You are here: HomeNews2015 04 08Article 353510

Business News of Wednesday, 8 April 2015

Source: B&FT

Air transport slows for Feb

Airlines operating on the continent recorded the weakest international revenue-passenger-kilometres (RPK), latest International Air Transport Association (IATA) according to data released last week. RPK is a measure of sales volume for passenger traffic. It measures the gains made by airlines when a revenue passenger -- a traveller who actually pays for their ticket -- is flown one kilometre.

IATA’s Air Passenger Market Analysis -- February 2015, showed a two percent fall in international RPK growth for African airlines; the weakest among all the regions.

The significant reduction in volume, IATA noted, “Reflects adverse economic developments in parts of the continent, not least in its largest economy, Nigeria, which is highly reliant on oil revenues”.

Currently, peculiar challenges confronting various regions on the continent have adversely impacted air transport.

Indigenous Ghanaian carrier Africa World Airlines has been making in-roads in sub-regional flights with its daily service between Accra and Lagos. It had plans to commence an Accra-Abuja daily service and regional flight to Liberia and Sierra Leone and Senegal. However, the outbreak of Ebola changed the dynamics.

The same can be said about Starbow, which operates domestic flight from Accra to Kumasi, Tamale and Takoradi, and has plans of resuming its regional flight to Cotonou as well as starting new flights from Accra to Liberia, Sierra Leone, and Burkina Faso among others.

In the West African sub-region, the outbreak of Ebola last year disrupted the financial projection of African carriers as a result of drastic reduction in both in-bound and out-bound business and leisure passengers in the sub-region.

Having contained Ebola, with few isolated cases in the three most affected countries, the economies affected are yet to rebound from the disease’s devastating economic impact for the first quarter of this year.

Indeed, the entire region is also reeling from the disease’s impact on their respective economies. Over the past five years, international passenger throughput has been increasing by 10 percent yearly. However, the outbreak of Ebola and challenging economic conditions in Ghana impacted total international passenger throughput for 2014.

International passenger throughput for 2014 dipped by some 19,000 -- from 1.67million in 2013 to 1.65million in 2014.

Government, which is the biggest buyer in the economy, also limited official trips abroad as a result of rising expenditure as against revenue. This year, Ghana -- a net importer of crude oil -- has also had to revise its oil revenue estimate for 2015 as a result of falling crude prices.

Crude fell to a record low early this year and is still at its lowest price in years, selling at about US$56 per barrel.

Prescriptions by the International Monetary Fund to address the country’s fiscal deficit have meant constrained spending by central government. The situation is further compounded by the on-going load shedding that has and continues to impact businesses.

With an already large number of unemployed graduates, the heavy load-shedding in Ghana is affecting the operations of micro-, small-, and medium-scale enterprises.

Large multinationals have had to retrench some staff as a result of the on-going power rationing. All these have caused a significant reduction in general disposable income, especially among the middle-class -- which has been the driving force of the progress experienced in the country’s aviation sector. The report, however, forecasts an improvement in air transport in the coming months.

“Industry load factors are starting to show an upturn. Despite lower oil prices, airlines are adding capacity at a slower rate than the expansion in demand.

“The decline in oil prices over recent months should help support economic activity and passenger demand in 2015.

“In addition, recent improvement in business confidence, which had been easing throughout much of H2 2014, should help support growth in international travel.”

Join our Newsletter