Ethiopia: Africa's airlines face tough future with Ebola spread to US - Analysts

Addis Ababa, Ethiopia (PANA) - The Ebola spread to the US has created fears that US aviation authorities could slap travel restrictions, which would signal a major crisis for African airlines struggling to make profits, analysts warned in a report on Thursday.

DaMina Advisors, an African political risk advisory service firm, warned that with the first US confirmed case of Ebola diagnosed in Texas and growing public pressure on the Obama administration to restrict US airline travel to West Africa, the financial viability of a number of already struggling domestic African airline carriers may be under threat.

Africa’s financially struggling airline industry, which supports over 7 million jobs and contributes US$80bn in Gross Domestic Product (GDP), may witness several financial insolvencies if the US and European Union impose travel restrictions to West Africa.

There are fears if the travel restrictions specifically target Nigeria, Ghana, Senegal and Cote d’Ivoire, the potential of crippling the region’s economy would increase.

“While a US and EU airline travel ban on flights from Guinea, Liberia and Sierra Leone may not materially affect the financial viability of the struggling West African airline companies, any flight bans on travel from larger economies of Nigeria, Ghana, Senegal and Cote d’Ivoire has the real potential of financially crippling several domestic African carriers and negatively impacting West Africa’s GDP for 2014,” DaMina warned.

African airline companies are severely hit by poor airport infrastructure, high costs of operations and high insurance premiums.

The business challenges make the airlines least profitable aviation companies globally, according to the International Air Transport Association (IATA).

African airlines are projected to return a profit of just US$100 million in 2014, with a net profit margin of only just 0.8%, the lowest of all aviation regions globally.

KLM-Air France, Lufthansa, British Airways, Turkish Airlines, Emirates, Royal Air Maroc, TAP, South African Airways, Kenya Airways and Ethiopian Airlines which operate dozens of daily flights to key West African hubs of Lagos, Abidjan, Accra and Dakar will also see a sharp fall in patronage.

This might arise from business passengers postponing trips, tourists looking elsewhere for pleasure and Diaspora returnees stay home until the Ebola pandemic is under control.

Meanwhile, financial viability of several domestic African airlines may be under severe threat as a result of the Ebola spread.

Currently, Asky Airlines (Togo), Senegal Airlines (Senegal), CAA (DR Congo), Camair-co (Cameroon), Afric Aviation, Rwandair, Starbow (Ghana), Equajet (Congo, Brazzaville), Air Cote d’Ivoire, Mauritanie Airlines (Mauritania), DanaAir (Nigeria), Medview Air (Nigeria), First Nation Air (Nigeria), SN2AG (Gabon), Africa World Air (Ghana), CEIBA Intercontinental (Equatorial Guinea), Discovery Air (Nigeria) and Overland (Nigeria), dominate the local routes in West Africa.

Analysts fear their survival could be endangered if air transport services within West Africa become severely restricted due to Ebola.
-0- PANA AO/MA 2Oct2014

02 october 2014 13:12:03




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