Tony Tyler IATA
Text: Eric Johnson/Images: IATA, PwC, Miguel Torres Curado

Unclipping Africa’s wings

Airline trade association CEO Tony Tyler sees huge potential for African aviation – if governments can get it right. He also calls on all governments to support biofuels.

“Africa should soon start punching its weight on the stage of global aviation.”

As aviation regions go, isn’t Africa the world’s smallest?

In passenger volumes, Africa is the smallest. But it’s growing quite fast, so the opportunity is huge. Projected growth over the next 20 years is a compounded 4.9 % per annum. That’s as fast as the Asia-Pacific region. It’s considerably higher than the global average of 4.0 % over the same period. So Africa should soon start punching its weight on the stage of global aviation.

And it hasn’t punched its weight, has it? You said in a recent speech that two decades ago, the outlook for Africa was very similar to that for China.

The point I was making is that if governments adopt policies that drive aviation, then the potential benefits are huge. Also, that you can grow and simultaneously become safer. In the 1980s, Chinese aviation was not only a lot smaller, but also pretty backwards in terms of meeting international standards. Today, China is right up there with the best. So it’s wrong to think you can’t grow while improving quality and safety. For Africa, improving safety remains the number one priority.

Is Africa lagging the rest of the world?

It’s a mixed picture. Most major airlines and some smaller ones have adopted international standards and IATA safety audits: their track record is as good as any. But there are smaller airlines in Africa that bring down the average. This gives a distorted picture to the public. The man on the street hears of an accident in Africa, and he tars all African carriers with the same brush. He thinks they all have bad records. So we at IATA are working hard to instil better safety practices, especially at the smaller carriers, even though many of them are not our members. This is part of our mission. Besides, it’s bad for everybody when there’s an accident.

What is Africa’s safety problem?

Inadequate infrastructure, poor oversight and lagging adoption of global, harmonised standards – these are the main issues. Of course the extent of the problem varies greatly within Africa itself.

How can the challenge be overcome?

Under the Abuja Declaration of 2012 African governments committed to taking the necessary steps: strengthening civil aviation authorities, implementing safety management systems, certifying all international aerodromes and conducting safety audits. Governments are taking this seriously, and a lot is being done. The next step is for African governments to progress their understanding of aviation’s commercial realities. Africa is certainly not the only region to be overweight in restrictive regulations, onerous taxes and high user charges for generally poor infrastructure, but in some respects these issues are particularly acute. For instance, jet fuel in Africa is 21 % more costly than elsewhere – and jet fuel makes up 30 % of airline costs. Also, African countries have promised to open up markets within Africa, but they have been more liberal to non-African carriers than to their own. Only 20 % of intercontinental passengers to or from Africa travel on an African airline!

Can this be changed?

We’re trying to help African governments to understand the tremendous value of aviation, to the economy and to society. In a large continent with difficult terrain, the obvious transport choice is air. We’re also pointing out how other countries have succeeded. Look at Europe: at one time it had very restricted air markets, yet liberalisation has yielded spectacular results. Africa needs to try to build similar institutions to those that have worked in Europe – while being careful not to repeat some of Europe’s mistakes, particularly on the failure to integrate air traffic management, and its over-prescriptive regulatory regime. And there are other role models in using air travel as a driver of economic development. In parts of the Middle East, Singapore, Hong Kong and South Korea: they get it. They understand that a healthy aviation sector is a win-win for everybody.

Turning to the airline business overall, how is current performance?

Profits have improved steadily from 2011 to 2014, and our latest forecast for 2015 foresees record profits and revenues. Still, on average, airlines at best barely cover their cost of capital. In any other industry, this would be a minimum requirement, but for the airlines it’s a huge achievement.

Why is their profitability so poor?

This is an intensely competitive industry. IATA alone has some 260 members. And barriers to entry are low. Yet our business partners are very concentrated. There are two major aircraft manufacturers. There are three main engine suppliers. Airports are almost always regional monopolies. And governments see airlines as soft targets for taxation. We’re efficient at collecting taxes and fees for them, probably more efficient than they are on their own. There are a lot of people making a lot of money in aviation – just not the airlines.

“A 2014 study commissioned by IATA showed that intra-Africa liberalisation in 12 major African countries could create 155,000 new jobs and $1.3 billion in additional GDP.”

Carbon emissions – what’s the latest on that?

We’re looking forward to the climate change summit in Paris in December 2015. If this goes well, it will help aviation. But even if it doesn’t go well, airlines are pursuing a long-term strategy of improving efficiency, becoming carbon neutral and then cutting carbon emissions by 50 % from 2005 to 2050. The key to going carbon-neutral is world governments agreeing a global market-based measure to capture aviation carbon emissions. The body that will decide this, the International Civil Aviation Organization, will meet in a year’s time to agree the details, but there is a great deal of work to be done in the meantime. One area where we’ve made great progress is in using biofuels to power jet engines. Here, there needs to be government intervention to ensure that biofuel markets run smoothly, and for appropriate incentives to increase production. There’s a great benefit for governments. If they can ensure that the 200 largest airports run on biofuel, they’ll cover about 80 % of air traffic. You can’t get much more efficient than that – this is a real opportunity for improvement.

 

Tony Tyler

The UK national was born 1955 in Egypt, studied in England and has lived and worked on every continent except South America (and of course Antarctica). He started in the Far East at the airline Cathay Pacific in 1978, where he rose to CEO in 2007. In 2011 he became CEO at IATA, from which he will retire in June of 2016.

International Air Transport Association (IATA)

is the trade association for commercial airlines, representing some 260 carriers based in 117 countries, carrying 83 % of global air traffic. IATA works closely with the other leading aviation institution, the International Civil Aviation Organization (ICAO).

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