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Jet fuel cost biting into profits


Rising jet fuel prices a major setback to African airlines

By Apolinari Tairo, eTN Tanzania | Jun 08, 2012

Rising jet fuel prices a major setback to African airlines
Image via topnews.in

(eTN) – Rising jet fuel prices are increasingly affecting profit margins of African airlines, while some airports lack modern and adequate handling facilities to meet standards to handle passenger and cargo aircraft, and while African governments are suffocating the airlines with big taxes.

The forthcoming Routes Africa Forum to be taking place on the Indian Ocean island of Seychelles next month, is expected to address and look at problems facing most African airlines, taking into account the rising jet fuel prices in Africa, which had so far affected performance on the continent’s air transport sector, while poor airport facilities and exorbitant taxes are also a matter of concern.

Aviation observers are hoping to see the delegates of the Routes Africa 2012 Forum in Seychelles addressing problems facing airlines operating in this poorest continent of the world, making them to record losses or little profit margins.

Commenting on such a situation, the Chief Executive Officer of Tanzania’s first private airline, Precision Air, Mr. Alfonse Kioko said airline operators are affected by increasing fuel prices and higher taxes imposed by the government. He said aircraft operators in Tanzania are badly hurt by rising jet fuel, which almost doubled in the past year, forcing some aircraft to fly to neighboring Kenya for re-fueling at prices 30 percent lower than Tanzania.

African airports, on the other hand, are poorly maintained and brought into modern handling ground for big airplanes. Mr. Kioko argued that unpaved airports and those without proper navigational facilities added to high costs of operating commercial airlines in Tanzania.

He said unpaved runways can even double the costs through added consumption of fuel or even causing damages to the aircraft, and push the airline to buy spare parts every now and then.

Precision Air, which was the first privately-owned airline to be established in Tanzania nearly 20 years ago, is currently the leading air carrier operating in Tanzania’s sky. With a total of 12 aircraft, Precision Air covers major towns in Tanzania, Kenya, Uganda, Comoros, and South Africa. From June 22 this year, the airline will extend its wings to Lusaka in Zambia, Lubumbashi in Democratic Republic of Congo (DRC), and later Harare in Zimbabwe. Mr. Kioko said the airline wants to open up central African countries and the rest of Africa.

The Lusaka and Lubumbashi route will help to cut time of travel and costs, while travelers are going to spend just 6.20 hours in the trip. Precision Air will operate 3 times a week with new Boeing 737–300 equipment. These 2 new destinations will bring the airline to a total of 17 routes plied in the African region.

The flights will operate from Dar es Salaam connecting via Lubumbashi, then to Lusaka. Tourists and other travelers from Tanzania used to have to get through to Zambia and DRC through Johannesburg in South Africa.

“We are planning to buy 5 brand new planes in 3 years to come. And this year, we are going to get 2 planes, and next year we will receive … 2 more equipment, and in 2014, Precision Air will receive the other one,” Kioko said.

It is anticipated that the new airplanes will make Precision Air meet its target of covering the whole of East, Central, and Southern African destinations.

Precision Air is, as well, planning to make Tanzania’s capital of Dar es Salaam a major hub for big continental air carriers for Africa and the world at large, to compete with giant airports in this continent. This would offer quick connection to West Africa and Asia, with more plans targeting European destinations, Mr. Kioko said.

This Tanzanian registered and fast-growing African airline plans to own 17 aircraft by 2014.

More than 6 million jobs and US$ 67.8 billion are supported by aviation in Africa. Africa is a continent where surface transport infrastructure is very poor.

Aviation experts forecast that air passenger numbers in Africa were expected to almost triple from 67.7 million in 2010 to over 150.3 million in 2030. Meanwhile, cargo volumes are projected to rise at a rate of 5.2 percent per annum.

The African continent can really take advantage of the benefits that aviation provides over the coming decades. Already, over 1.5 million livelihoods in Africa are supported through the trade in fresh produce to the United Kingdom alone. Tourism is another area for potential growth, providing long-term sustainable development of the economy, experts said in their published reports.

Taking advantage of the 7th Routes Africa 2012 Forum, airlines will be joined for by several airport authorities, airline associations, and tourism boards to chart out impeding issues affecting smooth growth of airline and tourism on this continent.

The Forum that will take place from July 8 to 10 in the Island’s capital of Victoria, will for the first time witness the attendance of the largest group of airlines with 16 carriers having already registered for the event, while several airports from Africa and outside the continent will be represented, according to Allain St. Ange, Seychelles Minister for Tourism and Culture.

Routes Africa, which is an annual event that gathers route development professionals from across Africa, the Middle East, and beyond, is being co-hosted by the Seychelles Tourism Board and Seychelles’ Civil Aviation Authority.

The list of delegates who will attend this event has increased to 61 participating members, and the organizing team of Routes Africa 2012 is anticipating even greater numbers of delegates for the Forum.

A total of 16 carriers have registered their active participation. These are South African Airways, Etihad Airways, Air Seychelles, Emirates Airways, Turkish Airlines, Qatar Airways, Mega Maldives Airlines, Nasair-Eritrea, Malaysia Airlines Cargo, Astral Aviation, Saudi Arabian Airlines, Rwandair, Zambezi Airlines, Ethiopian Airlines, and Iberia Airlines.

Three of these airlines – South African Airlines, the largest carrier in the African region; Arik Air, which is currently the sixth largest African carrier by available seat kilometer (ASKs); and Air Seychelles, the national carrier of the host country – will be delivering company’s briefing during Routes Africa, said Minister Alain St. Ange.



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