Trade barriers stymie intra-Africa air growth

Africa’s gross domestic product (GDP) is expected to reach US$2.6 trillion by 2020 and air cargo into Africa is expected to triple by 2025. The largely untapped intra- Africa trade market could considerably boost these figures, provided that major trade barriers are removed. “A lot of infrastructural and other challenges affect landbased modes of transport, such as road and rail, but cargo can fly to almost any developed destination in Africa – and quickly,” said Nico Bezuidenhout, acting CEO at South African Airways (SAA), when he delivered the keynote address at the Air Cargo Africa 2015 conference in Johannesburg last week. He added that road and rail infrastructure was making headway, but not as fast as airport infrastructure development and investment in aircraft. “Furthermore, global airlines are establishing partnerships with regional and domestic airlines to expand their reach on the continent, creating increased air accessibility. By 2017, African skies will be open for business,” said Bezuidenhout. He commented that goods such as pharmaceuticals, mobile communication products, electronics and automotive parts were all in high demand in Africa, with that demand set to increase twenty-fold in some cases. “These commodities have always traditionally been moved by air due to their light weight, high value and an urgent demand from consumers,” Bezuidenhout said. Fitsum Abady, managing director of Ethiopian Cargo Services, agreed with Bezuidenhout’s optimistic picture, adding that the continent’s economic growth was the second fastest on the globe and that the continent’s GDP was projected to grow by around 6% per annum over the next decade. “Africa is no longer perceived by the global trading community as the dark continent but one with a bright future. However, there are still major trade barriers which could negatively impact airfreight growth and the industry needs to work with its other trade partners to address these,” he said. One of the major barriers, according to Abady, is the high operational costs for air cargo carriers. “We have a wide directional imbalance in the African freighter market, with low load factors on the global exports side, which adds to the operational costs,” he commented. Added to that is the fact that the jet fuel price in Africa is twice that of the global average. “In traditional global markets such as the United States, Europe and Canada, the average price of jet fuel is around US$2.50 per litre. In Africa it is over US$5,” Abady pointed out. INSERT & CAPTION By 2017, African skies will be open for business. – Nico Bezuidenhout