African airlines must “walk before they can run” as liberalisation nears

The 60- to 150-seat segment will be a catalyst to further growth, market penetration and airline profitability over the next two decades, a report from Bombardier Commercial Aircraft has claimed.

The manufacturer said the complete market to 2036 is expected to be 12,550 aircraft worth $820bn, based on 2017 list prices. The 100- to 150-seat segment will represent 70 per cent of the revenues, 6,800 aircraft valued at $580bn, followed by the 60- to 100-seat segment with 5,750 deliveries worth $240bn.

After a trend to take larger aircraft in the recent years, airlines will look at taking smaller aircraft in the future, the report added. North America and Europe will continue as the largest markets for new aircraft. Together they will take delivery of 5,700 aircraft or 46 percent of deliveries.

In Africa, Bombardier Commercial Aircraft expects the 60- to 150-seat aircraft fleet to grow by 2.4 times in order to meet the growing traffic demand.

Imed Ben Abdallah, head of airline marketing for the Middle East and Africa at Bombardier Commercial Aircraft, says liberalisation in Africa remains an issue, but the manufacturer expects intra-regional traffic to grow 4.6 percent annually over the next 20 years.

“The 60- to 150-seat aircraft fleet will grow by 2.4 times in order to meet the growing traffic demand,” he says.

“From a base of 340, a total of 550 new aircraft are needed, of which 300 aircraft will be delivered in the large regional aircraft category and 250 aircraft will be delivered in the small single-aisle category.”

Although international markets to and from Africa are mostly liberalised, intra-regional markets are still largely subject to restrictive bilateral agreements that create pent-up demand yet to be fully realised.

Ben Abdallah says that as the possibility of Africa’s first single air transport market moves closer, many African airlines must recognise this and learn to “walk before they can run”.

“They have to invest in the right strategy,” he says. “They have to start by building domestic and regional networks before flying internationally. That means starting with small gauge regional aircraft then up to bigger fleet once market matures.

“In addition, they have to replace aging fleets with modern, fuel efficient and right-sized aircraft. They have to focus on profitability and financial stability by prioritising profit per passenger over cost per seat.

“The average load factor in Africa is and has been in the mid-60s. There is an imbalance between offered capacity and demand.”

Ben Abdallah adds that feet right-sizing also avoids inflated fuel, crew and maintenance costs: “With fewer seat sales required for break-even, Africa's airlines can also protect yields while keeping fares attractive.”