Air transport is an important enabler to achieving economic growth and development.
Air transport facilitates integration into the global economy and provides vital connectivity on a national, regional, and international scale. It helps generate trade, cargo business, promote tourism, and create employment opportunities.
Global trends in air transport
As the global economy is becoming more and more connected, the air transport is one of the fastest transportation sectors. The air transport provides a total of more than 87.7 million jobs worldwide.
It directly generates employment opportunities within the airlines, air navigation services providers and airport operators, and additionally creates jobs via the supply chain in the transportation of goods and services.
Air transportation also plays an important role for tourism, contributing to economic growth, especially in developing countries.Air transport has necessitated the growth of the e-Commerce and technological advancement in the aviation industry.
The growth of e-Commerce in the air transportation industry is anticipated to augment the growth of the air transportation market globally. This is owing to the increasing economy which is turning to ecommerce for online shopping from consumers to businesses, consumer to consumer, and business to business by transforming into a modern service provider and anticipating consumers’ expectations.
For instance, AirAsia launched its new AirAsia Shop online platform in 2020, which enables customers to purchase duty free products and have them conveniently delivered to their doorstep within the next working day.
Innovation has spiraled in the air transportation with the introduction of automation. The growing adoption of automation techniques is expected to drive the global air transportation market in future.
This is due to the increasing developments in the technologies in every industry across the world. For instance, numbers of airports across the globe such as Pittsburgh International Airport (PIT) have adopted autonomous robots with ultraviolet (UV-C) light technology for cleaning and non-face-to-face automatic body temperature robots at its exit to decrease the risk of COVID-19 infections.
The major factors that may hinder the growth of the air transportation market in the world are the increasing fuel prices and high operational cost. Fuel costs account for approximately 15% to 30% of the total operating expenses. However, many companies have programs to evade the fuel costs by making contracts to lock in their costs for a fixed period of time, turning it into a fixed expense.
When the fuel prices rise, this contract helps these companies to save on the fuel.
When the pandemic started in China in 2020, it sent its shock waves to countries across the globe. And as the number of cases was on the rise, it enforced the governments across the world to take severe actions like border seals, lockdown, and implementing strict social distancing measures, in order to stop the impending catastrophe.
These actions had a dramatic impact on the economy, as the industrialist across the globe were forced to halt their production, leading to supply chain disruptions and impairing of various industries. Thus, plummeting the global markets. However, it is expected that continuous reopening of trade activities, the market will witness steady growth in demand in the coming years and more modern aircrafts and airports globally .
Air transport trends in Africa region
Airlines inside and outside Africa is upbeat about the growing opportunities and huge potential in the continent’s aviation industry. Africa is set to become one of the fastest growing regions and hubs for aviation in the next 20 years with an annual expansion of nearly and over 5%, according to the International Air Transport Association (IATA).
Driving this growth is international and African carriers adding more routes on the continent and scaling up their operations by acquiring or forging partnerships with other airlines operating there. In the past decade, Turkish Airlines has tripled the number of African cities it serves — from 18 to 56, while other Middle Eastern, European and Asian airlines, are adding routes as well.
Meanwhile, other African carriers are rushing to raise capital to fund their expansion, by offering to sell stakes in their companies to other airlines on the continent. For example, in 2018 the continent’s largest airline by revenue and profit, Ethiopian Airlines, signed a deal to acquire a 45% stake in Zambia Air, resurrecting the Zambian flag-carrier more than two decades after it’s shut-down.
Vanity airlines are also becoming a thing of the past on the continent, as African governments take steps to turn debt-laden, loss-making state airlines into self-sufficient operations, usually through restructuring plans or by selling them off.
Moreover, another sign that Africa’s aviation industry is witnessing an upturn is that low-cost carriers have begun serving second-tier cities on the continent, a trend that industry experts expect to continue to grow and make aviation affordable.
South Africa’s Kululabecame the continent’s first budget airline in 2001. Since then, others have jumped in, connecting cities that bigger carriers deem unprofitable to serve at prices the growing middle-class can afford.
The Africa’s air transport industry’s is growing, and its expansion will create millions of jobs in construction, airport technical support, maintenance, customer service, and other fields. Once aviation development hits a critical mass, it will become a major driver of Africa’s economy, including taking the continent’s hospitality and tourism industries to new heights especially with the growth of African Continental Agreements stimulating intra Africa trade growth .
Air transport trend in East Africa
The East Africa air transport has undergone tremendous growth. However, the East African region has one of the most expensive flight routes in the world per seat costs led by the Nairobi to Entebbe, Nairobi to Kigali and Nairobi to Dar es Salaam routes. The expensive rates on both passenger and cargo flights contribute to the high cost of doing business in the region and actions to make the business more competitive is the way forward for economic transformation in the region.
East African air transport service is regulated and is still fragmented, restrictive and expensive due to the existence of different Bilateral Air Service Agreements. The regulation of air services should be about safety and not what airline is travelling . Open Skies and more airlines to come into the region should be encouraged for investors and trade development .
Despite the countries having national carriers, tickets from one capital to another in the region are relatively high, giving room to foreign airlines to undercut them, making the business of aviation expensive for regional airlines. Over 40 percent of air ticket costs in the region comprise of regulatory charges, parking fees and other taxes.
A ticket for a flight from Burundi to Arusha is 1,000 dollars on an East African airline, yet to fly from Burundi to Dubai is $500. The EAC countries should optimize the Customs Union and the regional economic Common Markets. Unharmonised domestic tax regime affects the free movement of goods, services, labor and capital the freedoms of which are provided in the Treaty protocols.
Leaders in the region should review policies and fees to stimulate growth, air travel in East Africa has great potential with operators and passengers looking forward to new attractive business incentives and infrastructure development.
Air transport trend in Kenya
Kenya is the largest economy in east Africa and is a regional financial and transportation hub. Therefore, Air Transport provides the most efficient and quickest transport means to and from Kenya. The country’s perishable high value commodities like fish, flower, fruits and vegetables are exported by air and infact Nairobi leads as the highest cargo business hub last year.
Four airports handle international flights, Nairobi’s Jomo Kenyatta International Airport (JKIA), Mombasa’s MoiInternational Airport (MIA), Eldoret International Airport, and Kisumu International Airport.
The Kenyan air transport operation has had several challenges. However, despite the current challenges surrounding the future growth, of Kenya Airways, the International Air Transport Association forecasts more than double growth for the country’s air transport sector in the next 20 years.
Africa remains the biggest source of air passengers to Kenya, contributing 70 per cent of total visitors annually. Europe is next with about 585,000 passengers followed by Asia-Pacific 284,000, the Middle East, 233,000 and the United States 210,000.
Dar-es-Salaam is the busiest air route between Kenya and any city pair followed by Entebbe, Dubai, Addis and South Africa.
The Netherlands is the busiest cargo market for Kenya followed by the United Arab Emirates, Turkey, the United Kingdom and Saudi Arabia.
Air transport market in Kenya is forecast to grow by 249% in the next 20 years. This would result in an additional 11.8 million passenger journeys by 2037.
If met, this increased demand would support approximately 11.3 billion dollars of GDP and almost 859,000 jobs. As such, though the air transport in Kenya has faced turbulent times, the future looks more promising innovative partnerships and new aviation business models, aggressive teams and leadership pushes the implementation of making the the Africa aviation business and transform the airport development strategy be more successful and competitive.
Chris Diaz,
Trustee in Brand Africa and Business Leader.
