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African airlines expected to turn a profit in 2024 African airlines expected to turn a profit in 2024

he International Air Transport Association (IATA) has called on African governments to capitalize on the robust aviation sector to drive economic and social development across the continent.

IATA recently announced that African airlines are expected to earn a collective net profit in 2024, marking the second consecutive year of profitability. This positive outcome highlights the sector's resilience post-COVID. However, the projected $100 million profit translates to just 90 cents per passenger, significantly below the global average of $6.14.

"Africa’s airlines turning a profit is good news, but the margin is thin and falls short of the global standard. Many airlines across the continent still face losses due to infrastructure deficiencies, high costs, heavy taxation, and the lack of a continent-wide traffic rights regime," said Kamil Alawadhi, IATA’s Regional Vice President for Africa and the Middle East.

Despite these challenges, IATA's Focus Africa initiative aims to strengthen the aviation sector, enhancing economic growth and social development. Alawadhi emphasized the need for continent-wide collaboration to achieve safe, efficient, and sustainable air connectivity.

2024 Financial Outlook Highlights

  • Net Post-Tax Profit: African airlines are projected to achieve a net post-tax profit of $100 million, marking a second year of profit post-COVID.
  • Per Passenger Profit: Expected profit per passenger is USD 0.9, nearly double the 2023 figure of $0.5, but still well below the global average of $6.14.
  • Profit as a Percentage of Revenue: Profit margins are anticipated to be 0.6% of revenue, up from 0.4% in 2023, yet significantly lower than the global net profit margin of 3.1%.
  • Revenue Passenger Kilometers (RPK) Growth: Forecasted RPK growth is 8.5%, indicating strong passenger demand, though slightly behind the expected capacity growth of 9.1%.
  • Load Factor: The load factor is expected to reach 61.9%, slightly above the 59.8% breakeven load factor for African airlines.

Focus Africa Priorities

The Focus Africa initiative addresses key challenges and opportunities within the continent’s aviation sector, focusing on six priority areas: Safety, Infrastructure, Connectivity, Finance and Distribution, Sustainability, and Future Skills.

Safety

Africa reported no jet hull losses or fatalities in commercial aviation accidents in 2023, with an improved accident rate of 6.38 per million sectors. The priority remains implementing ICAO safety standards, with the Collaborative Aviation Safety Improvement Program (CASIP) aiding this effort.

Connectivity

The Single African Air Transport Market (SAATM) aims to liberalize civil aviation by removing traffic rights restrictions. However, many governments have yet to implement necessary measures. Over half of the 607 bilateral air service agreements (BASA) in Africa are compromised, hindering intra-Africa connectivity.

Blocked Funds

Certainty in fund repatriation is crucial for connectivity development. In June 2024, blocked funds in African countries amounted to $880 million, with the top offenders being Algeria, the XAF Zone, Ethiopia, Eritrea, and Zimbabwe.

"The potential for aviation in Africa is immense. While it has 17% of the world’s population, it contributes only 2% to global travel. Collaborative initiatives like Focus Africa, involving partners such as AFCAC, AFRAA, and AASA, aim to overcome these hurdles, ensuring a safer, more efficient, and better-connected continent," said Alawadhi.