ADDIS ABABA, ETHIOPIA – African airlines face hard times as a global economic downturn could spur the industry’s US and European giants to seek new markets on the continent, a pan-African body said Tuesday.
“With traffic in America and Europe decreasing, there will be fierce competition created in Africa as a result of more infiltration by foreign carriers,” Christian Folly-Kossi, Security General of the African Airlines Association, told AFP on the sidelines of a meeting in Addis Ababa.
“Many African airlines will be at risk of disappearing because of competition. You can not put a heavyweight and a featherweight together in a boxing match,” he explained.
Folly-Kossi said African carriers have already been affected, as several past agreements signed with Western counterparts had paved the way for a reduction of their market share in the continent’s fledgling aviation industry.
“I am preaching more consolidation, more political support and protection from governments,” he said.
In addition, soaring oil prices have compounded the industry’s woes, Folly-Kossi said, as most carriers use obsolete and fuel-consuming fleets.
According to the London-based financial firm JP Morgan, the global airline industry will spend nearly 20 billion euros (25 billion dollars) more on fuel expenses in 2008 than in 2002.
While a downturn is expected for most African carriers, continental heavyweight Ethiopian Airlines is expecting a boom in revenue.
Ethiopia’s flagship carrier generated 941 million dollars (743.3 million euros) during the 2007/2008 fiscal year, and is expecting the figure to rise to more than 1.2 billion dollars (948.2 billion euros) for the current year.
“For us, there has been a slight dip in imports and exports due to the financial crisis but we haven’t been affected that much,” Girma Wake, the company’s CEO, told AFP.
Girma said he expected a tightening of loan availability and drop in tourism but predicted Ethiopian Airlines would survive better than others.
“It might be difficult for other African airlines but for us, the more flexibility we get the better. Liberalisation is very important for our programmes to succeed.”
– AFP