The following interview features Willie Walsh, Director General of the International Air Transport Association (IATA), who answered questions from journalists representing media outlets from around the world, including Capital, at the 81st IATA Annual General Meeting (AGM). Willie shares his insights on the challenges and opportunities facing the African aviation industry, the urgent need for regulatory reforms, and IATA’s vision for realizing the continent’s full potential in air transport. Excerpts;

Question: Given Africa’s ongoing challenges, such as high operating costs, how does IATA urge governments to implement policies? What are your thoughts?

William M. Walsh: We absolutely need to establish a single market in Africa. The only way for the continent to reach its full potential is by making it easier for airlines to operate within it. Everyone agrees that this is the right direction, yet no one is willing to take the necessary bold steps. If we don’t make these changes, Africa’s share of the industry will remain stagnant—2% ten years ago, 2% twenty years ago, and likely 2% ten years from now. The continent is missing out on significant growth opportunities due to the high costs associated with its fragmented market.

This year, we are seeing healthy growth in Africa at around 8%, which is promising, but it’s only a fraction of what could be achieved if we transformed the operating environment to allow airlines to operate more freely and cost-effectively.

Question: What are the main challenges IATA has identified in the southern African region? Given that our domestic and international arrivals dropped in Q1, what are the major challenges you’ve noted in this area?

Willie: The challenges are largely consistent across the entire continent. Operational costs in Africa are higher than average; for example, fuel prices are elevated compared to other regions, and airport charges are expensive relative to many parts of the world. Additionally, retaining skilled labor is a significant issue, as there are more attractive opportunities elsewhere, particularly in the Gulf region, where recruitment is very strong. This situation will likely worsen with the emergence of airlines like Riyadh.

The demand for skilled labor is immense, and while Africa is continually training skilled workers, it is losing them to other regions. The operating environment is particularly challenging due to limited aircraft availability. Airlines must constantly consider where to deploy their limited fleet, often gravitating toward markets that are more efficient and have lower costs, avoiding the external factors that can disrupt operations.

Despite these challenges, I firmly believe that Africa’s geography and demographics present impressive opportunities for growth. However, these opportunities are not translating into reality due to the various issues we’ve discussed. Additionally, governments often view airlines primarily as sources of tax revenue, which adds further to the operational burden faced by carriers on the continent.

So, I wouldn’t say these issues are unique to South Africa; they are prevalent throughout Africa.

Question: There seems to be significant disillusionment among airlines in Africa. Does the concept of a unified market still hold merit, or can we now acknowledge it as a failure and consider a new approach?

Willie: You could argue it’s a failure because, while an agreement is reached, it is never implemented. That needs to be acknowledged. I believe we shouldn’t celebrate the signing of an agreement; rather, we should celebrate its implementation. Clearly, there’s no reason to celebrate at this point. I still believe it’s the solution, and I suspect most people privately agree. There is a fear of what might happen when we introduce it, but I would argue that people shouldn’t be afraid.

Looking at other markets that have deregulated similarly, we see significant growth. In the US, Europe, and parts of Asia, deregulation has led to increased efficiency in the industry and provided airlines with more opportunities. This, in turn, tends to result in greater investment and expansion. It’s a shame we have an agreement that, if implemented, could create enormous economic value.

You’re right; I wouldn’t celebrate the current situation because it has failed. We need to continue to challenge the reasons why it hasn’t been introduced and encourage its implementation. We have a responsibility to highlight the benefits that would come from implementing IATA, and this is a role we see for ourselves.

Aer Lingus was a state-owned airline that had to confront new competition following deregulation in Europe, and it succeeded. It remains in business today. Most state-owned airlines in Europe that were willing to adapt to the new operating environment have thrived. In Aer Lingus’s case, its main competitor was Ryanair, the most aggressive and efficient low-cost airline in the world. If Aer Lingus can survive in that competitive landscape, it should inspire confidence in others that they can succeed as well, provided they take the right steps. Aer Lingus had to change to meet the competition, and as a result, the airline industry has seen significant growth.

During my tenure as CEO of Aer Lingus from 2001 to 2005, we expanded our network threefold in a short period. This required us to adopt different strategies and address our cost structures.

There were tremendous opportunities that we wouldn’t have been able to exploit in the previous operating environment.

Question: Don’t you think that white, wealthy government, political willingness for that certain term, is there any alternative solution, like advocating for airlines to collaborate more or share resources?

Willie: Honestly, while there is some benefit to that approach, it pales in comparison to the advantages of a truly open market.

To some extent, I would encourage people to consider that we haven’t done enough. Merely increasing Africa’s share of global aviation from 2% to 2.1% is insufficient. Africa should represent a much larger percentage—perhaps 10% or 15%—given its size and population. It’s unreasonable for a continent of Africa’s scale to only account for 2% of global aviation; its impact should be significantly greater. Achieving this requires a fundamental transformation in how the continent operates.

While our industry has low barriers to entry, succeeding within it is extremely challenging due to intense competition. We welcome the emergence of new airlines and hope they are well-capitalized to increase their chances of success. A hub airport can only function effectively if it has a hub carrier.

Developing a hub without a hub-based carrier is futile because hubs need feeder traffic and, more importantly, a network that connects to and from the hub. Establishing an airport may be straightforward, but making it a successful hub relies on having a robust hub carrier operating there.

Regarding your third question about domestic flights: if we consider true domestic flights within a single country, that’s one matter. However, I view domestic flights within Africa as almost analogous to domestic flights in Europe, creating a large, interconnected market. The challenge for many African countries is that demand is often too limited to support a sustainable domestic network. Additionally, many airlines want to operate jet aircraft, and many customers expect to fly only on jets. Without strong demand, maintaining a significant domestic network becomes impossible.

Now, regarding the pressures on countries like Mozambique, which currently lead the list of markets where airlines struggle to repatriate revenue, we believe that over time it will become self-regulatory. We caution governments about the potential consequences of this situation. Our role is to highlight these risks, but ultimately, it’s up to each airline to determine their response.

Typically, airlines begin by reducing service frequency to limit their exposure. They aim to maintain a level of service where revenues cover local market costs, minimizing the need to repatriate funds from the country. When this isn’t feasible, airlines often withdraw from the market, which negatively impacts the country by reducing connectivity and ultimately harms consumers who rely on those connections.

We can’t compel governments to release funds, but we must illustrate the consequences of inaction. If they fail to allow money to be released, they risk facing a situation similar to Nigeria’s, which once topped the list of problematic areas. Nigeria experienced significant success but eventually saw airlines withdrawing their services entirely. The only way for these airlines to return to the Nigerian market was to ensure they could repatriate their funds. This situation exemplifies the challenges of self-regulation.

Interestingly, during the decade from 2015 to 2024, Africa welcomed 57 new airlines, making it one of the few regions to achieve a net gain. Although 45 airlines failed during this time, the net result was a positive addition of 12 airlines. In contrast, the global aviation industry saw a loss of 12 airlines in the same period. Notably, from 2020 to 2022, during the COVID pandemic, 16 airlines were established, but an equal number also failed—this outcome is not surprising.

The current geopolitical climate, including tariffs and policies related to the U.S. and Europe, is influencing airline operations. Many companies are focusing on Europe and North America due to their importance.

Regarding potential domino effects in Africa, the aviation industry acis already grappling with high operating costs. The recent tariff increases have further burdened these costs, complicating efforts to achieve even a modest 2% growth. So far, tariffs have not significantly impacted passenger or cargo demand, with a few exceptions. The most notable exception is the Canada-U.S. route, which has seen a considerable decline in traffic. While some headlines claim a 70% drop, the reality is a low double-digit decline in bookings from both Canadian and U.S. points of sale, with a more pronounced reduction from Canada.

In contrast, transatlantic travel between Europe and the U.S. remains relatively stable, aside from a 1% decrease in March, followed by a 2.4% increase in April. Forward booking profiles look promising. Although there is a slight softening in bookings for the fourth quarter compared to the previous year, this is based on smaller volumes, as travelers are now booking much later.

Additionally, routes from the Middle East to the U.S. have experienced growth, and flights between China and the U.S. have increased by about 8-9% compared to last year. Overall, aside from Canada, we are not observing significant impacts at this time.