mitigate the contraction in economic activity resulting from COVID 19. The prioritization of the industries to receive support may leave airline operators at risk. Privately owned airline operators will likely end up filing for bankruptcy or seek bailouts if they are not able to secure an income stream.
Airline operators have started implementing short term mitigations to lessen the financial impact of reduced revenue. These cost reduction initiatives include pay cuts, unpaid leave, and even suspension of contracts with some pilots and non-essential staff. Other actions include switching from passenger travel to cargo operations. Cargo operations include shipping goods and medical supplies across Africa and to other continents as a temporary survival measure.
The aviation industry in Africa is facing the unknown post the COVID-19 pandemic with the mammoth task to return to profitability and growth. With no return to normal air travel in sight the aviation industry is facing collapse. Governments in Africa need to review the restrictions placed on air travel as critical to national interest. Government support through bailout and restructuring packages are unsustainable and longer-term strategies need to be developed to create a profitable and self-sufficient industry.