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High taxes ruin African airlines – IATA

By BusinessNews Staff on June 7, 2014

The International Air Transport Association (IATA) has attributed the failure of airlines in Africa to over taxation by states, which is also compounded by safety challenges.

Director-General and Chief Executive Officer of IATA, Tony Tyler, who spoke at the 70th IATA Annual General Meeting and World Air Transport Summit in Doha, Qatar on Tuesday, observed that in Africa there are high taxes and high cost of fuel on the continent than anywhere else in the world.

These, he said are reasons why airlines in the continent barely operate profitably and therefore have short life span.

Tyler also observed that another challenge facing airlines in the continent is safety and announced that IATA has rolled out measures to assist airlines in the region to meet the target set by African government in 2012 in Abuja, which stated that airlines operating in Africa must have IATA Operational Safety Audit (IOSA) by 2015.

IATA said it would be conducting two aviation days in Africa this year. One in Johannesburg and the other in partnership with African Airlines Association (AFRAA) in Algiers to send the message that aviation is the driver of development and should be supported by government because it creates jobs and provides the key for economic development.

The meeting to be attended by aviation agencies, airlines and other stakeholders would focus on the issue of safety and how to operate sustained and profitable airlines in the continent.

“We are working with 16 airlines in Africa to train them so that they would join IOSA. We want them to improve their safety. We have conducted training programmes for African airlines. The African government made declaration in Abuja that there will be mandatory IOSA for all African airlines by next year,” said Tyler.

IATA also called for airlines, governments, and industry stakeholders to guide the development of the commercial airline industry into its next century with a global mindset and based on a foundation of global standards.

“The key to unlocking aviation’s future potential is a global mindset supported by strong partnerships. Aviation connects people and business. Securing aviation’s future begins with some immediate challenges. Airlines must be profitable, safe and secure businesses. We need to provide efficient, customer-focused services. And sustainability must be integral to everything that we do,” said the IATA’s director-general.

Tyler’s comments were made in his state of the industry address which takes place as the industry commemorates the 100th anniversary of scheduled commercial flight.

“Scheduled commercial aviation began with a single passenger on a 23-minute journey across Tampa Bay, Florida on 1 January 1914. Since then, aviation has changed the world immeasurably for the better.

“This year, airlines will connect 3.3 billion people and 52 million tonnes of cargo over 50,000 routes, supporting 58 million jobs and delivering goods with a value of $6.8 trillion. In a team effort of committed partners, aviation literally moves the global economy. And by working together with a global mindset, there is enormous potential still to be achieved,” said Tyler.

In his keynote address, Tyler discussed several challenges that industry and government partners face as commercial aviation begins its second century.

“Our financial performance does not yet match the value that we deliver. Airlines are expected to achieve a global net profit of $18 billion in 2014. That’s a net profit margin of just 2.4 per cent or less than $6 per passenger carried,” Tyler added.

The industry’s profitability has strengthened from the $6.1 billion net profit earned in 2012 and the $10.6 billion earned last year. An improved industry structure is among the factors supporting strengthened performance.

According to him, “Our customers expect efficient global connectivity. But the regulatory structure prevents the global consolidation that has happened in other industries. By creatively working together with a global mindset—through alliances, joint ventures, franchising, and domestic consolidation—we are now seeing some significant results.”

Airlines, he said have continue to deliver great value to consumers, pointing out that in the last two decades, the number of city pairs served has doubled while the real cost of travel has halved.

Tyler reiterated the industry’s commitment to working together and with governments in the constant pursuit of improved safety. That commitment is bearing results in aviation’s safety record. In 2013 there were 29 million flights with Western-built jet aircraft and only 12 hull losses. “Flying is incredibly safe. And we are determined to make it safer,” said Tyler.

[This Day]

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