Growth, with much potential still unexploredBy the end of 2006, Africa was home to 14% of the world’s population with some 900 million people spread across more than 50 countries. Spanning 30 million square kilometres, the continent accounts for 20% of the world’s total land area, equivalent to the combined surface area of China, Europe and the United States. Such a vast expanse makes interconnecting travel within Africa by road and rail prohibitive. Therefore, expanding the air transport network appears to be the quickest and simplest way forward in linking the countries, their people and trade both within this massive region and with the rest of the world. African economic performance has been very robust in recent years with average growth of 5.2% per year between 2003 and 2006. This momentum has been achieved through (1) high export revenues and the resulting fiscal expansion, (2) rapid growth in foreign direct investment inflows, particularly to the energy sector, (3) expansion in the construction sector, (4) improved performance in agriculture and (5) increased tourism activities. The current global economic development and elevated natural resource prices provide the basis for an acceleration of growth in Africa. As a consequence, economists have continued to revise their economic forecast, with the latest being 35% higher than those prepared four years earlier. This echoes the repeated, upward revision of forecasts that have been necessary for China in recent years. Africa is expected to enjoy an average of 5% annual growth in real Gross Domestic Product (GDP) over the next 20 years, which is impressive when compared with the 3.2% average growth expected each year for the world as a whole. While political instability has been an issue in the region, many of the longer term disputes have now been consigned to the past. Combined with a world focus on the continent, this has led to actions such as debt relief for some nations and, therefore, a gradual improvement across the region. Trade activities with Africa have been driven by demand from countries with resource-intensive economies and almost double digit economic growth, such as China, India and a number of other industrialised nations. Tourism contributes to GDP and jobs in Africa, with an increasing number of countries taking advantage of the geographical position, history, flora and fauna, that make the region attractive for the growing eco-tourism market. This approach is already delivering benefits for countries like Kenya, Tanzania, Namibia and South Africa. According to the World Tourism Organization, with a 10% increase, Africa was the only region to experience a double-digit growth in tourism in 2006, with inbound tourism having grown 30% between 2003 and 2006. Tourism infrastructure continues to develop all over Africa. This is especially true in the north of the region, which has a more mature air travel market than other parts of the continent and where low-cost carriers are expected to further stimulate demand. Over the last ten years, the African international market has gained 80% more Available Seat Kilometres (ASKs) with African airlines retaining between 40% to 50% market share, despite strong competition from foreign carriers. As much as 70% of these additional ASKs have been added to the European market, leaving many opportunities to further expand the African international market. By more effectively capitalising on the African intra-regional market, the region’s carriers will be in a much better position to counter increases in capacity implemented by foreign airlines. Furthermore, consolidation, which has the potential for trend setting airlines to emerge alongside the introduction of new, more efficient aircraft, will allow African carriers to improve their competitive strength. The average age of aircraft in the African fleet, which is 15 years, has remained unchanged for the last ten years. With fuel prices remaining stubbornly high, improving competitiveness through fleet renewal will be a significant consideration for the region’s airlines. A growing regional economy, flourishing trade and tourism, greater liberalisation and the emergence of a low-cost sector will drive a strong increase in Africa’s passenger traffic. Airbus forecasts that revenue passenger kilometres will grow well above the world average, at 5.8% per annum over the next 20 years, with more significant growth of 6.6% over the next ten years. If Africa achieves full liberalisation, intra-regional traffic has the potential to grow at an impressive 8.0% per year. International markets are also expected to grow strongly. Traffic to North and Latin America will increase by 8.0% and 6.2% respectively, while traffic to Asia-Pacific will rise by a remarkable 8.3% per year over the next decade. Over the next 20 years, the African passenger aircraft fleet is expected to more than double to 1,319 aircraft. This is the result of strong passenger demand, which together with aircraft replacements, particularly in the single-aisle market, will result in inceased productivity levels as the region replaces its existing fleet with more efficient new built aircraft. |
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