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African Airlines Staring At Shs15 Trillion Loss On Costly Fuel

Kenya Airways and Ethiopian Airlines planes at Kamuzu International airport in Malawi. PHOTO | COURTESY

 

African airlines are expected to record $4.1 billion (UShs15.2 trillion) loss this year on the back of expensive fuel that is eroding the gains made by a recovering business.

 

Africa Airlines Association (AFRAA) says expensive jet fuel and other expenses involved in running the airlines will weigh down on the profits.

 

In Kenya, Kenyan airlines have had to adjust their fares upward because of a sharp rise in the cost of fuel, which accounts for a significant portion of the expenses involved in running the aircraft.

 

The cost of jet fuel has hit a high of KSh148 a litre at the moment from KSh100 in January, piling pressure on airlines at a time when the demand for flying has remained low as the industry still recovers from the effects of Covid-19.

 

“Full-year revenue loss for African airlines for 2022 is estimated at $4.1bn, equivalent to 23.4 percent of the 2019 revenues,” said AFRAA.

 

International Air Transport Association (IATA) had earlier warned that rising jet fuel prices were likely to cause airfares to increase this year, as airlines grapple with higher operating costs.

“We have had to adjust our fares because of expensive fuel that has increased our operation cost,” said Jambojet chief executive officer Ndegwa Karanja.

 

Mr Karanja, however, said the prices would be reviewed downwards in the coming days depending on the cost of fuel.

 

Safarilink chief executive officer Alex Avendi said the high cost of fuel has been passed on to the cost of tickets, making them pricier.

 

“There has been a significant rise in the cost of fuel since January and this has had an effect on the cost of tickets,” said Mr Avedi.

 

The projected loss for this year, however, is lower than what was recorded last year, a pointer that the aviation industry is recovering from massive losses witnessed in the last two years as Covid-19 disrupted the sector.

 

In 2021, African airlines cumulatively lost $8.6 billion in revenues due to the impact of the pandemic, representing 49.8 of 2019 earnings.

 

The Intra-African passenger traffic recovery was estimated at 74 percent in May due to the easing of anti-covid-19 restrictions in several African countries.

 

A total of 27 states in the continent have eased travel restrictions by removing the requirement for testing on fully vaccinated passengers.

 

The list of the countries include South Africa, Kenya, Nigeria, Mauritius, Senegal, Seychelles, Togo, Tanzania, Ethiopia, Sao Tome & Principe, DRC, Congo Republic, Zambia, Mali, Sierra Leone, Uganda, Niger, Somalia, Mauritania, Eswatini and Ghana.

 

Chinese authorities have set out plans to ease Covid-19 restrictions in stages for a return to a more normal life from the beginning of last month.

 

Eastern Asia and America are facing a rising number of cases of Covid-19. Europe is envisaging a new wave of contamination due to two Omicron sub-variants and has initiated measures for closer surveillance.

 

Worldwide, the cumulative number of Covid-19 cases has reached 523 million of which 12 million are in Africa. The global recovery rate is 98.8 percent compared to 97.9 percent in Africa.

 

The cases of Covid-19 in Kenya have been growing steadily since May with the positivity rate reaching a high of seven percent this week from a low of 0.1 in January.

 

AFRAA says, however, that across Africa, passenger traffic volumes remain low because of the high ticket cost and travel apathy.

 

“It is hoped that with the continued relaxation of lockdown and Covid-19 restrictions in many countries, traffic will increase as we approach the summer holiday peak season,” said the agency.

 

In the month of May 2022, AFRAA estimated that African airlines’ capacity deployed reached 76.6 percent of 2019 capacity.

-Business Daily

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