Summary
The collapse of global air passenger has reduced cargo capacity and led to higher air freight rates for ACP horticulture and floriculture exporters. Analysis suggest air passenger numbers in Africa and Europe are unlikely to recover to pre-Covid19 levels fort five years, with Africa-Europe intercontinental air services likely to be similarly limited. East Africa is likely to be seriously affected, with exporters needing to explore the scope for: interim air freight solutions between East Africa and major EU27 and UK markets; the development of a commercially sustainable dedicated model for air freight shipments between east Africa and Europe and rethinking the basket of products air freighted to Europe given increased air freight charges. Regionally based air cargo services could usefully be designated as a sector where ‘strategic autonomy’ should be promoted, with international assistance being sought in pursuit of this goal.
With a range of ACP fruit, vegetable and cut flower exports to Europe depending on low cist cargo space on passenger flights to get their goods to Europe, the grounding of 95% of passenger flights has significantly disrupted exports to Europe. This is beginning to impact on future production for export.
Against this background analysis from the global consulting company ICF released at the beginning of June 2020 makes grim reading. The report notes how ‘demand for air travel could plummet by as much as 62%’ in the face of the Covid-19 pandemic, suggesting it will take up to 5 years for air passenger number to recover to pre-Civid-19 levels.
This process of recovery in air passenger numbers will be uneven and slowest in Africa and Europe. This does not bode well for the recovery of intercontinental passenger services between Africa and Europe. The analysis suggests the impact of the Covid-19 pandemic is likely to be more profound that the impact of the 2008 financial crisis. It highlights how ‘following the financial crisis of 2008, Europe scarcely saw an impact on air passengers, and recovered in just one year’, while following the Covid-19 pandemic air passenger numbers in Europe are unlikely to recover to pre-Covid-19 levels until 2024 (1).
The ICF report pointed out how potential air passengers ‘even if they are cleared to fly by national governments, and they have the money to do so, many will be left wondering if their respective trips are worth the health risk’ (1). The ICF report takes the view given ‘the unique nature of this crisis, the travel slump will last much longer than the coronavirus itself’. Indeed, it is suggested ‘the worst is yet to come’, with a long run reduction in demand and shrinkage in air passenger services.
Beyond the overall picture on future air passenger travel there is the question of the sequencing of opening inter-continental air passenger services. With Europe having a slower rate of recovery, comparable to a degree to that of Africa, EU-Africa passenger flights are unlikely to be priority routes for major international carriers. The ICF analysis for Africa suggests that by the end of 2021 air passenger numbers will have recovered to only 65% of 2019 levels, with this reaching 81% by the end of 2022 and 97% by the end of 2023. A similar slow rate of recovery for passenger numbers in Europe is projected.
This will have an impact on the number of passenger flights and will hold back the restoration of pre-Covid 19 levels of air passenger services between Europe and Africa.
The recovery of routes between Europe and Africa are unlikely to be favoured under the proposed ‘air bridges’ or ‘travel corridors’ approach to the reopening of air passenger services. Under this approach by mutual agreement between the governments concerned, travellers would be allowed to ‘fly in and out without coronavirus quarantine restrictions’, where comparable low levels of Covid-19 infection rates existed (3).
While health experts have suggested it may not be possible to establish such ‘air bridges’ even between the UK and Europe this summer (3), the widespread adoption of such an approach could carry serious implications for the resumption of passenger services between Africa and Europe. This would arise from the different timeframes for the spread of infections in Europe and Africa, and the ‘smouldering’ nature of the spread of the Covid-19 pandemic in Africa. According to the WHO’s Director for Africa, Matshidiso Moeti, Africa will face a longer and slower pandemic than elsewhere since Africans tend to travel less. This could see hotspots of infection in Africa remaining a reservoir for reinfections elsewhere in the world (4).
Furthermore, there is a growing debate on the net health and mortality benefits of lock down and other containment measures in Africa, given the impact this has on the delivery of primary health care services and access to food. For example, the London School of Hygiene and Tropical Medicine has estimated if lockdown ‘restrictions prevent vaccinations, in Africa 140 will die for every Covid-19 death prevented’ (5).
Similarly in Malawi, it is estimated that while lockdown measures sustained for 9 months would avert 12,000 deaths from Covid 19, the economic consequences of the lockdown as a result of people going hungry and being more vulnerable to Malaria and TB would reduce the number of avoided deaths by half. However, since Covid-19 affects mainly the old while malaria and TB mainly affects the young ‘the lockdown would actually cause a net loss of 26,000 years of life’. Overall, the Malawian National Planning Commission estimated ‘the costs of the lockdown outweighed the benefits by 25 to 1’ (5).
These considerations are giving rise to fears African governments could move towards easing lock-down measures while infection rates are still rising. Given the fiscal constraints faced and underlying differences in demographics and mobility, African governments are grappling with a range of difficult dilemmas, the resolution of which could reduce the scope for the establishment of ‘air bridge’ agreements and the renewal of air passenger services between Africa and Europe.
In this context the full recovery of air passenger services between Africa and Europe could be deferred for many years to come, with consequences in terms of continued limits on passenger-based air freight cargo availability and higher air freight charges.
| Comment and Analysis
The prospect of significantly less passenger based air cargo space for the shipment of horticulture and floriculture cargoes to Europe is likely to see higher air freight prices for some time to come (see companion epamonitoring.net articles, ‘Signs of Recovery in the EU Floriculture Sector but Air Freight Challenges Overhang East African Cut Flower Exports’, 9 June 2020’ and ‘Covid-19 Related Cancellation of Commercial Flights Beginning to Bite for ACP Horticulture Exports’, 7 April 2020). This could carry serious implications for the air freight model used for the delivery of fresh short shelf life produce to European markets from a range of ACP countries. Given the importance of exports of air freighted short shelf life products in their export trade to the EU, the long timeframe for the recovery of air passenger services could be most serious for horticulture and floriculture exporters in East Africa, most notably Kenya. Cut flower, vegetable, and fruit exports from Kenya account for fully 59% of the value of total exports to the EU in 2019 with airfreighted products accounting for an estimated 77% of these exports. While Uganda, Tanzania and Rwanda have a far lower dependence on fruit, vegetable and cut flower exports to the EU in their overall trade, their dependence on air freight for the conduct of this trade is significant, at an estimated 40%, 31% and 82% of total fruit, vegetable and cut flower exports respectively. In this context the hard reality that air passenger services between Europe and East Africa are unlikely to return to pre-Covid 19 levels for years to come will require: a) The establishment of interim air freight solutions between East Africa and major EU27 and UK markets. b) The development of a commercially sustainable dedicated model for air freight shipments between East Africa and Europe. c) A potential rethink of the products produced for air freighted delivery to European markets, considering the likely sustained increase in air freight charges which will be faced in the coming years. In terms of interim solution support for the reconfiguration of idle passenger aircraft for freight purposes alongside better organisation for the contracting of return cargoes would appear to be essential. This needs to be seen in a context where the collapse of air passenger-based freight services globally, means dedicated air cargo operators are now operating in a sellers-market, with available capacity being deployed to service the most profitable routes. This highlights a wider problem, namely, the dependence of the dedicated East African air freighted trade on international companies whose commercial calculations are rooted in global considerations. In this context, with Europe-North American and Europe-Japan/Korean routes generating per kilo freight revenues up to 6 to 7 time higher than East African routes, the only option for securing dedicated long term air freight capacity increases is through the strengthening of the dedicated cargo handling capacities of regionally based air lines in East Africa. This needs to be seen in the context of the kind of investment which in its €1.85 trillion EU Recovery Plan, the EC has described as essential in sector where ‘strategic autonomy’ needs to be promoted, in order to strengthen overall economic resilience. For East Africa the air cargo sector can be seen as just such a sector where funding needs to be mobilised to promote ‘strategic autonomy’, in order to strengthen overall economic resilience ‘see companion epamonitoring.net article, ‘What Lessons Can the ACP Draw from the EU’s Post Covic-19 Recovery Plan?’, 23rd June 2020). The effective planning of such an expansion will require an intensification of stakeholder dialogues, following a waiving of competition rules on collusion, to allow the development of sustainable business plans for the expansion of dedicated cargo services. It will also require the mobilisation of loans for the leasing or purchase of dedicated cargo planes, based on a viable business plan. This will require close public/private sector collaboration and may require seed capital from international partners (ranging from the EC and EIB to the World Bank and EU member states export credit agencies). This needs to be seen in light of the recent proposals for establishing ‘air bridges’, which would allow quarantine free travel between designated countries by mutual agreement between governments with comparable levels of Covid-19 infections. The adoption of such an approach to the reopening of air passenger services would mean it could be years before air passenger services between Africa and Europe are restored to pre-Covid-19 levels. |
Sources:
(1) Consultancy.eu, ‘Europe needs five years to reach pre-corona air travel levels’, 11 June 2020
https://www.consultancy.eu/news/4337/europe-needs-five-years-to-reach-pre-corona-air-travel-levels
(2) ITV news, ‘Air bridges between UK and low-risk countries could be introduced at end of June’, 2 June 2020
https://www.itv.com/news/2020-06-02/air-bridges-between-uk-and-low-risk-countries-could-be-introduced-at-end-of-june/
(3) Guardian, ‘Health experts cast doubt on UK hopes for holiday ‘air bridges’, 2 June 2020
https://www.theguardian.com/world/2020/jun/02/uk-air-bridges-with-holiday-destinations-impossible-warn-public-health-experts
(4) The Economist, ‘Why covid-19 seems to spread more slowly in Africa’, 16 May 2020
https://www.economist.com/middle-east-and-africa/2020/05/16/why-covid-19-seems-to-spread-more-slowly-in-africa
(5) The Economist, ‘Covid-19 is undoing years of progress in curbing global poverty’, 23rd May 2020
https://www.economist.com/international/2020/05/23/covid-19-is-undoing-years-of-progress-in-curbing-global-poverty