Airlines Problems and opportunities of the African Aviation Market

Brexit, the withdrawal of Great Britain from the European Union, poses major problems for European airlines: Airlines like the British Easyjet, which until now have operated bases all over Europe, are forced to apply for new AOC's outside Great Britain in order to guarantee a flight operation after the Brexit. In response, Easyjet applied for an Austrian AOC and registered a large part of its fleet in Austria.

What does all this have to do with the problems of aviation in Africa? The problems in Africa are of a very similar nature! While in the EU airlines from all member states are allowed to open bases at airports without restrictions, in Africa this depends on bilateral agreements between the respective countries. This means that if an airline from country A wants to offer flights from country B to C, negotiations between country A and B are necessary. Out of concern to weaken their own airline, which is often run by the state, only a few bilateral agreements are concluded. As a result, a low cost market with airlines operating bases in several countries does not exist in Africa so far. Initial attempts to develop an international African low-cost carrier have had only limited success in the last years. Fastjet for example, which operates flights from South Africa, Tanzania, Simbabwe, Mozambique and Zambia is not able grow in the way other international low cost carriers do to become successful. Other airlines, such as Ethiopian Airlines, are forced to set up new airlines in other African countries to gain access to their markets.

As a result, there are not enough connections between the different countries of the continent and the prices for flights are relatively high. Often travelers are forced to book a connecting flight over Europe or Asia if they want to travel between different African countries. That's one of the major reasons why non-African carriers currently cover eighty percent of the African market.

The African Union has recognised the problem and launched the "Single African Sky" project as part of Agenda 2063. Twenty-three African countries want to unite here and thus open their markets. After an announcement in January, however, the project has not yet been officially launched.

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Another problem of African aviation is the strict entry regulations of the different countries. According to the Africa Visa Openness Index, Africans require a visa for an average of 55% of the countries on their continent. Here, too, many countries are anxious to facilitate entry due to economic interests. In 2016, the African Union launched a project to develop the African Union Passport. The passport, which should be available to all people on the continent from 2020, is intended to facilitate travel within Africa.

The existing infrastructure is also causing problems for the airlines in Africa. With passenger growth of +7.5% in 2017, the continent's airports are facing major challenges. In some cases, the existing airports are not designed for the ever-growing number of passengers. In recent years, governments and increasingly foreign investors have invested more and more in infrastructure and especially in airports. Chinese investors and banks in particular have recently increased their investments in Africa. China frequently invests in infrastructure and receives access to raw materials from African countries in return.

Many African countries have decided to build new airports. One example is Bugesera International Airport in Rwanda. With around 700,000 passengers per year, the current Kigali International Airport has reached its capacity limit. In September 2016, the government of Rwanda signed an agreement with Mota-Engil of Portugal to fund, build and operate the new airport for 25 years under concession from the government. The Portuguese group agreed to provide $418 million to fund the first phase of construction. In August 2017, construction began. Completion of first phase of the US$828 million project is expected in 2019.

In the future, new and modern airports must play an important role in ensuring that aviation can continue develop as planned. If the freedom to travel and cooperation between the various countries are further strengthened in the future, it can be assumed that aviation will continue to grow strongly in Africa.