Africa is classified as an emerging market and over the years its aviation industry has been characterised by consistent growth.
In 2019, the Airports Council International (ACI) World Annual Traffic Report recorded traffic in the region as 214 million passengers, 2.5 million air cargo metric tonnes and 3.2 million aircraft movements.
Growth has been consistent with the same report recording annual growth rates of +9.4% in the passenger market, +9.6% in cargo, and +4.2% in aircraft movements.
Compared to other regions of the world, Africa has experienced tremendous growth in the sector and the odds were still in favour for further growth which was much needed and brought a ray of hope for financial sustainability to non-viable airports in the region.
The ongoing COVID-19 pandemic has brought the global aviation industry to its knees and Africa has not been spared. Many countries have enforced several restrictions to international, regional and domestic travel in order to curb the spread of the deadly virus.
This has led to airports in the region experiencing a drastic decline in traffic resulting in enormous losses to airport revenue. Airports’ aeronautical and non-aeronautical revenue sources have plummeted as revenues have a direct relationship with airport traffic.
We have witnessed airfields become parking lots for grounded aircraft with terminal buildings housing deserted retail shops as a result of flight bans and cancellations.
African airports are estimated to lose 51.2% of their revenue in 2020. A large percentage of these airports struggled financially before the Pandemic. Most African airports had traffic below 1 million passengers per annum. These airports were non-viable, barely able to cover their operating expenses.
A high ratio of airport operating costs is fixed. This ultimately means more financial burden for the already struggling airports.
African airports face a variety of challenges, and the impact of the COVID-19 pandemic greatly amplifies those concerns with airport business sustainability being at its core.
Experts predict that it will take at least two years for the industry to return to its pre- COVID-19 glory and this might be the best-case scenario.
How will African airports recover from this crisis?
There is no shortcut or perfect response to this question but strategies must be put in place to ensure that these airports do not suffer more than anticipated.
Government assistance: Now more than ever the industry is clamouring for government support. Airports are major economic catalysts in a nation’s development and will play a great role in Africa’s recovery from the pandemic.
Aviation supports millions of jobs, enables trade as a third of all trade value is sent by air, contributes a sizeable percentage of the regions’ gross domestic product (GDP), contributes to social development, and the list goes on.
It is important for governments to acknowledge the huge role the aviation industry plays in economic development and support the industry in the form of financial grants, tax relief, and implementation of policies to support the stability of the entire air transport system.
Smaller economically non-viable airports should not be overlooked as they are essential as part of an integrated air transport network for safety, security, and socio-economic reasons.
Airport operations: Once busy airports are now a shadow of themselves as traffic has continued to decline in the past few months. Airports must work in collaboration with other aviation stakeholders to get through this pandemic. Airlines, regulators, business owners, and concessionaires must harmonize strategies to ensure that the industry remains sustainable.
The mode of operation as we know it has been altered and drastic measures have to be taken to ensure the safety of airport users in order to restore passenger confidence in air transportation.
Airport operations are likely to be characterised by several health measures like physical distancing, more frequent sanitization, intensive passenger temperature checks, health screenings, and so on.
These can put pressure on passenger facilitation causing operational inefficiency during peak periods. Without cooperation from all stakeholders, it will be impossible to achieve the operational competence needed for a speedy post-pandemic recovery in the sector.
Capital Expenditure: The growth witnessed by the industry in recent years – and a projection that air traffic will double by 2040 – led to the initiation of capital-intensive expansion projects by many African airports. This resulted in major CAPEX spending across the board.
With the advent of the pandemic, these projects are bound to suffer. Airport operators should re-examine their priorities, and in doing so, set urgent and priority expenditures at the front row. Plans should be developed to resume CAPEX projects at future periods bearing in mind lower revenue generation, cost of funding, and the looming foreseen economic recession in the period ahead.
Public Private Partnership (PPP) agreements for capital expenditure projects would need to be reviewed reflecting the impact of the pandemic on airport business, in determining a reasonable return for investors.
Cost saving and leaner operations: Most airports might have to make the difficult decision to run a leaner operating model in order to manage expenses. A high percentage of an airport’s operating expenses are fixed but some cost-saving measures should be put in place for variable expenses.
This might be in the form of staff reduction or rationing, terminal use restrictions for airports with multiple or large terminals, elimination of non-essential expenses, and so on.
This is a great time to develop and implement productivity and key performance indicators to aid in the efficient measurement of resources used to produce a certain level of activity. Examples of these indicators include
These indicators can show a clear picture of likely areas for the implementation of cost-saving measures.
While figuring out cost saving measures, African airports need to pursue non-traditional sources of enhancing non-aeronautical revenue. The global aviation industry is witnessing diminishing traffic and it is uncertain how long it will take to return to 2019 figures.
Alternative sources of revenue – not directly associated with passenger traffic – need to be established to support airport operations.
Airport leadership: There is not a more crucial time than now to have the best leadership in African airports.
Airport leaders must step up to the challenge by engaging their entire community to ensure the delivery of operational excellence in this difficult period of uncertainty.
Strategic decisions, without personal, political, and bureaucratic influences, have to be employed to guarantee the delivery of sustainable solutions to the airport’s unique challenges.
To win the battle that lies ahead, airport leaders require a passion that transcends the various tests of skills, experience, strength, and character that are emerging from the impact of the pandemic. Airport community engagement is paramount at this crucial time as experience has demonstrated that the aviation industry is stronger together.
The successful recovery of the African airport industry will require strong committed leadership to make certain that continuous innovative measures are developed and implemented.
Airport emergency plan: African airports must learn from this pandemic and make their emergency planning procedures tighter. Great emphasis should be placed on the lessons learned, and findings used to improve the already existing airport emergency procedures.
As airports cannot always predict emergencies, the best proactive option is to plan ahead. An effective emergency plan will minimize any potential disruptions to airport operations and ensure the protection of lives and property of all airport users.
In coping with the COVID-19 pandemic, innovation and adaptability are key to performing the most important task of providing an environment for the safe, secure, and efficient movement of passengers, cargo and aircraft.
Airports in Africa like the rest of the world are seeking ways to emerge rapidly from the COVID-19 pandemic. However, if attention is not given to key areas as a matter of priority, the recovery journey may become strained. This will diminish the hopes of many African airports in bouncing back to their pre-COVID-19 glory, blurring the realization of their previously anticipated bright future.
Africa needs an efficient air transport system, the responsibility falls on all stakeholders to ensure the industry not only survives but thrives at the end of this pandemic. We are stronger together.