Welcome back to the last in our series of articles focused on the African Aviation Market. In part one we discussed the fortunes of two legacy airlines in the continent, and in part two we explored the challenges faced by African aviation to meet the demands of projected population growth. In this article, we compare the rate of aviation growth across different regions of Africa.
It’s widely accepted that aviation is a powerful generator of economic activity creating wealth in regions, jobs in local economies, facilitating trade and industry between countries, and perhaps most importantly connecting families around the world.
It is also accepted that the most successful aviation markets are those with the least regulation, where competition thrives, new entrants enter the market, taxation is limited, digital distribution established and where doing business is simple.
If those are the prerequisites for a successful and growing aviation sector, then Africa has perhaps yet to embrace the opportunities. And although there are selected markets and airlines that have done extremely well in recent times, the missed opportunities for development outweigh the success stories. But is that changing?
Improving Headline Numbers
Certainly, at the highest level of analysis it appears that three of the four IATA Africa regions are now at higher levels of airline capacity than in the summer of 2019 – certainly a positive sign. As increased competition enters the market, North Africa appears to be in the middle of a significant growth phase, while Southern Africa continues to struggle back to 2019 levels of airline capacity. It could be argued that the current market has a better match of capacity to demand and the loss of two large airlines has improved the wider market conditions for all parties.
Airline capacity growth of over 24% in North Africa ranks as one of the highest recoveries by an IATA region since Summer 2019. And although rates of growth in Eastern Africa and Central/Western Africa are closer to the 10% mark, it would seem to suggest that things are improving across the continent. Proportionally North Africa is the largest market with a 40% share of the continent’s capacity. Its proximity to more mature markets such as Europe and the Middle East has driven growth, especially in the low-cost sector but more on that later.
Part of aviation’s value is in connecting regions and facilitating connectivity between the major cities across those regions. One of Africa’s greatest challenges has always been connecting the major commercial cities on the continent without having to take a side trip to Paris, Madrid, London or Dubai. Despite what looks like positive capacity growth, the structure of the market hasn’t changed for many years.
- Central/Western Africa: two-thirds of all capacity is operated within the region and there is more capacity operated to other points outside of Africa (19.7%) than the 14% to the rest of Africa.
- North Africa: less than 3% of all capacity operated is to other regions of Africa and nearly four out of five seats are operated to other regions outside of the continent.
History, geography and politics have all played a part in the development of the aviation market and from the outside it looks like the four regions of Africa are more disconnected than ever. And while perhaps one or two African airlines have developed services across the continent they are certainly in the minority.
Controlling African Regions Density
Successful regional markets rely on a foundation of locally based airlines that have established networks and, in many cases, operated over several years in which they have both understood how the market operates but also how to survive the daily operational issues that occur. In some parts of the world, local regional airlines have continually failed, resulting in the market becoming over-reliant on overseas airlines that have no real strategic investment in the market and can at any point leave for other seemingly more attractive locations. The Caribbean would be a classic example of how a non-domiciled airline reliance can create continual market uncertainty for the local communities.
The chart below would suggest that across the four regional African markets, a large proportion of capacity is provided by locally based airlines, ranging from 45% in Central/Western Africa through to 74% local airline reliance in Southern Africa - where the long distances from other regions have historically limited overseas airlines interest in operating outside of the major European and Middle East markets such as London and Dubai.
Whilst it may seem that in each region local airlines have control of their destiny, a slightly deeper dig into the data reveals a different picture, where either one market or airline has a very high share of capacity operated.
In Eastern Africa, for example, 38% of all capacity is based around Ethiopia and the national carrier Ethiopian Airlines. Similarly, in Central/West Africa one-third of all capacity is from Nigeria, a market six times larger than the next largest in the region but where the largest airline, Air Peace, only has a 10% share of all capacity; indeed, Ethiopian Airlines are the second largest airline operating in the region!
With ninety-nine airlines operating scheduled flights from Central/Western Africa this summer and a total market of some 19.4 million seats there would appear to be perhaps too much competition or selective operating by some airlines.
With airline capacity now above 2019 levels (in three of the four African regional markets) and a considerable share of capacity in each region provided by locally based airlines, structurally the continent is in a better place today than it ever has been to finally realise its potential. However, there may just be one issue and competitive challenge that is emerging which will need to be faced sooner rather than later: the emergence of inbound low-cost carrier (LCC) activity.
The Threat of Low-Cost Airline COmpetition
For decades, markets in Africa have been protected from the low-cost airline competitive dynamic; expensive airport charges and regulatory hurdles frustrated this segments growth. But is that about to change?
- This summer 34% of all scheduled airline seats will be operated by low-cost airlines, that increases to 38% if China is excluded from the global count.
- In Western Europe 45% of seats will come from LCCs, and yet across Africa the current LCC share is 15% - of which nearly 90% is based around North Africa.
As the chart below shows, the low-cost sector has virtually no presence in three of the four African regions and represents a major market opportunity for established low-cost carriers as and when market conditions change, and that is already beginning to happen!
Since 2019, Ryanair has more than doubled its capacity to Africa. They are now the eighth largest airline operating to the continent, with all their capacity deployed into Morocco (with based operations in place). Opportunities for expansion elsewhere are boundless and, at some point, a tourism board or even Government will invite them for an exploratory discussion.
The collective Wizz Air operations have suddenly shifted from 13,000 seats on sale in Morocco during Summer 2019, to over 362,000 in Summer 2024 - with Egypt a real market of focus for the carrier from both their European and Middle East bases. And not to be outdone and with growth aspirations FlyNAS now operate over three quarters of a million seats to African markets from Saudi Arabia, and that’s before the Vision 2030 factor and their latest aircraft order.
Aviation has moved slowly in Africa almost being dragged across the continent rather than embraced as a means of creating greater wealth for everyone. Regulators, administrators and fiscal policies have frustrated the real potential that exists for decades, but is there finally a way forward for travel in the region? The idea of LCC travel might be imposed on some, while others, recognising the potential, could gain a competitive edge through proactive leadership. It’s clear the tide is slowly turning, presenting opportunities for some and threats for others.
Only time will tell who those winners and losers will be.
