$601m Airlines’ Revenue Blocked In 17 African Countries — Economic Confidential

COVID-19: $601m Airlines’ Revenue Blocked In 17 African Countries

The International Air Transport Association (IATA) has expressed worry over the trapping of $601 million airlines’revenue blocked in 17 African countries since the onset of COVID -19 over a year ago.

Blocked funds are owed to airlines that could not be repatriated to their country in routes they fly to.

According to the global airlines’ regulator the inability of these countries: Algeria, Angola, Benin,Burundi, Central African Republic, Eritrea, Ethiopia, Equatorial Guinea, Malawi, Mozambique, Nigeria, Sudan, Gabon, Cameroon, Chad, Congo and Zimbabwe to repatriate the large sum is creating unease for the carriers struggling for survival.

The global regulator has therefore urged governments in Africa to take steps in escalating priorities in areas not limited to: continued financial relief and the release of committed aid and blocked funds, safe reopening of

borders and planning for the safe restart of aviation business.

Besides, the steps to be taken by the governments, IATA said eight airlines in Africa were in dire financial straits as some have filed for bankruptcy or entered business administration over the 12 past months notwithstanding the $2.4 billion secured as government aid last year.

According to the global airlines’ regulator, most of the $2.2 billion was distributed through direct government loans , equity financing and cash injection.

Investigations have shown that over $30 billion pledged for air transport and tourism in Africa by International finance agencies and other institutions, including the African Development Bank (AfDB), African Export Import Bank, African Union and the International Monetary Fund (IMF), is however, yet to reach the airlines and other aviation stakeholders in need.

Speaking in an interview, IATA’s Regional Vice President Africa and the Middle East, Kamil Al Awadhi said : “African airlines posted a combined loss of $2 billion in 2020. This year we expect only a slight improvement of $1.7billion loss as the struggle with COVID-19 continues.

“Looking ahead it’s unlikely that traffic will return to post COVID-19 levels until 2023. Financial relief measures are still desperately needed, particularly those that do not increase the industry’s debt burden. Additional relief measures and activating existing pledges are essential.

“But, the industry could get better if government relief is administered in different forms. Cost reductions in terms of taxes and charges will help. And the release of the $601 million of airline revenues that are currently blocked from repatriation in certain governments would be an immediate boost in some markets.

“Governments will need a financially viable air transport sector to energize economic recovery from COVID-19. Many of Africa’s airlines were weak even before the crisis. Reducing costs and freeing blocked cash has long been a priority for African aviation. If ever there was a time for decisive government action on these issues, it is now.”

In a related development, African Union has taken leadership in preparing for the safe restart of aviation in Africa through its “Saving Lives, Economies, and Livelihoods” campaign.

The move is part of collaboration between different sectors of governments involved in the crisis including Ministries of Health, Transport and IT.

To drive the programme, IATA has been supporting AU’s efforts in urging governments in Africa to: replace quarantine measures with testing, accept a reasonable validity period of five days for COVID-19 testing

for travel and avoid COVID-19 vaccination as a mandatory pre-entry and exit criteria.

The IATA official said : “ Preparing the industry to safely restart after a year or more of disruption will take careful planning and advanced preparation. Governments need to develop the benchmarks and plans that would enable a safe, orderly and timely restart.

“That means working with governments in at least two areas: establishing operational restart plans, putting tools in place to manage new COVID-19 testing and vaccine requirements and testing and vaccinations will play a role as the pandemic comes under control and economies ramp up, including the travel sector.

“IATA has developed IATA Travel Pass to manage health credentials, protect against fraud and enable a convenient travel process. It is being trialed by a number of airlines and airports around the world, including Ethiopian Airlines and RwandAir in Africa. Another major African carrier is expected to come on board soon. IATA Travel Pass complements the work being done by the AU to safely manage travel.”

Regulatory statistics reveal a 69 per cent drop in passenger demand in Africa in 2020 compared to the global 66 per cent figures.

IATA data reveals that passenger demand is back to 1998 levels, with 61 per cent drop in capacity in Africa compared to 57 per cent globally. Air cargo was a bright spot for African carriers, cargo volumes increased by one per cent in Africa, translating into high cargo revenues, which provided needed support to airlines. African airlines lost $2billion in 2020 with carriers losing $49.63 for every passenger they flew in 2020 compared to a global loss of $66.04.

The IATA official said : “ Connectivity fell by 90 per cent at the low point of the crisis. Before the crisis there were 970 unique international routes at the low point of the crisis there were 100. And the density of those connections has become much thinner.Job losses could grow to 4.5 million in Africa in aviation and related industries.

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