Trapped airlines funds in Africa hits $670 million

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Airline industry officials continue to express alarm over the amount of foreign currency funds blocked by African governments, as airlines on the continent await repatriation of some $670 million in earnings.

Speaking at the opening of the 50th African Airlines Association (AFRAA) annual general assembly in Rabat, Morocco on Monday, the director general of International Air Transport Association (IATA), Alexandre de Juniac, highlighted the challenge to airlines and the traveling public. “This is a big concern for us,” he said.

“Many of these countries are facing severe economic challenges. But blocking airline funds puts air connectivity at risk. That, in fact, deepens economic challenges.”

Alexandre de Juniac
Director General and CEO, IATA

Juniac noted that timely fund repatriation serves everyone’s interest and called for urgent dialogue to mitigate the problem. After a series of negotiations with IATA, the governments of Nigeria and Egypt completely cleared their backlog of blocked funds. Zimbabwe, Angola, and Sudan continue to hold the majority of the blocked funds.

The IATA DG further noted that Africa has become an expensive place to do business for airlines. While the world’s airlines on average make $7.80 of profit per passenger, African airlines lose some $1.25 for each passenger carried. “Jet fuel cost is 35 percent higher [in Africa] than the rest of the world,” he said. “Taxes and fees are amongst the highest in the world. African governments view aviation as a luxury rather than a necessity. We must change that perception.”

AFRAA is holding its annual general assembly under the theme “Strengthening African Aviation in a Liberalized Environment.”

AFRAA secretary general Abderahmane Berthe noted that the high cost of operation in Africa threatens the viability of many African carriers. “Restrictive bilateral air service agreements are preventing market access and as result, foreign investment is not forthcoming,” he said. “Safety and security remain a challenge.”

FRAA secretary general Abderahmane Berthe addresses his organization’s 50th annual general assembly in Rabat, the Kingdom of Morocco

While 16 percent of the world’s population resides in Africa, the continent generates less than 3 percent of global passenger traffic. Despite the list of challenges, Berthe sees hope for the African airline industry. “There is a huge potential for growth,” he said. “The Single African Air Transport Market was launched in January 2018 in Addis Ababa, at the headquarters of the African Union. We have seen a lot of improvement since then.”

AFRAA expects Africa’s air transport industry to expand at a rate of 4.9 percent during the next decade and passenger traffic to double in the next fifteen years. “We are working to maintain a high level of safety and security in the continent and to have profitable airlines,” Berthe concluded.

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