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African airlines to lose $40 million to covid-19 flight disruption

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- IATA records early signs of demand decline

Airlines in Nigeria and other African countries have been estimated to lose $40 million in revenue this year over flight disruption due to coronavirus spread.

Though the losses are in varying degrees, airlines operating on the Chinese routes will bear the larger brunt.

Meanwhile, the International Air Transport Association (IATA) announced global passenger traffic data for January 2020 showing that demand climbed 2.4 per cent – the onset of the covid-19 related flight disruptions.

The January data was down from 4.6 per cent year-over-year growth for the prior month and is the lowest monthly increase since April 2010, at the time of the volcanic ash cloud crisis in Europe that led to massive airspace closures and flight cancellations.

As of yesterday, Nigeria, Algeria, Egypt, and Senegal have recorded their first index cases, with scores under surveillance and contact tracing.

Airlines around the world have suspended or modified flights after the outbreak of the covid-19 coronavirus, which began in mainland China late last year and has now spread to more than 60 countries around the world.

The global hit to the aviation industry is projected to be $29 billion this year – a 4.7 per cent industry-wide drop in revenue per passenger kilometer, IATA has said.

The blow to African airlines could be as much as $40 million, IATA’s special envoy to Africa, Raphael Kuuchi, said at an aviation conference in Addis Ababa, Ethiopia.

IATA forecast in December that African airlines would make a loss of around $200 million this year, similar to 2019.

The Chief Executive Officer (CEO) of Ethiopian Airlines, Africa’s largest carrier, Tewolde GebreMariam, said the virus had slashed passenger demand. Ethiopian Airlines has faced criticism online for not cancelling flights to China like neighbours Kenya, Tanzania and Rwanda.

“The air travel demand for Ethiopian Airlines has declined by 20 per cent due to the corona. It is a big shock,” Tewolde said.

On Tuesday, Kenya halted direct flights from Italy’s northern cities of Verona and Milan, which usually head to the Kenyan coast. Northern Italy has seen Europe’s biggest cluster of coronavirus cases.

Last month, Kenya Airways and RwandAir suspended all flights to and from China until further notice.

The World Health Organisation has advised countries against banning flights, saying the outbreak was yet to reach the pandemic level.

IATA’s Director General and CEO, Alexandre de Juniac, said January was just the tip of the iceberg in terms of the traffic impacts owing to the covid-19 outbreak, given that major travel restrictions in China did not begin until 23 January.

“Nevertheless, it was still enough to cause our slowest traffic growth in nearly a decade,” de Juniac said.

January international passenger demand rose 2.5 per cent compared to January 2019, down from 3.7 per cent growth the previous month. With the exception of Latin America, all regions recorded increases, led by airlines in Africa and the Middle East that saw minimal impact from the covid-19 outbreak in January. Capacity climbed 0.9 per cent, and the load factor rose 1.2 percentage points to 81.1 per cent.

African airlines’ traffic climbed 5.3 per cent in January, up slightly from 5.1 per cent growth in December. Capacity rose 5.7 per cent, however, and load factor slipped 0.3 percentage point to 70.5 per cent.

Asia-Pacific airlines’ January traffic climbed 2.5 per cent compared to the year-ago period, which was the slowest outcome since early 2013 and a decline from the 3.9 per cent increase in December. Softer GDP growth in several of the region’s key economies was compounded by covid-19 impacts on the international Chinese market. Capacity rose 3.0 per cent and load factor slid 0.4 percentage point to 81.6 per cent.

European carriers saw January demand climb just 1.6 per cent year-to-year, down from 2.7 per cent in December. Results were impacted by slumping GDP growth in leading economies during the 2019 fourth quarter plus flight cancellations related to covid-19 in late January. Capacity fell 1.0 per cent, and load factor lifted 2.1 percentage points to 82.7 per cent.

Chinese airlines’ domestic traffic fell 6.8 per cent in January, reflecting the impact of flight cancellations and travel restrictions related to covid-19. China’s Ministry of Transport reported an 80 per cent yearly fall in volumes in late January and early February. Capacity slipped 0.2 per cent and passenger load factor plunged 5.4 percentage points to 76.7 per cent.

“The covid-19 outbreak is a global crisis that is testing the resilience not only of the airline industry but of the global economy. Airlines are experiencing double-digit declines in demand, and on many routes, traffic has collapsed. Aircraft are being parked and employees are being asked to take unpaid leave.

“In this emergency, governments need to consider the maintenance of air transport links in their response. Suspension of the 80/20 slot use rule and relief on airport fees at airports where demand has disappeared are two important steps that can help ensure that airlines are positioned to provide support during the crisis and eventually in the recovery,” de Juniac said.


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