African aviation challenges – blocked funds, inadequate Sustainable Aviation Fuel policy, safety, market access & affordability

 

(Posted 21st November 2023)

 

 

 

Keynote Address by IATA Regional Vice-President Africa and Middle East Mr. Kamil Alawadhi at the #AFRAA55AGA 

 

Good morning. I am very happy to be here in Uganda for the 55^th AFRAA AGM. For 55 years IATA and AFRAA have been partners in supporting the development of air connectivity in Africa. We have worked together with our member airlines through many good times. We have found great strength in partnership through far too many crises. And whether we are in good times or in crisis, nearly every day, IATA and AFRAA are collaborating to help our members.

 

A few of the broad areas where, as your associations, we are working to deliver value for our members:

• Promoting regional air connectivity by working together with governments to support the implementation of the Single African Air Transport Market (SAATM). This work aims to (1) see the 23 countries committed to SAATM ratify the accord and (2) encourage more countries to join the SAATM.

 

• Liberating airline funds blocked by governments from repatriation by advising governments on best practices to clear backlogs. Since 2018, a significant amount of blocked funds have been repatriated from Angola, Ethiopia, Ghana, Nigeria, and Zimbabwe through working with the respective governments. Currently $1.68 billion in airline funds remain blocked across the continent.

 

• Improving operational safety through a data-driven, collaborative program to reduce safety incidents and accidents. This includes improving data sharing, prioritizing the accurate communication of aeronautical information, timely accident and incident reporting, and promoting IATA safety auditing programs including the IATA Operational Safety Audit (IOSA) and IATA Standard Safety Assessment (ISSA). With all IATA members on the IOSA registry and all AFRAA members on the IOSA or ISSA registry, this effort will focus on encouraging governments to adopt the use of IOSA in their safety oversight programs.

 

• Achieving reasonable levels of taxes and charges by focusing governments on the long-term social and economic benefits of aviation. Infrastructure in Africa comes with a high price tag; user charges across the continent are 8% higher than the industry average. Infrastructure charges must be set at levels that are fair, justified, and reflective of a value service proposition for airlines and passengers. Efforts through a pan-Africa fuel campaign have resulted in charges reductions in Chad, the Ivory Coast and Zambia over the last five years.

 

• Supporting airlines to achieve the industry’s goal of NetZero emissions by 2050. Advocacy with governments to work collectively in achieving international commitments like LTAG and CORSIA by adopting policies that will rapidly expand the supply of SAF and creating a policy framework that enables competitive prices for cleaner energies in preparation for ICAO’s CAAF/3 this month, as well as supporting airlines with their skillset and knowledge on SAF.

 

Earlier this year, AFRAA joined IATA’s Focus Africa initiative. AFRAA is absolutely instrumental and strengthens the Focus Africa coalition as we work to increase aviation’s role in Africa’s development. Our associations share a common vision – the development of a safe, secure and sustainable aviation industry in Africa that facilitates business, trade, and tourism and contributes positively to Africa’s economic growth and development. The continent is home to the world’s most rapidly growing population but accounts for just 2% of air passenger and cargo transport activity. The road to realizing aviation’s potential will be long, but with the strong partnerships we have, we can, and we will realize the needed change.

 

Every time we come together, we must have open and frank discussions about the challenges Africa’s aviation industry is facing and opportunities to collaborate in order to maximize efficiency and minimize the present patchwork of inconsistent, outdated and redundant rules and regulations.   It is this collaborative approach that will differentiate the outcome of Focus Africa from previous efforts.

 

Safety and flight operations

Safety, the core value of our industry.  While there has been marked improvements in ATM, communication, navigation, surveillance and the region’s overall safety performance, our goal as an industry is to always improve.

One of Focus Africa’s safety initiatives is CASIP, the Collaborative Aviation Safety Improvement Program with the objective to improve operational safety and to reduce the accident and serious incident rate across the continent of Africa.  This will be achieved through collaboration with over 10 partners from across the industry pooling resources to prioritize areas for address.

Aviation Data is fundamental to safety. With your help we are creating the world’s most comprehensive database for aviation safety through our Global Aviation Data Management (GADM) program. I encourage every airline to contribute its data. By contributing, you’ll enable us to have the complete picture of safety performance, assisting you evaluate your own operations, and for IATA to identify trends and emerging risks to prioritise actions for safety improvement.

Operational and environmental flight efficiency is an area the regional IATA teams are passionate about developing. Among many initiatives in progress, one of the most recent examples of demonstrating collaboration and commitment to drive efficiency and sustainability has been the drive towards implementation of efficient operations. IATA has been driving the adoption of Free Route Airspace (FRA) in the region for many years. Last month, we saw successful trials with Kenya Airways and Ethiopian Airlines carried out with the support of AFRAA. We also continue to champion contingency management in the region and look in 2024 to drive more change through Focus Africa to ensure resilience in our system.

Many of the achievements that are made in safety and flight operations are a result of years of effort and engagement between partners, and we call on all stakeholders to continue these collaborations in mutually beneficial and meaningful way. This brings me to another critical point which is participation.

For IATA to deliver what matters to our members operating in to and over the region, we need the voice of our airlines. I will be honest here, participation by African carriers in many of IATA’s action-oriented safety and flight operations regional groups from airlines in the regions is weak – we need more carriers from the African continent, in order to play a stronger role in driving an agenda that suits you. I urge AFRAA / IATA members to be part of the forums that discuss and debate to drive our activities under the governance of the highest level at IATA.

 

Blocked Funds

The second major issue plaguing Africa is blocked funds. As of September, $1.68 billion of airlines funds are blocked across Africa out of $2.36 billion globally. The numbers are alarming and the impact of this on connectivity is devastating.

Aviation is capital intensive. Cash flow is key for airlines’ business sustainability – when airlines are not able to repatriate their funds, it severely impacts their operations and impacts their decisions on where to fly. But the risk of blocked funds is not just limited to airlines; the negative impact extends to the countries blocking the funds. It impacts the country’s economy and its connectivity, and it hurts investor confidence and reputation. Aviation is not only an economic enabler, it is a pillar of modern economies.

Governments must prioritize aviation and find sustainable solutions in the clearing of blocked funds, and we continue to offer our support in any way we can.

 

High costs

Africa’s aviation industry is still recovering from significant losses due to the pandemic. To make up for this shortfall, governments should avoid imposing higher fees, levies, carbon taxes or new taxes on air transport, trade or tourism. These measures would only make air travel more expensive and less accessible in Africa, where the average airfare is already 30% higher than the industry average and the jet fuel cost is 10-20% higher than the global average.

Higher costs would discourage customers who are sensitive to prices, resulting in lower demand and revenue for airlines and other stakeholders in the aviation sector, such as airports, ground handlers, suppliers and air navigation services. They would also hamper economic development and limit the opportunities for job creation and income generation. High cost leads to high price, which reduces demand and growth in a price elastic market, and ultimately affects connectivity negatively.

The message is clear: governments should follow ICAO’s policies on charges and infrastructure and consult with airlines and industry to ensure a fair and cost-effective operational environment that benefits a more connected continent.

 

Sustainability

Ahead of ICAO’s Third Conference on Aviation Alternative Fuels (CAAF3) beginning today, we worked in ensuring that the outcomes of the conference align with the industry’s position which we are delighted to have AFRAA align with us on.

The Net Zero Roadmaps by IATA highlight the importance of SAF for reducing aviation emissions. By 2050, SAF could account for around 65% of reductions with the rest coming from new propulsion technologies, efficiencies, offsetting and carbon capture. A global framework for SAF is needed to avoid market distortion. The aviation industry and ICAO member States have committed to Net Zero CO2 emissions by 2050 and have adopted CORSIA to offset international aviation emissions. Four key elements must be included:

1. Governments enacting early and effective policy support to boost SAF production and enable functioning markets.
2. The adoption of a SAF accounting mechanism based on robust chain of custody models as per CORSIA SARPs.
3. Focus on feedstock diversification to expand production of SAF across all regions.
4. ICAO’s role to facilitate knowledge sharing for SAF ramp-up.

SAF is expected to do the heavy lifting in reaching net-zero by 2050. SAF industry will need to leverage feedstocks across almost every country where Africa has a huge advantage, improving energy security, independence, and resilience for the African continent. Africa holds significant potential for the development and deployment of SAF. For example, a comprehensive research study headed by WWF found that South Africa has the immediate technical potential to produce 3.2 to 4.5 billion litres of SAF annually, following the strictest sustainability requirements. But limited progress can be made towards African production of SAF without the right policy toolkit, starting with the need for supportive policy framework whereby governments formulate national strategic plans for achieving sustainable aviation and involve all stakeholders.

 

Closing

I am proud of the longstanding relationship and collaboration with AFRAA and I am certain, our work together through Focus Africa will lead to a safer, more efficient, secure, and better-connected continent. Let’s proactively work together and take Africa’s aviation industry to the next level, to reflect the potential of Africa African market.

Thank you.