Economic gains to sustain aviation growth


Chief Operating Officer of Africa World Airlines, Sean Mendis

Business News of Friday, 24 May 2019

Strengthening the country’s economic fundamentals and growing of same is expected to sustain the growth of air travel at about 5 percent per annum in the years ahead, Sean Mendis, Chief Operating Officer of Africa World Airlines (AWA) has said.

“We are scratching the surface of what [the potential of the aviation industry] is. It is a worldwide trend that we have really seen when per capita GDP is below US$1,000, people don’t really fly. When the per capita GDP reaches the US$1,000-US$5000 range, air travel grows at double at rate of GDP. That’s where Ghana is now a lower middle-income country.

“There are a number of reasons for this: when people have more disposable income, the first thing they go after is consumer goods; the second thing they do is travel. We are in that sweet spot where this is constantly growing. That is what we are going to see until Ghana reaches a per capita GDP of US$5,000 – which is a long way away,” he told B&FT in an interview.

The rate of growth in the sector, given the country’s current per capita income, if modelled over a decade shows that the sector will continue to grow at about 5 percent every year.

“Your rate actually grows 2 x 1 minus GDP,” Mr. Mendis theorised

Ghana’s per capita GDP reached a four-year high of US$1,632 or GH?7,110 at the end of 2017.

The figure is an 8.2 percent increase over the US$1,508 recorded in 2016, and higher than the World Bank’s position that per capita growth rates – if they continue along historical lines – will be between 1.7 and 2.5 percent over the next two to three decades.

Government has said it wants to double per capita GDP in the next six years – but the Bretton Woods institution has said that the goal is unrealistic, since it would require per capita growth rates of around 9 percent.

After reaching US$1,841 in 2013, GDP per capita dropped by 22.4 percent in 2014 to US$1,428 – and tumbled further by 8 percent in 2015 to US$1,311 before inching up by 15 percent in 2016.

Indeed, a recent dre Aviation West Africa Market Intelligence Annualised International Passenger Growth Forecast has predicted a 6 percent growth in international passenger throughput for 2019.

This means international passenger throughput is expected to hit 2 million this year, up from 1.9 million in 2018.

The expected growth in international passenger throughput is higher than the forecast for West African neighbours Cameroon, 2.3 percent; Liberia, 33.7 percent; The Gambia, 1.8 percent; and Nigeria, 2 percent. The forecast however predicts a larger growth in the Senegalese (7 percent) and Togolese (9.2 percent) markets.