African airlines in the month of October 2020 flew 76% fewer Revenue Passenger-Kilometres (RPKs) in October compared to the same period a year ago as their international RPKs were the most resilient of all regions, amidst modest improvements on Africa-Europe and Africa-Middle East routes.
However, airlines based in the Middle East penciled in soft performances, as international connectivity and long-haul traffic remained muted. The region’s RPKs fell by 86%yoy, with little improvement on the 88% contraction in September. Of the key markets, the smaller Africa Middle East was the most resilient, reporting a 77% decline in passenger volumes.
This was contained in the State of the region – Africa and the Middle East released by the International Air Transport Association (IATA) in December 2020.
According to the report, Industry-wide Revenue Passenger-Kilometres (RPKs) fell by 70.6% year-on-year in October, a modest improvement from the 72.2% decline in September. As in the previous months, the gain has been driven by domestic markets.
The report noted that the industry-wide Cargo Tonne-Kilometres (CTKs) of the region – Africa and the Middle East – fell by 6.2% year-on-year versus a 7.8% fall in the previous month while their pace of improvement softened modestly compared with September.
“Notwithstanding the softer year-on-year expansion in October, Africa remained the second-best performer of all regions after North America. The region’s CTKs rose by 2%yoy, compared with an 11% expansion in September. The main culprit behind the slowdown was the Asia-Africa market where CTK growth decelerated by 19ppts, to +4% year-on-year.
“Middle Eastern carriers registered a broadly unchanged CTK contraction from the previous month, at -2%yoy. The weakness was largely driven by developments on Africa-Middle East trade lanes where the contraction in volumes accelerated to -30%yoy,” said the report.
Under the industry capacity growth and load factors, airline seat capacity in the region continued to recover faster than RPKs. As a result, the industry-wide passenger load factor (PLF) reached a new record-low for October (60%). At the regional level, the PLF was at 48% & 39% for African and Middle Eastern carriers, respectively.
For freight, load factors remained in elevated levels amidst the ongoing capacity shortage that resulted from grounding of passenger aircraft. The CLF of African airlines was12ppts above a year-ago level while Middle Eastern airlines saw a 13ppts gain in their CLF.
IATA noted that its latest sample of Q3 2020 results confirmed that the negative impact of the pandemic on airline financials persists. Airlines in all regions of the world reported another quarter of sharp losses since the recovery in air travel demand was limited.
IATA noted that the passenger yield data should be interpreted with caution due to the small number of tickets being sold amidst the pandemic crisis.
In the area of GDP growth, IATA averred that in some selected countries particularly in South Africa, business sentiment ticked down as recovering demand resulted in a shortage of industrial commodities. The economic backdrop remained challenging in the UAE amidst the effects of COVID-19 while Saudi Arabia’s business activity showed a solid recovery from the virus.
The trade-weighted US dollar index fell by 2.5% in November amidst investors’ hopes that vaccines will accelerate the global economic recovery. Amongst the key regional currencies, the ZAR was the main mover this month, gaining ~5% against the US$.
Brent Crude oil and jet fuel prices also reflected positive news flow about the vaccine, rising by 2% and 4%, respectively versus October.