Soaring cost of flying cargo threatens EAC recovery

Everywhere around the world, reports indicate, the cost of flying cargo continues to rise and negatively impact on an industry that is yet to fully recover from Covid-19 pandemic.

The Africa Airlines Association (AFRAA), a trade association of airlines on the continent, indicates that expensive jet fuel, or aviation turbine fuel, and other expenses are weighing down on profits.

According to AFRAA, full-year revenue loss for African airlines for 2022 is estimated at $4.1 billion, equivalent to 23.4 percent of the 2019 revenues.

To stay in business, reports indicate, airlines adjusted their fares upward because of a sharp rise in the cost of jet fuel. The cost of jet fuel, it is reported, has increased 36 percent in the last six months, prompting airlines to add a special levy to protect their margins.

John Bosco Kalisa, the CEO of the East African Business Council (EABC), stressed that “this is terrible” as it will increase the cost of doing business in the region.

“Already the airlines are struggling to recover from devastating impact of Covid-19. Any additional charges will derail the recovery of both the cargo and passenger flights,” he told Doing Business.

The cost of jet fuel – which accounts for a significant portion of expenses involved in running an aircraft – hit a high of $1.25 a litre from $0.85 in January, piling pressure on airlines at a time when the demand for flying remained low as the industry still recovered from effects of Covid-19.

SOURCE: NEWTIMES