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‘Multiple taxes, low load factor to deny Nigeria, African carriers $200m in 2020’

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Latest Global Aviation Outlook Report published Monday by the International Air Transport Association (IATA), has pointed out two key factors that will deny African airlines sizable chunk of projected global net profit of $29.3 billion in 2020.

IATA, the clearing house for over 280 major airlines worldwide, said in its report that both Nigeria and African carriers will continue to face structural problems of high costs of operations encouraged by endless chain of government taxes and fees plus low load factors due to flying apathy in the continent.

Whereas the report was of the view that Nigeria and the rest of African carriers operating under harsh government taxes, will loss well over $200m, IATA statistics believe that the global airline industry will produce a net profit of $29.3 billion in 2020, which will be seen as a marked jump over a net profit of $25.9 billion expected in 2019.

“Economic growth in the region has been relatively good and is expected to rise in 2020, but markets are extremely fragmented and inefficiently served in the absence, so far, of a Single African Air Transport Market (SAATM). As a result, they are projected to show a loss of $200 million, similar to 2019,” the report read in part.

The report fears that SAATM effectiveness may not be seen in some African economies due to opposing government taxes and policy conditions from 2020.

However, aside Africa, IATA Outlook Report is upbeat that the return on invested capital is forecast to be 6.0 per cent; an improvement from 5.7 per cent expected in 2019.

Just as the net profit margin is forecast at 3.4 per cent; up from 3.1 per cent for 2019, overall industry revenues are forecast to reach $872 billion; a plus 4.0 per cent on $838 billion in 2019.

Besides, IATA projected that industry operating expenses are to jump to 3.5 per cent to $823 billion from $796 billion in 2019 even as passenger numbers are expected to reach 4.72 billion; up 4.0 per cent from 4.54 billion in 2019.

Also, freight tonnes carried are expected to recover to 62.4 million, a 2.0 per cent increase over 61.2 million tonnes carried in 2019, which was the lowest figure in three years.

Across performing economies of the world, IATA forecast averred that stronger economic growth should support passenger traffic (RPKs) growth of 4.1 per cent similar to 2019 (4.2 per cent) but below historical trends.

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