Brief report on IFC participation in Airfinance Cape Town Conference.
It was a pleasure to attend the recent Africa Airfinance Conference in Cape Town to meet continent’s major players and learn more about the most important trends of the African market development. Let us brief you on our general impression.
With 15% of the world’s population and 20% of the Earth’s land, Africa’s share in the global aviation is extremely moderate (around 3%). On the other hand its aviation sector has a vast potential for expansion due to continent’s growing and young population (predicted to double by 2050). Besides, there are long-term trends for positive economic development (throughout next 20 years average annual GDP growth is projected at 4%).
Meanwhile we witness some stumbles on the way to the bright future like: closed nature of most of the African economies preventing the route network expansion; high airport and fuel fares (the average for the first is around USD 50 per passenger and as high as USD 1400 per ton for the later); Yamoussoukro Decision on Africa’s open sky is still far from being implemented in full and continent-wide (however Ethiopia, South Africa, Kenya, Rwanda and Tanzania have joined the treaty and their airlines enjoy it – among the best examples are Ethiopian, South African and Kenya Airways); competition from non-African carriers is extremely high (Etihad, Emirates, Qatar Airways, KLM, BA, AF) – not least because of the favorable policy of some local civil aviation authorities; Cape Town Convention has been signed by less than a third of the African states, leaving fears of repossession and other risks to foreign lessors at high level; commonplace administrative scrutiny suffocates low-costers and start-ups.
Taking the most remarkable examples of the Africa’s success stories we would highlight Ethiopian Airlines, being among the largest carriers in the continent with 75 aircraft in fleet and average annual passenger turnover of 7 mln. According to long-term development plan Ethiopian should extend its fleet to 120 aircraft by 2025 and reach the average annual financial turnover of USD 10 bln. At present they expand at intra-continental market through joint-ventures like ASKY and Malawian, which means further development of regional aircraft fleet.
Prospects are good for the 100-seater jet sector which we like very much and work with (IFC holds orders and slots for Sukhoi Superjet SSJ-100). For instance, Royal Air Maroc has taken four Embraer E190s in 2014 and plans to expand that seat capacity in its fleet up to 20 aircraft in coming ten years. SA Airlink seeks for replacements for its twelve BAe 146. SA Express plans to phase out its CRJ fleet (-200 and -700, fourteen aircraft in total). EgyptAir is thinking to replace its twelve Embraer E170s. TAAG Angola Airlines also views hundred-seaters to expand its regional network. All that adds certain optimism for the big plans in Africa.