Investment opportunities in Africa’s aviation sector

Investment opportunities in Africa’s aviation sector

Source: Investment opportunities in Africa’s aviation sector | Newsday (Business)

The aviation sector supports more than five million jobs and $72,5 billion in gross domestic product in Africa.

BY PATSON CHAPEYAMA

The air transport industry in Africa has directly generated more than 300 000 jobs in 2016.

A total of about 35% of the total were in jobs for airlines or handling agents for example, flight crew, check-in staff, maintenance crew, reservations and head office staff.

Ten percent of the total worked for airport operators for example, in airport management, maintenance, security, and operations.

Forty-five percent were on-site in airports, at retail outlets, restaurants and hotels among others. Six percent were employed in the manufacture of civil aircraft including systems, components, airframes, and engines.

Air navigation service providers employed an additional 4%. There is a notable shift in the sector necessitated by robust economic growth, increasing urbanisation, influx of low cost airlines and tourism.

Despite representing 15% of the world’s population, the 230 airlines present in African airspace operate just 5,5% of the world’s commercial passenger and freighter aircraft and this is the evidence of a great investment opportunity.

Air travel is essential to the prosperity of Africa as it opens up opportunities that did not exist before.

Fostering the African aviation industry may be one of the driving forces of regional integration on the continent.

Better connected African countries and regions through a viable air transport industry could be the catalyst that can boost intra-African business, trade, tourism as well as cultural exchange.

Developing the aviation industry may also represent an opportunity to mitigate chronic transport problems faced by the 16 landlocked African countries.

The demand for air transport has increased gradually over the last decade with passenger numbers and freight traffic growing by 80% in 2015.

Africa is rated as one of the fastest growing continents globally in terms of international traffic, with an average growth rate of 6,1% compared to the global average of 5,8%, and 7,9% and 6,9% for the Middle East and Asia Pacific, respectively, while Europe, Latin America and North America are projected to record lower international passenger growth of 5%, 5,8% and 4,9%, respectively.

Infrastructure development investment gap

The World Bank’s Africa Infrastructure Country Diagnostics study provides analysis of infrastructure gaps, including for aviation, where lack of airline competition and the development of regional airport hubs are noted as important constraints.

Inadequate infrastructure: The air transport industry faces various challenges including poor airport infrastructures, lack of physical and human resources, limited connectivity, and lack of transit facilities.

Although substantial progress has been made during the past decade, Africa still lags behind other regions in terms of “soft” and “hard” infrastructure. It is, therefore, critical that African countries invest in the soft as well as hard infrastructure to support the industry.

Opportunities in investing in low fares private Jet craft

Private jet ownership is also expected to grow at a steady pace of 5,6% over the next two decades, according to a recent report issued by Boeing.

There are several elements spurring this growth. Africa is among the fastest rising private aviation markets due to a strengthening economy and a related increase in high net worth individuals. The population in Africa is expected to grow by over 70% over the next decade, hence the need to address transport challenges that comes with this growth.

The airline fares in the region are still high due to few players. Most airlines are monopolies and majority of them are government owned.

Investment opportunities in this sector is opening up as the private sector takes over by providing low fares private jets to ply regional routes.

 Patson Chapeyama is a young cutting edge writer and business growth-preneur. He can be reached on +263733551626/ patchapeyama@gmail.com

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