Major challenges face southern African airlines

Southern Africa airlines are facing several challenges, including low economic growth, blocked revenue in countries lacking foreign exchange, and the need to comply with the European Union’s new personal data protection law.
These were some of the major findings to come out of the AASA annual general assembly and conference that was hosted by South African Airways at the Avani Victoria Falls Resort in Livingstone from October 11-14.
Airlines based in the sub-region will incur an estimated $300 million loss in 2018 while Angola, Mozambique and Zimbabwe were, at the time of writing, withholding millions of dollars in airline revenue due to foreign exchange shortages.
In the next five years, passenger growth in southern Africa will be marginal, averaging between 2% and 3% annually.
The AASA gathering was held at the time when there was global, regional and local political uncertainty, market instability, and rising costs were taking their toll on trade, tourism and economic development.
Dignitaries attending included Paul Steele, International Air Transport Association (IATA) senior vice president, member and external relations and corporate secretary; Zambia’s transport and communications permanent secretary, Misheck Lungu; and Poppy Khoza, director of the South African Civil Aviation Authority.
The conference heard that demand for air transport across sub-Saharan Africa will remain dampened by prevailing economic conditions, including gross domestic product (GDP) growth of 2.3%.
In his address to more than 200 delegates, AASA chief executive officer, Chris Zweigenthal, said it was projected that the aviation sector in Africa would register a 4.9% passenger growth annually over the next 20 years.
He said the figure for Africa would outpace the projected global expansion rate of 4.5%.
“For the aviation industry to develop, passenger growth must return to levels greater than 5% as soon as possible,” Zweigenthal said. “This increased demand will have to be met with increased capacity, either with more flights or bigger aircraft. It will also need an appropriate investment in airport and airspace capacity.”
As airlines grapple with low passenger growth, they have also suffered blocked revenue in Angola, Mozambique and Zimbabwe, which are all facing foreign exchange shortages.
“In September 2018, Angola was withholding $416 million, Zimbabwe $78 million and Mozambique $5million,” Zweigenthal said.
On the global scene, the new general data protection regulation (GDPR) enacted in the European Union in May 2018 to protect personal data for EU residents and visitors is causing problems to some African airlines.
Few African countries have drafted or promulgated cyber and data protection legislation, and where it has been done it is inconsistent.
Airlines, including those in Africa, are required to comply with the EU’s GDPR if they sell or market services and products to EU citizens and residents.
AASA has called on governments to adopt a consultative approach in formulating cyber and data protection legislation policies, as well as laws.
“Data security requires urgent attention,” Zweigenthal said. “Attacks and breaches of IT systems and databases have caused customers to demand greater diligence by airlines and other organisations. Personal data protection is a legally enshrined human right.”
In his keynote address, Steele, said technology was seen as the next driver of change in the aviation industry.
The good news is that 80% of Africans were now connected to mobile technology, which has led it to be a global leader in mobile banking.
“For airlines, these technologies offer added value and efficiency to better meet expectations of passengers,” Steele said.
He noted that customers expected an improved security experience, as they did not want to wait in long queues to get through security.
“The IATA-Airports Council International (ACI) smart security project aims to improve experience, efficiency and effectiveness of security. It was piloted by the Airports Company of South Africa at Oliver Tambo International Airport in 2017, but to date no other southern African airport has followed suit,” Steele said.
He explained that passengers hated mislaid and late bags, adding that IATA resolution 753 helped to track bags.
“South African stakeholders have set up a working group to oversee the full implementation of baggage tracking according to resolution 753,” Steele said.
Additionally, many African countries, including Zambia where the AASA gathering was held, are lagging behind in biometric identification at airports.
“New technologies, such as facial recognition, are beginning to revolutionise not only the way in which we get passengers through immigration but also how to process them through their journey. A recent test in Los Angeles, using biometric facial recognition to board passengers on an A380, saw boarding time halved from more than 40 minutes to just about 20, thus reducing waiting, stress and enabling on-time departure,” Steel said.
He added that passengers wanted real-time updates on travel information through their mobile devices.
However, other speakers noted that although information and communications technology (ICT) had helped improve efficiency in the aviation sector, social media had also had a negative impact on airline and airport operations.
South African entrepreneur, Mummy Mthembu-Fawkes, making a panel presentation on bridging the communication and delivery gap between the aviation industry and the customer, said numerous complaints on social media had emerged, partly because of customers who were born in this millennium.
Mthembu-Fawkes said that group of customers used ICTs abundantly and wanted things done quickly.
In addition, Zambia Airports Corporation Limited (ZACL) director of airport services, Agness Chaila, said some of the complaints that customers posted on social media on passenger experience were unfounded.
“We have members of staff monitoring social media. Sometimes I response to social media complaints at night,” Chaila said.
She was among panellists who discussed matching the passenger’s airport and airline expectation with their experience.
Although the aviation industry is facing challenges in southern Africa, there are some success stories in airport infrastructure development in some countries, including Zambia.
Chaila said Zambia decided to modernise airports so that the passenger experience matched with what was being achieved in other countries.
Zambia, through debt financing mostly from China, has mobilised about $1 billion to upgrade and develop three international airports. Work is expected to be completed by the end of 2020.
ZACL is building the $397 million New Copperbelt International Airport that will have a terminal with a capacity of one million passengers.
A new terminal building with a capacity of four million passengers and other facilities is being constructed at Lusaka’s Kenneth Kaunda International Airport at a cost of $360 million.
Another terminal building with a capacity of one million passengers has been completed at Livingstone’s Harry Mwaanga International Airport, through which AASA delegates arrived and departed.
However, developing and sustaining the aviation industry in Africa rests has much to do with the Africa Union’s Agenda 2063, which has identified the sector as critical, requiring open skies in the form of a single continental air transport market.
ICTs will have to be used extensively to improve connectivity, reduce costs, improve customer experience and comply with data protection laws, such as those in the EU.
The open skies concept was aptly put across by Khoza, who also called for gender balancing in the aviation industry.
Delivering a keynote speech on behalf of Dr Bonginkosi Nzimande, South Africa’s Minister of Transport, she said: “If operators in Africa do not take advantage of open skies, airlines from other parts of the world will overtake them. The time is now to make inroads so that interconnectivity hurdles within the African continent are addressed.”