The International Air Transport Association says business confidence in Nigeria is rising and helping to boost the growth of air passenger traffic.
IATA said in its latest passenger demand growth report that in January, Nigerian and African airlines recorded a rise of 4.9 percent in traffic.
“African airlines saw January traffic rise of 4.9 percent against a mixed backdrop for the region’s largest economies. In Nigeria, business confidence has risen sharply; while in South Africa, political uncertainty continues to inflict an economic toll. The region’s capacity rose by 4.2 percent, and load factor edged up 0.5 percentage point to 70.3 percent,” IATA stated.
According to the association, the global passenger traffic results for January 2018 showed that traffic rose by 4.6 percent compared to January of 2017.
IATA, however, stated that the results showed that the growth was the slowest year-over-year increase in nearly four years, as results were affected by temporary factors including the later timing of the Lunar New Year in 2018 as well as less favourable comparison with the strong upward trend in traffic seen in late 2016 to early 2017.
It also estimated that the impact of the later Lunar New Year-related travels period holiday represented around two-fifths of the slowdown in year-over-year growth for the month.
The IATA’s Director-General and Chief Executive Officer, Alexandre de Juniac, said despite the slow start, economic momentum was supporting rising passenger demand in 2018.
“That said, concerns over a possible trade war involving the United States could have a serious dampening effect on global market confidence, spilling over into demand for air travel,” he said.
He said international passenger demand growth slowed to 4.4 percent in January, from 6.1 percent in December, with all regions recording growth, led by Latin America and Europe while capacity rose by 5.3 percent and load factor dipped by 0.7 percentage point to 79.6 percent.
IATA had projected that a strong demand, efficiency and reduced interest payments would help airlines improve net profitability in 2018 despite rising costs, adding that it would be the fourth consecutive year of sustainable profits with a return on invested capital of 9.4 percent exceeding the industry’s average cost of capital of 7.4 percent.
The association however stated that African carriers would make a small loss of $100m in 2018 following a collective net loss of $100m in 2017.
It said that stronger forecast economic growth in the region would support demand growth of 8.0 percent in 2018, slightly outpacing the announced capacity expansion of 7.5 percent.
Juniac also noted that governments had roles to play in preserving the benefits of global commerce and ensuring adequate airport and airspace capacity to cope with an expected doubling of demand by 2036.
“Aviation is the business of freedom. It liberates us from the constraints of geography, distance and time, enabling us to lead better lives; and it makes the world a better place. For the business of freedom to grow the benefits it generates, we need borders that are open to trade and travel, and infrastructure to support the demand for connectivity. The government has the major role to play in this area,” he added.