2020 was an exceptionally tough year in history and the air transport industry has been severely impacted by the COVID-19 pandemic. From the start of the pandemic, AFRAA responded rapidly by taking necessary initiatives and actions in close collaboration with key air transport institutions, partners and stakeholders to find workable solutions for resilience to the pandemic and for post recovery efforts. We are pleased to present to you the highlights of AFRAA actions and initiatives in this report.
AFRAA’s 9-pillar recovery plan
AFRAA developed a 9-Pillar recovery plan that outlines a framework of various areas of intervention, measures to be taken as part of urgent, immediate, and consistent actions for the survival and rebound of the industry. The 9 pillars include: Governments/States, Regulators, Suppliers and Service Providers, Customers, Maintenance and MROs, Cost Management, Cargo Operations, Workforce and Strategies to maintain business continuity.
The recovery plan was developed through deliberations and inputs from airlines from a webinar staged on 20 April 2020 on the theme: “navigating COVID-19 pandemic and preparing for recovery post-crisis”.
Financial support to the air transport industry is among the top priorities for the restart. AFRAA continues to seek the required financial assistance from governments to support the industry. We also continue to urge international and regional financial institutions for the allocation of adequate resources to support the recovery of the aviation industry in Africa. Both state-owned and private operators should be accorded the much needed support.
Appeal to Governments and Financial Entities for Support to Airlines
- 18 March 2020: AFRAA wrote to all Ministers in charge of Transport and Finance in Africa through the respective Directors General of the Civil Aviation Authorities with an appeal that African governments consider the compensation of inevitable losses, the alleviation of exogenous operating costs, and the subsidization of the African airlines. AFRAA has expressed its readiness to African governments to work with them on plans to support the airlines in their jurisdiction on applicable measures to assist their respective airlines.
- 06 May 2020: AFRAA, in collaboration with 4 international air transport and tourism bodies made an appeal to international financial institutions, country development partners and international donors to support Africa’s Travel & Tourism sector. Among other measures, the appeal called for the provision of:
- $10 billion in relief to support the Travel & Tourism industry and help protect the livelihoods of those it supports directly and indirectly;
- Access to as much grant-type financing and cash flow assistance as possible to inject liquidity and provide targeted support to severely impacted countries;
Under the AUC Task Force where AFRAA was among the participating organizations, 15 Recommendations were made for the recovery of the industry. Out of these, 6 were related to finance:
- States to establish national plans that will ensure restart and recovery measures;
- States and AUC to ensure access to a stimulus Continental fund estimated at USD 25 Billion;
- AU to mobilize States, DFI and stakeholders to contribute to the financial package;
- Governments to give adequate level of priority to aviation sector;
- States to strengthen dialogue amongst themselves to implement relief measures;
- States to ensure that National Air Transport Facilitation committees are provided with budgetary provisions.
Outcome of appeals: As at end of November 2020, a total of US$2.456 billion Support had been extended to airlines by various African governments including: Burkina Faso, Cabo Verde, Cote D’Ivoire, Egypt, Morocco, Nigeria, Rwanda, Senegal and South Africa.
AFRAA-UNECA-IATA webinar on financial support to airlines
AFRAA staged a webinar on 04 June 2020 on the theme: “Financial support to the African airline industry in the context of COVID-19 pandemic impacts” as part of efforts to engage with Development Finance Institutions (DFIs) and donors for potential support to African airlines.
During this important webinar, Afreximbank informed African airlines of existing opportunities under the bank’s Pandemic Trade Impact Mitigation Facility (PATIMFA) designed to assist member countries in managing the adverse impacts of financial and economic shocks caused by COVID-19 pandemic. African airlines had a unique platform to discuss requirements and modalities for engagement with Afreximbank with a focus on immediate requirements.
AFRAA and ECA survey and report on the financial impact of COVID-19 on African airlines
AFRAA and the Economic Commission for Africa (ECA) published a report on the financial impact of COVID-19 pandemic on African airlines and insights for the recovery from the liquidity crisis. This follows a survey that was jointly conducted by the two organisations to quantify the indebtedness of African airlines from COVID-19 impacts which forms basis for campaigns for the much-needed financial support.
Entitled: “Policy research paper COVID-19 and African airlines overcoming a liquidity crisis,” the report focuses on the indebtedness of airlines to banks, financial institutions, aircraft leasing companies and aircraft manufacturers. It therefore sheds light on the financing options and cost structures of the airlines. The value addition of the paper lies in its overarching perspective, which consists in analysing, through a financing lens, the COVID-19-induced challenges faced by African airlines and also the efforts undertaken to address these challenges.
The report reveals huge differences in the size and structure of the debts of airlines. This suggests that a one-size-fits-all solution may not be appropriate to address their liquidity challenges. Financial support must therefore be tailored to the specific features of airlines.
AFRAA’s contribution in AUC/AFCAC High Level Task Force
AFRAA contributed in AUC/AFCAC High Level Task Force comprehensive African Aviation Recovery Plan with recommendations to African Ministries of Transport. Highlight of recommendations:
- States to put aviation sector as a priority.
- States to put in place $25Bn fund to support aviation sector.
AFRAA 5-year strategic plan
AFRAA seized the opportunity to reinvent itself through the development of a 5-year Strategic Plan which is intended to guide in the delivery of the Association’s mandate: “To promote, serve African Airlines and champion Africa’s aviation industry”. The overriding objective of the plan is to assist and support member airlines to successfully execute their strategies, to attain superior results, in synergy with AFRAA partners and stakeholders.
Route network coordination and Cargo
Cooperation among African airlines will be a critical factor for the airline industry to rebound after COVID-19. One of the objectives for cooperation among airlines is to improve intra-Africa connectivity. Under the auspices of the Route Network and Cargo Committee, AFRAA developed a Route Network Coordination Opportunity Report based on comprehensive data on intra-African connectivity. The report provides partnership opportunities for each airline under each specific market.
The main objective of the initiative is to close the network gaps, increase load factors and enhance airline revenues through commercial cooperation such as codeshares.
AFRAA connectivity index
AFRAA developed a connectivity index which measures the level of possible international connections at African airports and the evolution of conectivity over a specified period of time. For instance, estimates from AFRAA connectivity index indicate that there was a 90% drop in connectivity in November 2020 compared to the same period in 2019. The connectivity index is a useful tool to determine the level of Intra-African connectivity and provide a ranking of the best performing airports in terms of connectivity.
AFRAA interactive capacity-sharing portal
As part of initiatives and efforts for the industry restart and recovery from the impacts of COVID-19 pandemic, AFRAA launched an interactive capacity-sharing portal for African airlines on 12 august 2020. The portal, which was created under the auspices of the strategic partnership between AFRAA and ACC Aviation Group, provides airlines access to market-leading services to support the development of Africa’s aviation industry.
Cooperation among AFRAA airlines is paramount for sustainability of the air transport industry. The portal, which is powered by ACC Aviation Group, gives airlines a platform to share capacity and increases daily utilization of aircraft. On one hand, operators have the opportunity to make offers of their aircraft availability and check the list of offered airplanes for ACMI (Aircraft, Crew, Maintenance and Insurance), dry lease sale and layover aircraft use. On the other hand, users can place requests for: ACMI, passenger charter, cargo charter and consultancy services.
Other appeals to governments
- Safe and cost-efficient reopening of borders
The safe opening of borders by governments and relaxing travel restrictions is necessary to stimulate demand for the restart of air travel. As at end of November 2020, a total of 5 African States still had full restrictions in place while 9 other African States maintained partial restrictions. Our call to governments is for them to safely re-open borders to travel, provide an alternative to current quarantine rules and address the high cost of testing fees, noting that 11 African States charge between US$ 50-100 while 7 others charge above US$ 100.
Appeal to Benin Government on COVID19 Test Fees: The Secretariat wrote to the Benin Government to appeal for the withdrawal of the compulsory health control charge of 100 000 CFA that had been included in the ticket prices and imposed by Benin Government during the period of COVID-19. The Following the appeal, the cost of COVID tests was removed from the ticket price and passengers are making the payment separately through electronic means.
2. Slot utilization rules waiver at airports
The Secretariat made appeals to various airports in Africa and across the globe on the waiver of slot utilization rules due to the exceptional circumstances of the pandemic. Various airports heeded to the appeals in view of the exceptional circumstances of the pandemic.
3. Harmonization of Health and safety protocols
AFRAA has called for systematic testing, harmonization, mutual recognition across countries and streamlining of health screening processes by governments and operators. AFRAA lauds the Phase II guidelines of ICAO Council Aviation Recovery Task Force (CART) which focus on the evolving technological and medical advancements that will enable safe reopening of borders. These guidelines provide practical, aligned guidance to governments and industry operators on a coordinated global basis.
AFRAA made appeals on 15 June 2020 to the sub-regional economic communities to urge their Member States to put in place the required measures so that the airlines can resume their activities as quickly as possible.
4. CORSIA baseline revision
AFRAA in collaboration with other industry stakeholders including IATA is urged the ICAO Council to take a decision to use 2019 emissions only for the determination of CORSIA’s baseline. As a result of the appeals, the Council of the International Civil Aviation Organization (ICAO) took a decision to use 2019 as a baseline for the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). This will allow emissions to stabilize at pre-crisis levels from 2021, ensuring that ICAO’s aspirational target can be met without imposing an inappropriate economic burden on international aviation.
AFRAA Monthly Industry Affairs Briefing Webinars
In July 2020, AFRAA launched a monthly series of industry affairs briefing webinars as part of the Association’s commitment to advocate for member airlines’ interests and keep them informed of the developments in the airline industry. These webinars also inform members and stakeholders of the initiatives and actions undertaken by the Association in its mandate to support its members, become key players and drivers to African economic development.
The monthly briefing webinars are staged every last Wednesday of the month at 13.00hrs East Africa Time (10.00AM UTC/GMT).
Studies and Consulting
As airlines redefine their business models, network and fleet, AFRAA also avails restructuring consultancy services through AFRAA Consultancy to assist airlines with short and medium-term plans.
AFRAA remains at the forefront of industry to support an efficient recovery of the air transport sector – we will keep the momentum high into 2021 and beyond in close collaboration with our key air transport institutions and partners. Recovery from crisis will require concerted actions, coordinated efforts and a collaborative approach with all stakeholders to ensure survival and business continuity of the industry.