Algeria leads in Africa with 261 million USD in blocked airline funds, followed by XAF zone countries with 140 million USD. Ethiopia follows with 115 million USD, and neighboring Eritrea has 75 million USD. Zimbabwe rounds out the top five with 69 million USD in blocked funds.

52% of funds held by African states

African countries continue to hold a significant portion of blocked airline funds, totaling USD 880 million, which constitutes 52% of the global total of 1.68 billion USD. This obstacle remains a hindrance to the aviation sector’s recovery following the impact of Covid-19.

According to data from the International Air Transport Association (IATA), Algeria, the XAF zone countries, Ethiopia, Eritrea, and Zimbabwe are identified as the top five African nations where airlines face challenges in repatriating their profits.

Blocked currencies : Airlines suspended

« Consumers in these markets are bearing the brunt of these blocked funds, as airlines face uncertainty in continuing services without receiving payments », stated Willie Walsh, Director General of IATA. According to IATA, failure to recover these funds could result in disruptions to air services, further isolating Africa’s airlines from the global network.

In Nigeria, for instance, British Airways has ceased flights due to challenges in repatriating foreign currency, as government regulations prohibit conversion of local currency. This impediment prevents airlines from accessing revenues from ticket sales. Addressing this currency issue is crucial for the success of the « Focus Africa » initiative, which aims to establish sustainable air connections between the continent and other regions, fostering economic and social development.

Nigeria manages to release almost all its funds

Nigeria has now released 98 % of the total blocked funds, amounting to 831 million USD. This move has enabled airlines to repatriate their revenues in accordance with international agreements and treaty obligations.

Simultaneously, IATA is urging countries to leverage the strengthening African aviation sector to maximize benefits for local economies. This year, IATA forecasts that African airlines will achieve a collective net profit for the second consecutive year.

« African airlines are posting collective profits, which is positive news. However, these profits remain relatively modest and fall well below the global average. There are significant disparities across the continent, with many individual airlines still grappling with financial losses », stated Kamil Alawadhi, IATA Regional Vice President for Africa and the Middle East. He highlighted the challenges faced by the African aviation industry, including infrastructure gaps, high operational costs, burdensome taxation, and the lack of a comprehensive continent-wide multilateral traffic rights framework on a large scale. Addressing these challenges is crucial for the sustainable growth of the African aviation sector.

African airlines : Financial outlook for 2024

• Net profit after tax: African airlines should achieve a net profit after tax of 100 million USD.
• Profit per passenger: Profit per passenger should reach 0.9 USD, almost double the 2023 figure of 0.5 USD, reflecting improved operational efficiency and increased demand, but well below the global average of 6.14 USD.
• Profit as a percentage of sales: profit margins are forecast at 0.6 % of sales, compared with 0.4 % in 2023. This remains well below the worldwide net profit margin of 3.1 %.
• Growth in revenue passenger kilometers: Growth in revenue passenger kilometers is forecast at 8.5 %, indicating continued strong passenger demand in the region.
• Load factor: The load factor is expected to reach 61.9 %, slightly above African Airlines’ break-even load factor of 59.8 %.

Positive year for African airlines in 2023

IIn 2023, Africa achieved a significant milestone by recording no jet hull losses for the second consecutive year. Moreover, there were no fatalities in commercial aviation accidents throughout the year, as reported in IATA’s annual safety report. The continent’s accident rate stood at 6.38 per million sectors, marking an improvement from the five-year average of 7.11.

According to IATA, a key priority for Africa remains the implementation of safety-critical standards and recommended practices set by the International Civil Aviation Organization (ICAO). The Global Aviation Safety Plan (GASP) and the AFI Regional Aviation Safety Plan aim to achieve a 75 % implementation rate of these standards in Africa. Presently, only 12 out of the 54 African states comply with this benchmark. Strengthening adherence to these standards is crucial for further enhancing aviation safety across the continent.

Single African Air Transport Market

The Single African Air Transport Market (SAATM) aims to liberalize civil aviation across the continent by removing restrictions on traffic rights for African airlines. This initiative provides Africa with a comprehensive framework to boost economic growth. However, the implementation of SAATM has been hindered by the lack of action from many governments.

Moreover, an IATA analysis of 607 bilateral air service agreements (BASAs) in Africa highlights significant challenges in developing intra-African connectivity. More than half of these agreements face implementation constraints, underscoring a major obstacle to the growth of the aviation sector on the continent. To foster intra-African connectivity and stimulate economic development, African governments must actively support and adhere to SAATM through decisive actions and policy reforms.