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AFRICAN AIR
TRANSPORT
MARKET BENEFITS AND FUTURE
REGIONAL FLEET REQUIREMENTS
NOVEMBER 2019
LIBERALIZING AVIATION
WITHIN AFRICA
During the past century, we have been able to see the extraordinary
ability of the free market to promote development and prosperity. This is
very well expressed in the recent history of China, and the rebuilding of
countries like Germany, South Korea and Japan after periods of conflict.
 
The free market environment provides fertile ground for better service
delivery and greater operational efficiency, both of which provide a
higher level of profitability for any sector.
 
In this context, the Single African Air Transport Market represents one
of the most important initiatives for Africa development since it smooths
the way for liberalization of traffic rights, capacity, frequency, and pricing.
These create more route opportunities and increase African integration.
 
Such evolution can represent billions of dollars of value-added to the
whole of Africa's economy. Its impact on tourism, for instance, is enormous
as it can improve access to Africa’s natural wonders, landscapes and the
hospitality of the African people.
 
Increasing connectivity would also enhance African access to faster
supply-chains, improving economic productivity, enabling investment
and innovation in a virtuous cycle of social benefits and wealth
generation.
 
Over the past decades, we at Embraer have had the privilege of
participating in the Africa Aviation story. First with our turboprops, then
with the ERJs, our E-Jets, and most recently with the E2s starting to
crisscross the African sky. 
 
Now we’re very excited about the possibilities behind SAATM, an initiative
that could represent an airborne revolution in Africa as its skies become
more open and free.

RAUL VILLARON
VICE-PRESIDENT
SALES & MARKETING

2 3
CONTENTS

Aviation In Africa
Economic Impact Rationale
Forecast Methodology
SAATM-Ready Country Forecast
EXECUTIVE SUMMARY Inter-connectivity Benefits
Data Sources
Contacts
A Single African Air Transport Market, or SAATM, will
accelerate achieving the main goals of the 1999 Yamassoukro
Decision that liberalizes traffic rights, capacity, frequency
and pricing to create more route opportunities and increase
African integration.

In a study for IATA, InterVistas Consulting measured


aviation’s economic impact. It founds that a 10% increase in
international air services would increase a country's GDP by
0.07%. That figure could reach billions of dollars depending
on the size of each country’s economy. Its impact on tourism
is enormous since air travel facilitates access to Africa’s
natural wonders, landscapes and the continent’s hospitality.

A 2014 study commissioned by IATA estimated the impact of air


transport liberalization in twelve countries. Full implementation
of the principles of the Yamassoukro Decision would grow air
traffic by 18%.

Aviation is an engine for growth and development. It creates


jobs, stimulates economic growth, and fosters integration.
Increasing connectivity would enhance African access to faster
supply-chains thereby improving economic productivity, enabling
investment and innovation in a virtuous cycle of social benefits
and wealth generation.

Embraer aircraft are ideal for connecting Africa and for reaching
new markets. They offer exceptional passenger comfort and better
profitability for airlines. Now, with the arrival of the E-Jets E2s,
those benefits are even greater.

4 5
AVIATION IN AFRICA
From ATAG, Aviation Benefits Beyond Borders (2018)

161 1,277 349 36 98 1,130,000 68% 968,000


AIRLINES AIRCRAFT COMMERCIAL AIR NAVIGATION MILLION PAX FLIGHTS AVERAGE TONS OF FREIGHT
IN SERVICE AIRPORTS SERVICE PROVIDERS REGIONAL LF%

AFRICA HAS 2%
SHARE OF GLOBAL
PASSENGER TRAFFIC.
Source: ATAG

6 7
AIR TRANSPORT INDUSTRY
ECONOMIC IMPACT BENEFITS OF AIR TRAFFIC
The impact of air transport can be felt throughout an economy. Its direct impact is associated
with jobs created by airlines and airports. An important supply chain serves each aircraft which
LIBERALIZATION
also impacts an economy. Consumer spending flows across all lines of an economy, too. The
powerful engine of tourism accounts for a huge portion of the wealth generated by aviation, which
In 2008, the World Trade Organization used a gravity-type model to
acts as a catalyst that benefits many other industries.
explain bilateral passenger traffic. It estimated the impact of liberalizing
air transport services on air passenger flows for a sample of 184 countries.
DIRECT INDIRECT/INDUCED CATALYTIC EFFECTS The study determined a positive and significant relationship between the
(within the industry) (industry supply chain) (impacts on other industries)
volume of traffic and the degree of liberalization. An increase in liberalization
increases traffic volume approximately 30% between countries linked by
AIRLINES SUPPLIERS Trade
Passenger carriers Off-site fuel suppliers direct air service.
Air cargo carriers Food & beverage
Airline ticketing Construction
General aviation Tourism
Earlier in 2006, InterVistas, prepared a worldwide economic impact study of air
MANUFACTURING
AIRPORT & SERVICES Computers/electronics service liberalization. Its research found that after liberalization of air services
Civil airports Retail goods Location/investment
AVIATION General aviation airports agreements between countries, traffic typically grew an average of between
SECTOR Handling & catering
Freight services BUSINESS SERVICES 12% and 35%. Those rates were significantly higher than during the years
AIR Aircraft maintenance Call centers Labour supply
TRANSPORT Fuelling on-site Accountants preceding liberalization. An updated 2015 study confirmed the average increase
Lawyers, banks
INDUSTRY Retail
Computer software to be 16%. The 2006 analysis even showed growth exceeded 50% in several
Productivity/ Market efficiency
AIR NAVIGATION situations. In some cases, the figure was almost 100% of the pre-liberalization
Service providers rates. The wide variation is explained by the different sizes of each country-pair.
INDUCED Consumer welfare/social
(spending of direct & indirect
CIVIL AEROSPACE employees) InterVistas also simulated the likely result of liberalizing 320 country-pairs that
CIVIL Airframes
AEROSPACE Engines Food & beverages
Congestion/environmental were not part of any Open Skies agreements. The numbers were impressive.
SECTOR Equipment Recreation & leisure
Off-site maintenance Transport
Traffic grew, on average, almost 63%.
Clothing
Household goods
Source: Oxford Economics Comparatively, the creation of the Single European Aviation Market in 1993
produced annual average traffic growth between 1995 and 2004 that was almost
TOTAL EMPLOYMENT AND GDP SUPPORTED BY AIR TRANSPORT IN AFRICA (2019) double the rate between 1990 to 1994. That liberalization generated some 1.4
million new jobs.

Catalytic Effects
The Economic Impact of Air Transportation In 2014, the East African Business Council commissioned InterVistas to measure the
in Africa was measured by ICAO, in 2019. benefits of an Open Skies arrangement in East Africa. Through quantitative analysis,
Induced The employment generation was a total of the data showed that liberalization would lead to a 41% increase in frequencies and
Indirect GDP SUPPORTED 6.2 million jobs, being 415 thousand directly a 9% reduction in fares, both of which would stimulate demand for air travel.
(BN US$) associated with the operation. On GDP
Direct
impact, up to $55.8 Bn on all its Economic In the present Embraer study, traffic estimates for the ten SAATM ready countries
10.3 6.8 2.8 35.9 Impacts, being $10.3 directly associated with were performed, based on the above mentioned study results, as a conservative
415K the operation. average of 40% increase on top of the forecasted traffic, representing the upside
601K
benefits that SAATM could potentially bring in 2038.
This Embraer study associates the metric
TOTAL JOBS
248K presented to the traffic level of 2019, in RPKs,
to generate the proxies that will be used
4.9M
to forecast the Future Economic Impact of
Source: ICAO Aviation in the ten SAATM-ready countries. Sources: InterVistas and World Trade Organization

8 9
EMBRAER UP TO 150 SEATS - 2019-2038
FORECAST PROCESS PROJECTED FLEET
Data sources Ten SAATM-Ready Countries

GLOBAL TRENDS REGIONAL OVERVIEW

342 555
ECONOMIC SCENARIO HISTORICAL DEMAND & FLEET DATA

FLEET IN SERVICE

2019 2038
Sources: Cirium and Embraer

20-YEAR FORECAST
UP TO 150-SEAT AIRCRAFT
Methodology
Pre owned

Load Factor Productivity

Remaining Fleet

Projected New
Traffic Forecast Capacity Forecast Number of
Deliveries
(RPK) (AKS) Aircraft Required

Backlog

Source: Embraer

10 11
TEN SAATM-READY
COUNTRIES

1. SOUTH AFRICA
2. KENYA
3. MOROCCO
4. ETHIOPIA
5. NIGERIA
6. GHANA
7. MOZAMBIQUE
8. CAPE VERDE
9. RWANDA
10. TOGO

12 13
SOUTH AFRICA

14 15
SOUTH AFRICA
South Africa is the most developed country in Africa, with Johannesburg being the biggest hub of the entire
African continent. Five out of ten of the most profitable routes in Africa originate from SA. The country SAATM ESTIMATED
IMPACT IN 2038
is well connected with the rest of Africa and the world. The domestic market, with multiple daily flights
between all the major airports within the country, is well established too.

YEAR: 2018
AVG. DAILY DEPARTURES: 1115 DOM. 85% YIELD:
INTL. 15% US 7.62 ¢ TRAFFIC AND REVENUE RPKs (mi) End year
Impact: 2038
CAGR %
2019-38
Revenue
Bn. US$
160,000
Base Scenario 3.2% 6.7
Using the econometric model of traffic 140,000
SAATM 4.8% 9.4
COUNTRIES SERVED: 43 AVG. FLEET AGE: AVG. FARE: associated with future GDP, it is expected
that aviation in South Africa will keep
120,000
100,000
SAATM: 6 18 YEARS US$ 178 growing at 3.2% annually between 2019 80,000

Sources: Cirium and Sabre


and 2038. With the additional benefits that 60,000
SAATM would bring, the growth rate could 40,000
be up to 4.8%. 20,000
DEMAND AND SUPPLY EVOLUTION CAGR RPK: 1.9%
CAGR ASK: 1.8%
0
Source: Embraer, Sabre, IHS Markit

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

2032

2034

2036

2038
80,000 100%
Traffic Supply Load Factor %
RPK (mi) ASK (mi) LF% 90%
70,000

60,000
80%
FLEET SIZE Up to 150-Seat aircraft segment
70%
160
50,000 60% Although there is an established fleet of
140
up to 150-seat aircraft in the country, it
40,000 50%

40%
represented only about 14% of all ASKs
120
149
100
30,000 generated by South African carriers in 2018.
30% 80
20,000
20% There is huge potential to untap with the
60 90
40
10,000 10% implementation of SAATM to further improve
20
0%
intra-regional and domestic connectivity.
0 0
2010 2011 2012 2013 2014 2015 2016 2017 2018
Source: Embraer Fleet 2019 Fleet 2038
Source: Sabre

In the last decade traffic has grown modestly (2% CAGR). Implementing SAATM agreement will boost
the growth in the next 20 years, reaching a CAGR of 4.8%.
ECONOMIC IMPACT
Catalytic Effects YEAR: 2038
0.41
PROPENSITY TO TRAVEL Starting Year: 2010
Intermediate Years
2018
Using future traffic forecasts under SAATM Induced
IHS Markit assumed modest recovery in 0.40
Ending Year: 2018 2010
and economic impact assumptions from ICAO
Indirect
for Africa, South African aviation in 2038 is GDP SUPPORTED
Source: IHS Markit and Sabre

South Africa’s GDP growth rate to 1.4% in


Trips per Capita

0.39 expected to employ 240,000 workers and (BN US$)


2019. The budget deficit is expected to Direct
average 4.3% of GDP in 2019–21. provide up to 3.5 million summing the indirect
0.38 6.5 4.3 1.8 22.7
jobs and the catalytic effects of tourism. Air
It is expected that limited upward transport will generate US$6.5 billion directly 240K
0.37
momentum exists to propel the economy to for the national economy and account for up to
a higher growth path for the remainder of 0.36 US$35.3 billion of associated economic activity. 340K

2019. Travel propensity was positive in the TOTAL JOBS


110K
last decade, yet the absolute number of per 0.35
0 2 4 6 8 10
Source: Embraer, Sabre,
capita trips was low. IHS Markit, ICAO 2.8M
GDP per Capita

16 17
KENYA

18 19
KENYA
Air transport is a major driver in Kenya’s economy, supporting tourism and attracting multinational companies
and foreign investment in the country. Aviation accounts for 4.6 per cent of Kenya’s GDP. Implementing SAATM ESTIMATED
IMPACT IN 2038
SAATM agreement will further boost connectivity between the country and the rest of the continent.

YEAR: 2018
AVG. DAILY DEPARTURES: 515 DOM. 78% YIELD:
INTL. 22% US 7.87 ¢ TRAFFIC AND REVENUE RPKs (mi) End year
Impact: 2038
CAGR %
2019-38
Revenue
Bn. US$
30,000
Kenya has a positive outlook for GDP growth Base Scenario 1.9% 1.3
COUNTRIES SERVED: 46 AVG. FLEET AGE: AVG. FARE: with derived traffic tracking upward.
25,000
SAATM 3.9% 1.8

SAATM: 6 US$ 151


20,000
23 YEARS Twenty-year estimates forecast a compound 15,000
Sources: Cirium and Sabre annual growth rate of 2.4% between 2019 10,000
and 2038. SAATM implementation would
CAGR RPK: 2.9% see a significantly higher rate of up to 3.9%.
5,000

DEMAND AND SUPPLY EVOLUTION CAGR ASK: 2.2% 0

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

2032

2034

2036

2038
Source: Embraer, Sabre, IHS Markit
18,000 100%
Traffic Supply Load Factor %
RPK (mi) ASK (mi) LF% 90%
16,000
80%
14,000
Up to 150-Seat aircraft segment
70%
12,000
60%
FLEET SIZE 250

10,000
200
50% Between the ten SAATM-ready countries,
8,000
40% Kenya is the one with the largest fleet of 150 184
6,000 aircraft up to 150 seats. That fleet can
30%
potentially get close to 200 aircraft threshold, 100
4,000 20% making Kenya an leader in intra-regional and 117
50
2,000 10% domestic connectivity in the region.
0% 0
0
2010 2011 2012 2013 2014 2015 2016 2017 2018
Source: Embraer Fleet 2019 Fleet 2038
Source: Sabre

The overall number of domestic and international departure seats has increased by more than three
quarters since 2010. The growth of Kenya’s domestic market, in particular, has accelerated over the past
three years, increasing with an average annual growth of 30%. Domestic capacity has risen from 1.95 million ECONOMIC IMPACT Catalytic Effects YEAR: 2038
departure seats in 2010 to 5.18 million this year, while international capacity has grown from 3.88 million to Induced
5.1 million over the same period. Using future traffic forecasts under a
Indirect
0.13
SAATM and economic impact assumptions GDP SUPPORTED
Starting Year: 2010
2018 from ICAO for Africa, the derived economic Direct (BN US$)
PROPENSITY TO TRAVEL 0.12
Intermediate Years
Ending Year: 2018
effect on Kenya would be US$6.0 billion
1.1 0.7 0.3 3.9
in GDP contribution and the creation of
Trips per Capita

Kenya is showing consistent growth in 0.11 650,000 jobs in 2038. Some 50,000 jobs 50K
both GDP per Capita and Trips per Capita. would be directly associated with airline
However, the propensity to travel is still low 0.10 operations.Direct economic impact is 60K
compared to worldwide levels. 2010 estimated at US$1.1 billion. TOTAL JOBS
30K
0.09
Source: Embraer, Sabre, 500K
0.08
IHS Markit, ICAO
Source: IHS Markit and Sabre 0 0.5 1 1.5 2

GDP per Capita

20 21
MOROCCO

22 23
MOROCCO
SAATM would enable Morocco to further expand its intra-African network, enhancing connectivity between
Africa and the rest of the world, using its already extensive network. SAATM ESTIMATED
YEAR: 2018 IMPACT IN 2038
AVG. DAILY DEPARTURES: 300 DOM. 34% YIELD:
INTL. 66% US 7.29 ¢ TRAFFIC AND REVENUE
RPKs (mi) End year CAGR % Revenue
According to long-term GDP projections,
COUNTRIES SERVED: 62 AVG. FLEET AGE: AVG. FARE: Morocco is expected to maintain positive
100,000
Impact: 2038
Base Scenario
2019-38
4.8%
Bn. US$
3.7
SAATM: 3 10 YEARS US$ 155 traffic growth of 4.8% annually from 2019 to 80,000
SAATM 6.1% 5.2
2038. SAATM would boost that rate to 6.1% 60,000
Sources: Cirium and Sabre compounded annually. 40,000

20,000
CAGR RPK: 6.2%
DEMAND AND SUPPLY EVOLUTION CAGR ASK: 5.8% 0

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

2032

2034

2036

2038
Source: Embraer, Sabre, IHS Markit
35,000 100%
Traffic Supply Load Factor %
RPK (mi) ASK (mi) LF% 90%
30,000
80%

25,000 70%

60%
FLEET SIZE Up to 150-Seat aircraft segment
20,000
50% Morocco could greatly benefit from 30
25
15,000 the expansion of Africa’s intra-regional
40%
traffic untaped by SAATM. Because of
20 27
30% 15
10,000
its geographic location, it could be also 10 16
20% connect people from all over the continent 5
5,000
10% to Western Europe. 0

0 0%
Fleet 2019 Fleet 2038
2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: Embraer
Source: Sabre

With SAATM, African destinations would grow considerably. Sustainability and probability can only be
achieved with right size aircraft, increasing frequencies and enabling connectivity.
ECONOMIC IMPACT Catalytic Effects YEAR: 2038
Induced
0.50
0.50
Using future traffic forecasts under SAATM and
PROPENSITY TO TRAVEL Starting Year: 2010
Intermediate Years economic impact assumptions from ICAO for
Indirect
GDP SUPPORTED
0.40
0.40
Ending Year: 2018 Africa, Morocco aviation in 2038 is expected Direct (BN US$)
2018
Trips per Capita

Morocco in almost a decade increased its to employ 100,000 workers and provide up to
1.5 2.0 1.0 20.0
propensity to travel figures, both in terms of 0.30
0.30
2.9 million summing the indirect jobs and the
GDP per Capita and in Trips per capita. catalytic effects of tourism. Air transport will 100K
0.20
0.20 2010 generate US$1.5 billion directly for the national
economy and account for up to US$24.5 billion 200K
0.10
0.10 of associated economic activity. TOTAL JOBS
100K

0.00
0.00 Source: Embraer, Sabre, 2.5M
IHS Markit, ICAO
2.8
2.8 2.9
2.9 33 3.1
3.1 3.2
3.2 3.3
3.3
Source: IHS Markit and Sabre
GDP per Capita

24 25
ETHIOPIA

26 27
ETHIOPIA
Ethiopia is an excellent example of a virtuous circle connecting economic development and improving
connectivity. Rapid growth of Ethiopian airlines and Addis Ababa hub contributes to the country’s
SAATM ESTIMATED
impressive GDP growth, in turn, one of the fastest growing economies in the world is stimulating the
demand for air travel and fueling the growth of the national carrier. IMPACT IN 2038
YEAR: 2018 TRAFFIC AND REVENUE
AVG. DAILY DEPARTURES: 315 DOM. 64% YIELD: With strong economic foundations and RPKs (mi) End year
Impact: 2038
CAGR %
2019-38
Revenue
Bn. US$
ambitious and comprehensive growth 120,000
INTL. 36% US 5.65 ¢ strategies in place (e.g. “Vision 2010”, 100,000
Base Scenario 6.6% 3.7
“Vison 2025”) even in the base scenario SAATM 8.2% 5.1
COUNTRIES SERVED: 62
80,000
AVG. FLEET AGE: AVG. FARE: traffic is expected to grow at the annual
rate of 6.6%, which is almost double of the 60,000

SAATM: 7 9 YEARS US$ 162 global growth rates. SAATM implementation 40,000
Sources: Cirium and Sabre would bring more flexibility in designing the
20,000
regional and inter-regional route network
and support building even more robust hub 0

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

2032

2034

2036

2038
DEMAND AND SUPPLY EVOLUTION CAGR RPK: 15.2% structure in ADD. In this scenario growth
CAGR ASK: 16.6% rates can go as high as 8.2% per year.
30,000 100%
Traffic Supply Load Factor % Source: Embraer, Sabre, IHS Markit
RPK (mi) ASK (mi) LF% 90%
25,000
80%
Up to 150-Seat aircraft segment
20,000
70% FLEET SIZE 45
60% 40
Sub-150 segment already constitutes more
15,000 50%
then 1/3 of the country’s fleet. With SAATM,
35
30
42
40% the relevance of this segment will only grow. 25
10,000
30% The opportunity to open the connections to 20 27
2nd tier cities across the continent as well as 15
20% 10
5,000 increased number of frequencies on existing
5
10% markets will favor the smaller gauge aircraft.
0
0 0%
Source: Embraer Fleet 2019 Fleet 2038
2010 2011 2012 2013 2014 2015 2016 2017 2018
Source: Sabre
In terms of traffic and capacity growth in the last decade Ethiopia comes only second to Rwanda among YEAR: 2038
the SAATM ready countries. Given the country size this development is even more impressive. Despite such ECONOMIC IMPACT Catalytic Effects
aggressive growth load factors remain at healthy 70%+ levels. Going forward, however, there is some room Induced
for “right-sizing” – capacity discipline would help drive the load factors closer to the global average (82%). Ethiopia can derive huge economic benefits from
air transport liberalization through SAATM. Indirect
GDP SUPPORTED
Using future traffic forecasts under SAATM and
PROPENSITY TO TRAVEL 0.08
0.07
Starting Year: 2010
Intermediate Years
2018
economic impact assumptions from ICAO for Africa
Direct (BN US$)
Ending Year: 2018 to 2038, Ethiopia would see US$4.3 billion in direct 4.3 2.8 1.2 14.9
Trips per Capita

0.06
Propensity to travel in Ethiopia closely follows the 0.05 GDP contribution and up to US$23.2 billion when
impressive growth of GDP/capita. At 0.07 trips/ 200K
0.04 including all the derived benefits. Some 200,000
capita country is still way below global average (0.6 jobs would be directly linked to aviation, and up to
0.03 250K
trips/capita), which leaves a lot of room for further
growth. When combined with country’s growing 0.02 2010 2.5 million associated jobs would be created. TOTAL JOBS
100K
population, this provides a very strong base for 0.01

future development of country’s aviation sector. 0 2.0M


0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 Source: Embraer, Sabre,
Source: IHS Markit and Sabre GDP per Capita IHS Markit, ICAO

28 29
NIGERIA

30 31
NIGERIA
As demand grows in Nigeria, existing airlines are strengthening their network with new destinations and
more frequencies, but also modernizing their fleet. New players are appearing in the country and SAATM
SAATM ESTIMATED
would bring more development opportunities.

YEAR: 2018
IMPACT IN 2038
AVG. DAILY DEPARTURES: 310 DOM. 80% YIELD: RPKs (mi) End year
Impact: 2038
CAGR %
2019-38
Revenue
Bn. US$
35,000
INTL. 20% US 9.58 ¢ TRAFFIC AND REVENUE 30,000
Base Scenario 3.3% 1.9
SAATM 5.1% 2.7

COUNTRIES SERVED: 34
25,000
AVG. FLEET AGE: AVG. FARE: Following the econometric forecast of
aviation traffic as a function of GDP, 20,000

SAATM: 7 21 YEARS US$ 168 passenger volume to/from Nigeria is 15,000


Sources: Cirium and Sabre expected to keep growing at 3.3% annually.
10,000
Implementing SAATM could increase that
to 5.1% CAGR. 5,000

DEMAND AND SUPPLY EVOLUTION CAGR RPK: 2.5%


CAGR ASK: 0.2%
0

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

2032

2034

2036

2038
Source: Embraer, Sabre, IHS Markit
20,000 100%
Traffic Supply Load Factor %
RPK (mi) ASK (mi) LF% 90%
18,000

80% Up to 150-Seat aircraft segment


16,000
FLEET SIZE 80
14,000 70%

12,000 60% Nigeria is in the process of renewing


70
75
60
and expanding its regional fleet with
50%
53
10,000 50
modern, state-of-the-art aircraft. If the
8,000 40% country’s airlines keep up the pace and 40

30% with SAATM’s additional push, Nigeria can 30


6,000
unleash its full potential to become one of 20
20%
4,000 the main players on the continent. 10

2,000 10% 0
Source: Embraer
0% Fleet 2019 Fleet 2038
0
2010 2011 2012 2013 2014 2015 2016 2017 2018

Source: Sabre

Nigerian aviation saw a reduction in Available Seat Kilometers in 2017. It has since regained momentum and ECONOMIC IMPACT Catalytic Effects YEAR: 2038
is showing signs of growth with positive Revenue Passenger Kilometers and high load factors.
Induced
The economic impact of air transport
PROPENSITY TO TRAVEL 0.06
Starting Year: 2010
2010
liberalization will be hugely beneficial to Nigeria. Indirect
GDP SUPPORTED
0.05 Intermediate Years In 2038, using traffic forecasts and economic (BN US$)
Direct
Trips per Capita

Nigeria has seen variations in GDP Ending Year: 2018 impact estimates from ICAO, aviation could
per Capita and Trips per Capita which 0.04 generate 800,000 jobs of which 60,000 would be 1.3 0.9 0.4 4.6

have trended slightly downward albeit directly associated with airline operations.
0.03 60K
from low absolute values. The industry would contribute some US$1.3
2018 billion to GDP. That number would rise to US$7.2
Since Nigeria has a population of 0.02 80K
nearly 200 million, there is room billion when factoring the induced and indirect TOTAL JOBS
for great advancements in its air 0.01 catalytic effects of tourism. 30K

transport industry. 0 650K


0 0.5 1 1.5 2 2.5 3 3.5 Source: Embraer, Sabre,
Source: IHS Markit and Sabre GDP per Capita IHS Markit, ICAO

32 33
GHANA

34 35
GHANA
Air traffic liberalization would open more routes to Ghana and unleash the country’s tremendous
potential. Air traffic has been growing steadily. Rights to access new markets would bring new benefits. SAATM ESTIMATED
YEAR: 2018 IMPACT IN 2038
AVG. DAILY DEPARTURES: 105 DOM. 54% YIELD:
RPKs (mi) End year CAGR % Revenue
INTL. 46% US 8.75 ¢ 16,000
Impact: 2038 2019-38 Bn. US$

TRAFFIC AND REVENUE 14,000


Base Scenario 3.4% 0.8

COUNTRIES SERVED: 28 AVG. FLEET AGE: AVG. FARE: 12,000


SAATM 5.4% 1.1
Ghana’s traffic as a function of GDP
SAATM: 6 12 YEARS US$ 244 forecasts is expected to keep growing 3.4%
10,000

8,000
Sources: Cirium and Sabre annually over the next 20 years. SAATM
6,000
implementation can improve the CAGR to
CAGR RPK: 4.8% 5.4% per year from 2019 until 2038. 4,000

DEMAND AND SUPPLY EVOLUTION CAGR ASK: 3.3% 2,000

0
Traffic Supply Load Factor % Source: Embraer, Sabre, IHS Markit

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

2032

2034

2036

2038
RPK (mi) ASK (mi) LF%
7,000 100%

90%
6,000
80%

5,000
FLEET SIZE Up to 150-Seat aircraft segment
70% 25

60% There is room for a significant increase in the


4,000 20

50%
size of the national fleet. Traffic demand is 21
there and it is expected to grow at an even 15
3,000
40% higher pace with SAATM. The up to 150-seat

2,000 30%
aircraft segment will be essential in connecting 10
12
domestic and intra-regional markets to the rest
5
20% of the continent, and to the world.
1,000
0
10% Source: Embraer
Fleet 2019 Fleet 2038
0 0%
2010 2011 2012 2013 2014 2015 2016 2017 2018
Source: Sabre

Air traffic in Ghana grew at the worldwide rate for nearly a decade. There is room for expansion on the ECONOMIC IMPACT Catalytic Effects
supply side since it has only increased half as much as demand. Load-factors are close to the world YEAR: 2038
average of 80%.
Ghana’s economy can make great gains from Induced
0.08 air transport liberalization. Based on ICAO
Starting Year: 2010
Indirect
PROPENSITY TO TRAVEL 0.07 Intermediate Years economic assumptions and traffic forecasts GDP SUPPORTED
to 2038, Ghana could see aviation directly (BN US$)
Trips per Capita

0.06 Ending Year: 2018


2018 Direct
accounting for US$0.6 billion of GDP and up
Ghana has seen variations in 0.05
to US$ 3.2 billion when considering all its 0.6 0.4 0.2 2.0
its GDP per Capita and Trips 0.04 derived benefits. Some 25,000 jobs would be
2010 25K
per Capita. Despite a positive 0.03 directly linked to aviation and up to 350,000
propensity to travel trend, jobs when all the associated economic 35K
0.02
the country still ranks below effects are included. TOTAL JOBS
0.01 15K
worldwide levels. Source: Embraer, Sabre,
0
IHS Markit, ICAO 280K
1.25 1.45 1.65 1.85 2.05 2.25 2.45
Source: IHS Markit and Sabre GDP per Capita

36 37
MOZAMBIQUE

38 39
MOZAMBIQUE
Mozambique's large geographic size combined with SAATM implementation across Africa will continue to
drive traffic growth at steady rate while likely connecting more regional markets to the country. The below
SAATM ESTIMATED
150 seat aircraft market in Rwanda is expected to double consequently.

YEAR: 2018
IMPACT IN 2038
RPKs (mi) End year CAGR % Revenue
AVG. DAILY DEPARTURES: 100 DOM. 69% YIELD: 7,000
7,000
Impact: 2038 2019-38 Bn. US$

INTL. 31% US 7.94 ¢ TRAFFIC AND REVENUE 6,000


6,000
Base Scenario 5.6% 0.3
SAATM 7.2% 0.5
The long-term economic outlook Mozambique 5,000
5,000
COUNTRIES SERVED: 9 AVG. FLEET AGE: AVG. FARE: is expected grow air traffic at a 5.6% CAGR 4,000
4,000

SAATM: 3 21 YEARS US$ 119 rate between 2019 and 2038. Implementation
of SAATM could raise that to 7.2%. 3,000
3,000
Sources: Cirium and Sabre
2,000
2,000

1,000
1,000
DEMAND AND SUPPLY EVOLUTION CAGR RPK: 7.2%
Source: Embraer, Sabre, IHS Markit 00
CAGR ASK: 7.8%

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

2032

2034

2036

2038
2010
2012

2016
2018
2020
2022

2026
2028
2030
2032

2036
2038
2014

2024

2034
2,500 100%
Traffic Supply Load Factor %
RPK (mi) ASK (mi) LF% 90%

2,000 80%
Up to 150-Seat aircraft segment
70%
FLEET SIZE 18
1,500 60% 16
Mozambique is another example of a
50%
country with huge potential to expand
14
12
16
1,000 40% the nation’s regional fleet. With SAATM, 10

30% Mozambique could more easily be 8

500 20%
connected to important hubs on the 6
8
continent and to the rest of the world. 4
2
10%
0
0 0% Source: Embraer Fleet 2019 Fleet 2038
2010 2011 2012 2013 2014 2015 2016 2017 2018
Source: Sabre

With Mozambique recently offering the most liberal air traffic rights on the continent, demand has
remained above industry trends both in Africa and Globally.
ECONOMIC IMPACT Catalytic Effects YEAR: 2038
0.040
PROPENSITY TO TRAVEL Starting Year: 2010
Intermediate Years Based on forecasts and ICAO economic
Induced

Ending Year: 2018 assumptions for Africa, Mozambique would Indirect


GDP SUPPORTED
Trips per Capita

The propensity to travel measured in profit from air transport liberalization. Aviation
Direct (BN US$)
Trips per Capita and GDP per Capita would directly contribute US$300 million to GDP
shows fluctuations in Mozambique’s 2010
0.035 and employ some 10,000 people. The indirect 0.3 0.2 0.1 0.9
economy having an impact. In absolute 2018 economic impact would be US$1.5 billion and up
terms, the variations are slight. The to 165,000 jobs in 2038. 10K
higher the index, the more likely
15K
residents will fly more.
TOTAL JOBS
10K
0.030
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 Source: Embraer, Sabre, 130K
Source: IHS Markit and Sabre GDP per Capita IHS Markit, ICAO

40 41
CAPE VERDE

42 43
CAPE VERDE
For the booming Cape Verde tourism sector aviation is crucial. So far most of the capacity was coming
from seasonal flights to/from Europe. Recent opening of new long-haul routes should change this
SAATM ESTIMATED
picture. SAATM can open further opportunities to diversify the network and balance the seasonality.

YEAR: 2018
IMPACT IN 2038
AVG. DAILY DEPARTURES: 65 DOM. 78% YIELD:
INTL. 22% US 6.43 ¢ TRAFFIC AND REVENUE RPKs (mi) End year
Impact: 2038
CAGR %
2019-38
Revenue
Bn. US$
14,000

The Cape Verde is expected to be one of the Base Scenario 7.5% 0.5
12,000
COUNTRIES SERVED: 16 AVG. FLEET AGE: AVG. FARE: fastest growing African aviation markets. 10,000
SAATM 9.4% 0.7
Number of factors are contributing: rapid
SAATM: 1 20 YEARS US$ 121 growth in tourism, development of long-haul
8,000

6,000
Sources: Cirium and Sabre routes, and diversification of the country’s
economy. SAATM can “supercharge” this 4,000

growth, helping to develop the African 2,000


CAGR RPK: 10.1%
DEMAND AND SUPPLY EVOLUTION CAGR ASK: 14.6% traffic flows – alternative to the prevailing 0

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

2032

2034

2036

2038
European traffic.
100%
4,000 Traffic Supply Load Factor % Source: Embraer, Sabre, IHS Markit
RPK (mi) ASK (mi) LF%
90%
3,500
80% Up to 150-Seat aircraft segment
3,000
70%
FLEET SIZE 14

12
2,500 60% Cape Verde will always need smaller gauge
50%
aircraft for the inter-island operations. 10
12
2,000 Moreover, development of new services to 8
40% the continental Africa would enhance the 6
1,500
demand for the sub-150 seats aircraft – 4
30%
1,000 they are the optimum “route-openers”.
2
5
20%
0
500 10% Source: Embraer
Fleet 2019 Fleet 2038
0 0%
2010 2011 2012 2013 2014 2015 2016 2017 2018

Source: Sabre

Cape Verde market is still immature, but growing dynamically over last years. With a relatively small base ECONOMIC IMPACT Catalytic Effects YEAR: 2038
and high seasonality the highly fluctuating load factors are not surprising.
Induced
2.2 Using future traffic forecasts and economic
PROPENSITY TO TRAVEL 2.0
Starting Year: 2010
2010
Intermediate Years
2018 impact assumptions from ICAO, aviation in Indirect
GDP SUPPORTED
Ending Year: 2018
Cape Verde will support 20,000 direct jobs, and (BN US$)
Direct
Trips per Capita

The Cape Verde passengers’ numbers to large extend 1.8 300,000 jobs from the indirect and induced
are determined by the inbound traffic. Propensity catalytic effects of tourism in 2038. Air transport 0.5 0.3 0.1 1.7
1.6
to fly is also boosted by Cape Verde being an island will generate US$500 million of economic
state. This results in Cape Verde leadership position 1.4 benefits directly up to US$2.7 billion indirectly. 20K
among the SAATM ready countries. However, positive 2018
2010 30K
economic outlook and traffic rights liberalization can 1.2
drive this metric further up – it’s not uncommon for TOTAL JOBS
1.0 15K
other island states to have 10 trips/capaita or more. 2.50 2.75 3.00 3.25 3.50 3.75 4.00
Source: Embraer, Sabre, 235K
Source: IHS Markit and Sabre GDP per Capita IHS Markit, ICAO

44 45
RWANDA

46 47
RWANDA
SAATM forecasts double digit percentage air traffic growth in Rwanda, enhancing connectivity and demand.
The below 150 seat aircraft market in Rwanda is expected to double consequently. SAATM ESTIMATED
YEAR: 2018 IMPACT, IN 2038
AVG. DAILY DEPARTURES: 40 DOM. 13% YIELD:
INTL. 87% US 6.43 ¢ RPKs (mi) End year CAGR % Revenue
Impact: 2038 2019-38 Bn. US$
TRAFFIC AND REVENUE 12,000
Base Scenario 7.3% 0.4
COUNTRIES SERVED: 16 AVG. FLEET AGE: AVG. FARE: 10,000
SAATM 9.8% 0.6
Air traffic growth in Rwanda is one of the
SAATM: 4 8 YEARS US$ 112 highest in Africa. It is forecast at 7.3%
8,000

Sources: Cirium and Sabre


compounded annually between 2019 6,000
and 2038. With SAATM, that rate could
CAGR RPK: 29.6% 4,000
DEMAND AND SUPPLY EVOLUTION CAGR ASK: 29.0%
increase to 9.8% CAGR.
2,000
Traffic Supply Load Factor %
RPK (mi) ASK (mi) LF% 0
2,500 100%

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

2032

2034

2036

2038
Source: Embraer, Sabre, IHS Markit
90%

2,000 80%

70%

1,500 60%
FLEET SIZE Up to 150-Seat aircraft segment
14
50% Traffic has been increasing steadily over 12
1,000 40% the last decade. Liberalization under
10
13
SAATM would link the country with more
30% 8
of the continent and the rest of the world.
500 20% Up to 150-seat aircraft can drive that 6

10%
connectivity. 4 6
2
0 0% 0
2010 2011 2012 2013 2014 2015 2016 2017 2018
Source: Embraer Fleet 2019 Fleet 2038
Source: Sabre

Rwanda has been a key player in air traffic liberalization over the past decade which has attributed to
its positive trending traffic growth, driven by its national carrier, Rwandair. In the last decade, traffic has
grown tremendously at an average rate of 30% per year. ECONOMIC IMPACT Catalytic Effects YEAR: 2038
Induced
PROPENSITY TO TRAVEL 0.08
Starting Year: 2010
Rwanda stands to gain economically from
Indirect
SAATM. In 2038, using traffic forecasts and
0.07 Intermediate Years GDP SUPPORTED
Among the ten SAATM-ready Ending Year: 2018 2018 economic assumptions from ICAO, aviation will (BN US$)
0.06 Direct
countries, Rwanda has the highest employ 196,000 people, 6,000 of which will
Trips per Capita

propensity to travel. Yet despite the 0.05 be directly associated with airline operations. 0.1 0.1 0.05 0.6
tremendous growth, it is still well 0.04 Aviation will have a direct impact on GDP of
6K
below worldwide levels. US$100 million. The induced and indirect
0.03
catalytic effects of tourism will represent up to 20K
0.02 US$ 850 million.
2010 TOTAL JOBS
0.01 10K
Source: Embraer, Sabre,
0 IHS Markit, ICAO 160K
Source: IHS Markit and Sabre 0.5 0.55 0.6 0.65 0.7 0.75 0.8 0.85
GDP per Capita

48 49
TOGO

50 51
TOGO
Togo is the only of the ten SAATM-ready countries that only has international flights. Air transport
liberalization in the region would boost Togo's network, which has a lot of potential to grow frequencies
SAATM ESTIMATED
and destinations.

YEAR: 2018
IMPACT, IN 2038
AVG. DAILY DEPARTURES: 20 DOM. 0% YIELD: RPKs (mi) End year
Impact: 2038
CAGR %
2019-38
Revenue
Bn. US$
INTL. 100% US 9.75 ¢ TRAFFIC AND REVENUE 4,500
4,000
Base Scenario 5.2% 0.2
3,500 SAATM 7.7% 0.3
COUNTRIES SERVED: 16 AVG. FLEET AGE: AVG. FARE: According to long-term GDP projections,
Togo is expected to maintain positive
3,000

SAATM: 4 12 YEARS US$ 196 traffic growth of 5.2% annually from 2019
2,500
2,000
Sources: Cirium and Sabre to 2038. SAATM would boost that rate to
1,500
7.7% compounded annually.
1,000
500
CAGR RPK: 8.5%
DEMAND AND SUPPLY EVOLUTION CAGR ASK: 6.7% Source: Embraer, Sabre, IHS Markit 0

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

2032

2034

2036

2038
1,800 100%
RPK (mi) ASK (mi) LF%
1,600 90%

80%
1,400
70%
FLEET SIZE Up to 150-Seat aircraft segment
1,200
60% With an excellent geographical location, 18
1,000 16
50% Togo will be a key player in connecting
800
40%
western Africa. Low gauge aircraft will
14
12
16
enable this network development, bringing 10
600
30% more frequencies and higher load factors. 8
400 20%
Source: Embraer
6
4
8
200 10%
2
0% 0
0
2010 2011 2012 2013 2014 2015 2016 2017 2018 Fleet 2019 Fleet 2038
Source: Sabre

Demand and supply have significantly grown over the last decade. However, load factors are below the
world's average. This is an excellent opportunity for right-sizing the fleet and increasing frequencies.

0.07 ECONOMIC IMPACT Catalytic Effects YEAR: 2038


Induced
0.06
PROPENSITY TO TRAVEL 2018 Air traffic forecasts and ICAO assumptions show Indirect
Trips per Capita

0.05 the total economic impact of SAATM on Togo’s GDP SUPPORTED


GDP to be up to US$ 0.9 billion and the creation Direct (BN US$)
The propensity to travel has been 0.04
fluctuating with the economy of 2010 of 100,000 jobs by 2038. Some 7,000 jobs will 0.2 0.1 0.05 0.6
Togo. The rate is positive albeit with 0.03 be directly linked to airline operations. The direct
low absolute numbers. economic impact of aviation is estimated at 7K
0.02 US$ 170 million.
Starting Year: 2010
10K
0.01 Intermediate Years
TOTAL JOBS
Ending Year: 2018 5K
0
0.5 0.55 0.6 0.65 0.7 Source: Embraer, Sabre, 80K
Source: IHS Markit and Sabre GDP per Capita IHS Markit, ICAO

52 53
INTER-CONNECTIVITY
BENEFITS
Existing frequencies to main airports
Route exercise of linking all ten
SAATM ready countries

Source: Sabre, Ref. Nov-18

54 55
Cape Verde 1 -

Ghana 3 - 12 83 8 7 7

Togo 4 16 - 16 4

Nigeria 6 85 12 - 7 11 10 18

INTER-CONNECTIVITY BENEFITS South Africa 8 7 - 77 7 33 29

79 - 11 7
Mozambique
With the SAATM it is expected that many new frequencies will be opened. Increasing the In the countries not yet linked by a direct flight, for liberalization impact estimation purposes,
Rwanda
this study 11
added a daily flight. Where flights were already 7
available, -
the existing 28 10
frequencies were
connectivity among the ten SAATM ready countries. To measure its benefit, this study used the
Connection Index, which is calculated per the following formula: rounded to the next multiple of seven, to simulate a conservative addition of new flights among
Kenya 7 10 33 7 29 - 51
countries. The exercise kept the airport and aircraft sizes constant.
Number of destinations x Frequency x Seats per flight weighted by the size of the destination airport. Ethiopia 7 4 18 29 7 8 53 -
Divided by a scalar factor of 1000.
SUMMARY OF FREQUENCY LIBERALIZATION IMPACT EXERCISE:
Where:
Number of destinations: among the ten countries of the study; Airport size Weekly
SAATM Main Seats per Destinations Conection Index
ref. to ATL frequencies
Frequency: weekly frequencies linking each country-pair;
Country Airport Weight Departure 2018 SAATM 2018 SAATM 2018 SAATM
Seats/flight: an average of seats available per departure;
Morocco CMN 10% 155 3 9 10 63 0.4 8.5
Weighting by airport size: Percentage of the processed passenger totals in the main international
Cape Verde SID 1% 114 1 9 1 63 0.0 0.4
airport of the selected country, compared to the largest airport in the world, which in 2018 was
Ghana ACC 3% 121 6 9 120 170 2.5 5.4
Atlanta (ATL).
Togo LFW 1% 152 4 9 40 84 0.2 1.0
Source: IATA
Nigeria LOS 5% 134 7 9 149 168 6.8 9.9
South Africa JNB 20% 148 6 9 161 205 28.1 53.7
Examples:
Mozambique MPM 1% 89 3 9 97 140 0.3 1.2
City - Airport Beijing - PEK London - LHR Chicago - ORD Sydney - SYD São Paulo - GRU
Rwanda KGL 2% 127 4 9 56 98 0.5 2.0
Connection Index 384.8 358.5 274.8 157.2 81.0
Kenya NBO 7% 143 6 9 137 168 8.2 15.0
Source: Embraer, Sabre - Nov. 2018 Ethiopia ADD 12% 217 7 9 126 161 22.8 37.5
Total 897.0 1320.0 69.9 134.5

WEEKLY FREQUENCIES AMONG Sources: Sabre, IATA, Embraer

THE TEN SAATM READY COUNTRIES: Significant improvement in the inter-connection among the ten-countries was obtained,
increasing the number of weekly frequencies on a total of 47%.
DESTINATION
CONNECTION INDEX
Country- Cape South Mozam-
Morocco Ghana Togo Nigeria Rwanda Kenya Ethiopia
pairs Verde Africa bique
2018 Post-SAATM
60.0 6.0
ORIGIN

Morocco - 1 3 6
50.0 5.0
Cape Verde 1 -
40.0 4.0
Ghana 3 - 12 83 8 7 7
30.0 3.0
Togo 4 16 - 16 4
20.0 2.0
Nigeria 6 85 12 - 7 11 10 18
10.0 1.0
South Africa 8 7 - 77 7 33 29
0.0 0.0
South Africa Ethiopia Kenya Nigeria Morocco Ghana Rwanda Mozambique Togo Cape Verde
79 - 11 7
Mozambique

Rwanda 11 7 - 28 10 Source: Embraer

Kenya 7 10 33 7 29 - 51
With regards to the connection index, the growth was 93%, meaning that linking all the ten
Ethiopia 7 4 18 29 7 8 53 - countries with at least a daily flight would mean almost doubling the connectivity of the region,
showing the multiplier effect of the aviation.
Reference: First week of November-2018
Source: Sabre
Airport size Weekly
SAATM Main Seats per Destinations Conection Index
ref. to ATL frequencies
Country Airport Weight Departure 2018 SAATM 2018 SAATM 2018 SAATM
56 Morocco CMN 10% 155 3 9 10 63 0.4 8.5 57
Cape Verde SID 1% 114 1 9 1 63 0.0 0.4
DATA SOURCES

ATAG
CIRIUM
IATA
IHS MARKIT
INTERVISTAS
OXFORD ECONOMICS
SABRE
WORLD TRADE ORGANIZATION

58 59
RAUL VILLARON
VICE-PRESIDENT
SALES & MARKETING
raul.villaron@nl.embraer.com

GAD WAVOMBA
SALES DIRECTOR
gad.wavomba@nl.embraer.com

FRANCISCO MORAES
SALES DIRECTOR
francisco.moraes@nl.embraer.com

DANIELE SANSONE
MARKETING MANAGER
daniele.sansone@nl.embraer.com

EmbraerCommercialAviation.com

embraer.com

november 2019

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