Airlines Associa,on of Southern Africa (AASA) Annual General Assembly. Mauri&us, 30 October 2 November 2014

Transcription

1 Airlines Associa,on of Southern Africa (AASA) Annual General Assembly Mauri&us, 30 October 2 November 2014

2 HUSSEIN DABBAS Vice President, Africa & the Middle East New Challenges for Avia,on Dealing with the Unexpected

3 Aviation is the most dynamic and progressive industry in the world

4 IATA IN BRIEF Global trade association for the world s airlines 240 passenger and cargo carriers 84% of global air traffic Meeting our members needs /11/03

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7 ECONOMIC INDICATORS & OUTLOOK: The AME Regional Outlook Fragile Economy, but on the improve The outlook is cautiously positive /11/03

8 Current conditions: a fragile global economy 25 %yoy Index, 50=no change Interna&onal trade (LHS) Industrial produc&on (LHS) Business confidence (RHS) Jan- 04 Jan- 06 Jan- 08 Jan- 10 Jan- 12 Jan- 14 Source: Datastream 30

9 But the outlook for Southern Africa is positive %yoy 10 9,1 9 Last 5 years Next 5 years 8,0 8 7,0 7 6,3 5,8 6 5,4 5,4 5,1 5 4,6 4,3 4,1 4,0 4,0 4,0 4 3,4 3,5 3 2,6 1, Source: IMF

10 Growth in air transport 5yr regional outlook %pa 7 6,3 Passenger Freight ,4 3,8 3,5 4,7 4,7 3,8 4,2 4,4 4,8 3,5 3 2,8 2,6 3, NthAm Europe A- Pac Mid- East LatAm Africa Industry Source: IATA

11 Average post-tax profit margin regional 5% 4% 4,3% 2013 (darker bars) & 2014 forecast (lighter bars) 3,3% 3% 2,6% 3,0% 2,4% 2% 1% 0,2% 1,3% 1,1% 1,6% 1,9% 0,6% 0,8% 1,5% 0% - 1% - 0,8% NthAm Europe A- Pac Mid- East LatAm Africa Industry Source: IATA

12 Per passenger profit by carrier region WORLD AVERAGE AFRICA Revenue Cost Net profit Revenue Cost Net profit $5.42 $1.64 $ $ $ $ Source: IATA

13 Africa $80 billion in GDP 6.9 million jobs 69.8 million pax

14 Benefits of aviation Africa Source: ATAG

15 1,4 Connectivity could be improved Connec&vity per $billion of GDP (PPP), ,2 Good Bad 1,0 0,8 0,6 0,4 0,2 0,0 Iceland Malta Cyprus UAE Hong Kong Singapore Jordan Mauri&us N. Zealand Qatar Panama Switzerland Lebanon Australia Malaysia Thailand Ireland Portugal US Latvia Vietnam Indonesia Spain Denmark Philippines Kenya Canada Norway Greece Finland Israel Netherlands UK Taiwan Morocco Italy Austria Japan Saudi Arabia Brazil Turkey Luxembourg Germany China Sth Korea Sweden Belgium France Ecuador Czech Rep. Egypt Colombia Mexico Sth Africa Hungary Chile Romania Peru India Bolivia Russia Argen&na Kazakhstan Nigeria Venezuela Poland Source: IATA

16 Africa lags on trips per head of population 10 Trips Per Capita Belize India China Seychelles Russia S Africa Botswana Portugal Slovenia New Zealand Hong Kong Spain United Kingdom France Italy Germany Singapore United States 0.01 Niger Nigeria Kenya Ethiopia ,000 20,000 30,000 40,000 50,000 GDP per Capita (US$) Source: PaxIS Plus, IMF

17 There is tremendous potential for Africa

18 But we should be realistic and focused

19 Ebola impact on total Africa ASKs to date 13 million ASKs (Dom+Int) Sep- 04 Sep- 06 Sep- 08 Sep- 10 Sep- 12 Sep- 14 Source: IATA

20 Africa the next emerging growth story

21 Key policy and industry challenges Safety Geopolitical uncertainty Safety, route disrup&on, oil/jet fuel prices Infrastructure Current needs and planning for the future Regulatory environment Role of government Liberaliza&on & consolida&on Incorporating technology E.g. e- freight, NDC Climate change Health

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23 Western-built Jet Hull Loss Rate per Region of Operator As at 30 September 2014 NAM LATAM/CAR EUR MENA AFI CIS NASIA ASPAC World IATA Members Accidents Update: As at 31 December Issued 1 September 2009 Accidents Update: Source: IATA As at 30 GADM Sep 2014

24 All Accident Rate per Region of Operator As at 30 September 2014 CIS NAM LATAM/CAR EUR AFI MENA NASIA ASPAC World IATA Members Accidents Update: As at 31 December Issued 1 September 2009 Accidents Update: Source: IATA As at 30 GADM Sep 2014

25 All Accident Rate for IATA Members vs. Non-Members (includes Eastern & Western Jet & Turboprop aircraft) Accidents Update: As at 30 Sep 2014

26 Safety Initiatives Ö Main challenge-high accident rate (Predominantly Runway Excursion) Ö IATA efforts directed at establishing Runway Safety Teams at AFI airports Ö Africa Safety Strategic Improvement Action Plan / Abuja Declaration Ö endorsed by the African Union Executive Council Ö aims to reduce the African accident rate by 50% by 2015 Ö calls for the completion of an IOSA by all African carriers Ö 20 airlines sponsored for IOSA Training in 2013 and 2014 Ö IATA Standard Safety Assessment (ISSA) introduced for smaller operators outside IOSA scope (aircraft below 5700kgs) Ö It can be answer to accident caused by operators outside of IOSA scope Ö Promoting concept of data sharing to enhance safety through Global Data Management program (GADM)

27 Aircraft Tracking Task Force Ö IATA announced the formation of a Task Force to evaluate options and deliver an industry position related to enhanced aircraft tracking by December 2014 Ö ATTF includes representatives from different aviation and airlines organizations, aircraft manufacturers Ö The aim is to develop recommendations to improve global flight tracking Ö The draft report is under internal review within IATA and by IATA s Operations Committee Ö Recommendations will be released to the industry and ICAO in mid-dec

28 Connectivity is the key condition for industry s success

29 Building connectivity within the continent

30 If 12 states were to implement Yamoussoukro decision 155,000 extra jobs $1.3 billion in GDP 5 million passengers

31 Aviation connects African businesses to world markets Source: SRS Analyser, non- stop connec&ons, July 2014

32 But connectivity could be improved in most of Africa Connectivity per $billion of GDP (PPP), Good Kenya S Africa Bad Nigeria Iceland Malta Cyprus UAE Hong Kong Singapore Jordan Mauritius New Zealand Qatar Panama Switzerland Lebanon Australia Malaysia Thailand Ireland Portugal US Latvia Vietnam Indonesia Spain Denmark Philippines Kenya Canada Norway Greece Finland Israel Netherlands UK Taiwan Morocco Italy Austria Japan Saudi Arabia Brazil Turkey Luxembourg Germany China South Korea Sweden Belgium France Ecuador Czech Republic Egypt Colombia Mexico South Africa Hungary Chile Romania Peru India Bolivia Russia Argentina Kazakhstan Nigeria Venezuela Poland Source: IATA s des&na&on- weighted measure of air transport connec&vity

33 In particular within the continent Source: SRS Analyser, non- stop connec&ons, June 2014

34 Africa is missing out on economic benefits Source: Intervistas

35 Fares on intra-african routes are high 0.19 Passenger yields and average trip length 0.17 Within Africa Passenger yields, US$ per RPK % Within S America Within Asia Within Europe Middle East- rest of world Africa- rest of world N- S America Asia- Europe N Atlantic Pacific Average trip length Source: PaxIS Plus, 2013 Q2

36 But load factors aren t 85% 80% 75% 70% Passenger load factors N American airlines Industry average African airlines 65% 60% 55% Source: IATA

37 Liberalization of intra-african markets is a key issue Source: WTO Air Services Agreement Projector

38 Despite successes where markets have opened Where African nations have liberalized their air markets, either within Africa or with the rest of the world, there have been substantial positive benefits: Kenya - South Africa (early 2000s): 69% rise in passenger traffic; Ethiopia s pursuit of more liberal bilaterals: On intra-african routes with more liberal bilaterals, Ethiopians benefit from 35-38% higher frequencies and 10-21% lower fares. ET one of the largest and most profitable airlines in Africa;

39 Despite successes where markets have opened Where African nations have liberalized their air markets, either within Africa or with the rest of the world, there have been substantial positive benefits: Morocco-EU open skies (2006): 160% rise in traffic; Number of direct routes between Morocco and EU increased from 83 in 2005 to 309 in Permission for LCC service between South Africa and Zambia (JNB-LUN): 38% increase in passenger traffic; 38% reduction in discount fares;

40 Understanding the benefits of liberalization Examine the impacts of air service liberalization for 12 countries in Africa: North: Algeria, Egypt, Tunisia East: Ethiopia, Kenya, Uganda South: Angola, Namibia, South Africa West: Ghana, Nigeria, Senegal

41 Understanding the benefits of liberalization

42 Passengers and shippers would benefits in many ways Greater connectivity: With liberalization, new routes would develop, increasing the number of direct connections within Africa. Greater convenience: Even where direct routes are operated, these are often less than daily services. With liberalization, greater service frequencies can be supported, providing greater convenience and choice for consumers. Time savings: New routes and greater frequencies will shorten the flying time between many cities. Fare savings: Passengers are expected to benefit from fare reductions of over 30%.

43 New routes and increased frequencies: Angola South Africa Direct services as a result of liberalization will greatly improve travel times for many passengers In many cases, travel times would be more than halved making both business and leisure travel more attractive

44 Increased connectivity would boost economic growth Increased air service and traffic would stimulate economic growth and employment in a number of ways: Aviation Sector: o 1,500 additional jobs in each of Angola and Namibia, 2,200 in South Africa. Tourism Sector: o Over 450,000 additional tourist visits across the 3 countries. $470 million in incremental tourist spend. Over 17,500 additional jobs. Impacts on Trade, Investment and Productivity: o Over $500 million in increased trade. o $111.5 million in incremental GDP and an additional 9,300 jobs in the wider economy. Overall Impacts for the 3 countries o In excess of $500 million of incremental GDP o Over 40,000 additional jobs

45 Even if liberalization is at a regional level Barack Obama: The markets with greatest potential are often those next door.

46 Africa as a whole would see significant benefits

47 Infrastructure development both physical and financing

48 Infrastructure/Operations Initiatives Ö Mobilizing states through operators to participate/register in ICAO AOC database Ö IATA working with AFI members to identify priority airports for implementing PBN procedures with APV Ö Working with airlines and Airports to promote CDO/CCO operations to save on fuel consumption and carbon emissions Ö Quality of Aeronautical Information has been identified as emerging safety issue Ö Promoting ICAO policies for ATC Charging principles which include transparency, non-discrimination, cost-relatedness and consultation with users

49 Taxes, Charges and Levies

50 Security

51 Major Initiatives Smart Security Pilot stage with 3 airports in the region Security Access & Egress 11 airports across AME Automated Border Control (ABC) Secure Freight - Pilot stage with 3 countries in the region E-Consignment Security Declaration (E-CSD) One-Stop Security (OSS) On top, we regularly run campaigns on matters such as airport development, facilitation etc. 51

52 VISION /11/03

53 Thank you /11/03