EMIL GUMEDE | Why African airline tickets are sky high

High ticket prices are stunting the growth of African-origin airlines — and without finding a way to reduce prices, the continent’s airline industry will remain in turbulence.

Exorbitant ticket prices have for years been a critical challenge for African airlines, undermining the potential of the continent’s airline industry, which should be flourishing given the vast expanses, lack of sea, rail and road transport. African skies are less accessible to travellers than their global counterparts.

To illustrate the point, a one hour-trip between Johannesburg and Harare costs about R3,000 ($159) for a round trip, from Lagos to Accra costs R8,700 ($460), and from London to Paris R1,100 ($58), a flight from Singapore to Kuala Lumpur is R1,200 ($63).

Sadly, many African airlines operate as monopolies — many of them are state-owned and get away with charging monopolistic prices. Historically, the African aviation landscape has been marked by limited competition among domestic airlines. This lack of competition can be attributed to various factors, including overprotected state-entities, regulatory restrictions that make it challenging for new players to enter the market and the dominant pricing model African airlines use to recoup inefficiencies through higher ticket prices.

With limited public transport such as rail, road or boat, African airlines remain, for many, the most feasible mode of transportation within and between countries. The incredibly poor state of road and rail networks in Africa exacerbates ticket prices across the continent. With fewer airlines operating on many routes — and non-existent or poor alternative transport modes — Africans have to grudgingly bear monopolistic pricing.

Unlike Europe, Latin America or Asia, many African countries have a scarcity of direct flight connections. For instance, Namibia lacks direct flights to several neighbouring nations, including Mozambique, Zimbabwe, Zambia, Malawi and other key markets. Similarly, Botswana lacks direct flight links to countries like the Democratic Republic of Congo, Mozambique, Tanzania and Eswatini.

The vast expanse of Africa poses unique challenges for airlines. African airlines have high operating costs. Covering long distances, navigating diverse climates and serving remote regions can significantly drive up operating costs.

Fuel expenses, maintenance and personnel costs are all  influenced by the sheer size of the continent. The African airlines’ operating model passes these high operating costs on to passengers, which contributes to unaffordable air travel.

The cost of aviation fuel plays a pivotal role in the overall cost of airline operations. In the Nigerian context, fuel expenses account for more than 60% of flight operation costs. In comparison, fuel costs represent about 22% of non-African global airlines’ total operating expenses.

Crucially, many African airlines are ineffectively managed, which drives up their costs. Many are state-owned, and the airlines often do not focus on being competitive, efficient or profitable because competition is often restricted by governments or when they fail, they are often bailed out by public money. Appointments or providing supplies to state-owned airlines are often based on political or patronage considerations driving up the costs.

Many routes chosen by African airlines are often based on political considerations, rather than profitability or market needs — which drives up the costs of many airlines that have routes that cannot be sustained by market demands.

Many African governments restrict foreign competition in their aviation markets, which drives up the cost for consumers. While it is important to support smaller African airlines that may face difficulties competing with larger global carriers — this must be done without discouraging competition, ensuring that local carriers are efficiently managed and have capable personnel.

Private or foreign airlines that want to compete with local state-owned ones, often encounter bureaucratic obstacles and varying aviation regulations when trying to expand into new markets. For example, various airlines in South Africa are faced with long complicated procedures to start new regional routes as the South African government seeks to protect the interests of SAA.

To mitigate the impact of fluctuating fuel prices, many African companies have recently introduced better fuel cost management strategies. One approach African airlines could use, is hedging, whereby airlines purchase futures contracts to lock in fuel costs for a predetermined period. This practice effectively transforms the variable expense of fuel into a fixed one, providing airlines with more financial predictability. However, not many African airlines use hedging to reduce fuel costs. 

More recently, the phenomenon of “Open Skies” agreements — if implemented — could help to reduce African air price tickets. An Open Skies agreement is an international treaty between countries that removes restrictions on air travel, allowing airlines from signatory nations to operate freely within each other’s territories. Open Skies agreements, which liberate the aviation sector from restrictive regulations and foster co-operation between nations, could potentially reshape Africa’s aviation landscape.

Under Open Skies agreements, airlines gain the freedom to choose routes, set flight frequencies, and determine capacity based on market demand. This encourages fair competition, stimulates economic growth, simplifies operational procedures, and benefits passengers through more choices and competitive pricing.

Open Skies agreements promote competitive pricing and fair competition in the aviation industry. Airlines under these agreements have the freedom to set their own ticket prices based on market demand and compete on service quality. This leads to competitive pricing, potentially lower airfares, and improved services, benefiting passengers.

Open Skies agreements encourage collaboration through code-share agreements, which enhance connectivity by expanding routes, stimulate tourism and trade, and promote economic growth. Overall, Open Skies agreements balance competition and co-operation and could — if implemented by African countries, create a dynamic and customer-focused African aviation market.

The AU has attempted to introduce its own Open Skies agreement, called the Single African Air Transport Market (SAATM), to establish a unified air transport market throughout the African continent. The SAATM aims to liberalise air travel across the continent and reduce regulatory inconsistencies and complexities within African countries that are stymying access to air transport.

Sadly, harmonising and simplifying the myriad of aviation regulations in many African countries is proceeding at a snail’s pace. SAATM continues to be hamstrung by restrictive regulatory barriers in many African countries and African state airlines continue to prioritise political, prestige and patronage, rather than market or profitably or efficiency considerations, which keeps costs to run airlines high and therefore helps drive up ticket prices.

Emil Gumede is an aviation analyst based at the University of Sussex.