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While African aviation flies high, South Africa burdened by slow growth, SAA struggles

While the South African aviation sector has faced its share of hurdles - not least the uncertainty around the future of flag carrier SAA - the rest of Africa has seen a strong performance, according to the International Air Transport Association.

The industry body released its latest global passenger demand growth report earlier in January. African airlines' international passenger traffic climbed 4.9% in November, up from 2.3% growth recorded in October.

All regions in the world saw annual increases in passenger traffic. Passenger capacity among African airlines rose 2.8% in November compared to October and the load factor climbed 1.4 percentage points to 70.3%.

The report did not specify figures for South Africa - only that the performance of its aviation industry was impacted by certain "challenges". 

When approached by Fin24, the industry body, which cannot comment on the business of individual airlines, declined to be more specific by what it meant by these "challenges" in the aviation sector in South Africa.

However, an independent industry analyst, who prefers to remain anonymous, pointed Fin24 to the market uncertainty surrounding financially-distressed South African Airways (SAA) - which was placed in business rescue late in 2019 - as well as South Africa's flat-lining economy, as prominent negative factors that would likely have dragged down the combined overall performance of African airlines during the period under review.

Fin24 reported in December that 2019 African airlines continue to suffer due to high costs and are projected to show a loss of $200m (about R2.9bn) in 2020, similar to the loss expected for 2019, according to IATA. At the time the industry body said this is largely due to government taxes and fees, as well as low load factors.

As for the cargo sector, IATA's recent update indicated that African airlines posted the fastest growth (13.7%) of any region in November 2019 with an increase in demand of 19.8% compared to the same period a year earlier. Its data shows strong trade and investment links between Africa and Asia, which contributed to the positive performance.

Global passenger traffic results for November 2019 showed that demand rose 3.3% compared to the same month in 2018. This was unchanged from October's result and below the long-term trend. The global load factor climbed 1.1 percentage points to 81.1%, which, according to IATA was a record for any November.

Alexandre de Juniac, IATA's director general and CEO, says November's moderate result reflects the continuing influence of slower economic activity, geopolitical tensions and other disruptions, including strikes in Europe.

"On the plus side, positive developments in the US-China trade talks, in tandem with signs of improving business confidence, could support an uptick in travel demand. In the meantime, continued modest capacity growth is helping to maximise asset efficiency," he said in a statement.

IATA's 2019 study on the economic value of air transport and tourism to South Africa indicates that in 2017, 20.9 million passenger journeys were made to, from and within South Africa, with aviation and tourism representing $9.4bn (about R140bn) in gross value added. It accounts for 3.2% of South Africa's GDP and supports 472 000 jobs. Over the next 20 years the South African market could more than double in size, according to the study.

IATA identified three areas where government action can enable aviation to continue its growth trajectory and generate even more value in South Africa: Firstly, what the organisation deems to be harmful immigration policies need to be reduced. It also suggests that taxes and charges that are increasing the cost of doing business in the country needs to be reduced.

Iata suggests SA undertakes a harmonised strategic approach to policy-making with transport and aviation central to economic planning.

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