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African airlines stare at $4b loss over costly fuel

NAIROBI— African airlines are expected to record a $4.1 billion 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.

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 ($1.25) a litre from Ksh100 ($0.85) 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.

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

Safarilink chief executive officer Alex Avedi 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 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.

Source: NAM NEWS NETWORK

Author Since: Dec 08, 2021

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