AV Analysis Week 34
A regular update where our in-house team of aviation experts and ISTAT certified appraisers use our data to analyse values, market movements and notable aviation news.
This week, our Head of Commercial Analysts Gary Crichlow provides an overview of the commercial passenger Widebody and Narrowbody fleet within Africa.
Introduction
Africa is a large, diverse continent: second only to Asia in terms of land area and population. Conventional maps tend to downplay its true size: a nonstop transcontinental flight North to South from Cairo to Johannesburg takes 8 hours; East to West from Addis Ababa to Bamako requires 7 hours.
Each aviation market within Africa’s geography has distinct characteristics. Each could easily be the subject of an in depth analysis. In this article, we will focus on broader insights that apply across the continent’s fleet, and highlight a few of the largest and most active markets.
African Fleet Overview
On an aircraft count basis, 2.33% of the global commercial passenger Narrowbody and Widebody fleet are currently operated by African carriers. Africa’s share by Market Value is slightly lower, at 2.23%.
While this proportion split has remained relatively stable over the past few years, hovering just above the 2% mark, the split by Market Value has tended to slightly underperform the split by fleet count.
The gap between fleet count proportion and Market Value proportion widened during Covid-19, and there is still lost ground to make up. Comparing the changes in the African fleet relative to the changes in the entire global fleet, and setting aside the fact that a large proportion of the live fleet was parked or stored during 2020 and 2021, it is clear that the growth in Africa’s live fleet lagged behind the global trend until this year.
On a Market Value basis, the discrepancy is more pronounced.
As the flow of new, high value aircraft deliveries was curtailed during the pandemic, the global fleet by Market Value dipped sharply between 2019 and 2020 and then stabilised before starting to recover in 2023. In comparison, the Market Value of the African fleet continued declining through 2022.
AviationValues’ data shows relatively few large, high value aircraft deliveries occurring into Africa in this period: two A350-900s and one A330-800 were delivered in 2021 (to Ethiopian and Uganda Airlines respectively) and 2022 saw one further A350-900 delivery to Ethiopian. The same period saw over 200 Widebody deliveries to the rest of the world.
There has been recovery to date in 2023, driven by Ethiopia's delivery of three large Widebody aircraft: two 787-9s and one A350-900, as compared to a global total of 86 Widebody deliveries to date. As these high value deliveries are realised, the gap between Africa and the global trend is narrowing; but there is still significant ground to make up.
Largest African Markets
The relative size of the share by Market Value of the entire African fleet’s USD 80.84 bn Market Value is depicted below, by country.
Within Africa, the countries with the largest fleets by Market Value are:
· Ethiopia
· Egypt
· Morocco
· South Africa
· Kenya
Operators based in these countries account for nearly three quarters of the total African fleet by Market Value.
AviationValues has tracked the evolution of these countries’ fleets year on year and depicted the results in the following two charts.
A comparison highlights a few of the distinctions between the markets:
Ethiopia is clearly the market leader, home to a relatively small fleet of high value aircraft. Its current Market Value of USD 5.25 bn is nearly 50% larger than second ranking Egypt (USD 3.53 bn) and exceeds the Market Value of countries outside the top 5 by 10%. Yet its fleet count is only two thirds of the Egyptian operated fleet and is just over a quarter the size of the African fleet outside the top 5. Its flag carrier Ethiopian Airlines is the largest in Africa and is actively taking delivery of new aircraft.
Egypt’s fleet has been growing incrementally in terms of numbers, but its Market Value has only increased significantly in the last 12 months, with the influx of 13 new A320neo family aircraft (nine to Air Cairo, four to EgyptAir) and three E190s to Air Cairo.
Fleet counts in Morocco and Kenya have remained broadly stable, with Market Values declining. Operators based there have not taken delivery of new or larger aircraft in significant numbers, reflecting both Royal Air Maroc and Kenya Airways’ financial condition. Royal Air Maroc does have a small order book of firm orders.
South Africa’s fleet Market Value has declined much more sharply than its fleet count. Its flag carrier South African Airways has had a tumultuous few years with fleet reductions, bankruptcy prior to Covid-19, and a relaunch in 2021. The airline was a significant player both internationally and within the African market prior to its bankruptcy before cost cutting processes that led to a significant reduction in its fleet.
Top 10 African carriers
Africa is home to several globally recognized and respected carriers. Many of them offer capabilities beyond transit of passengers and cargo: for example EgyptAir and Ethiopian Airlines both offer MRO and Engineering solutions. Ethiopian Airlines is also a supplier to The Boeing Company for wiring harnesses.
The table below lists the ten largest operators by fleet count, with the Market Value of their respective fleets. There is a clear distinction between operators of large high value fleets (such as Ethiopian) where large and/or young, new technology types predominate; and operators whose fleets are largely comprised of older technology aircraft.
African Order Book
AviationValues tracks a backlog of 152 commercial passenger Narrowbody and Widebody aircraft (firm orders only) attributable to African entities, or 0.7% of the current global firm order backlog. Ethiopian Airlines cements its position as the leading African carrier, comprising one third of the total.
While the order book is significantly smaller relative to the global order book. The current African fleet as a proportion of the global fleet (0.7% versus 2.3%), it is important to keep in mind that fleet replacement and growth needs may also be met from global lessors’ orderbooks or current portfolios.
As an example, in 2023 South African Airways set out medium term plans of operating the Airbus A350-900 again, and issued a request for proposal for four A320ceo, having secured one A320-200 and an A330ceo, with service entry for 2023. The A320-200s were due for service entry in September. There could be further opportunities for lessors to place additional aircraft in 2025 and 2026 due to lease end expiries to some of SAAs current in fleet A320-200s and A330.
Conclusion
As a continent, Africa accounts for nearly a fifth of the world’s population and land area, but only about 2% of its operating fleet. Its relatively small size in commercial fleet terms belies a hugely diverse collection of markets, with struggling state owned and private carriers competing alongside truly world class airlines. The market leader is clear: Ethiopian Airlines, is the largest carrier by fleet count, fleet Market Value and order book. However, outside Ethiopian and a handful of winners, the region has lagged behind the rest of the world in its post Covid-19 recovery, and restructuring is a dominant theme for many carriers across the continent. Opportunities are there for investors, but only if armed with the right information and access to continually refreshed data, to make sure the recovery is a broader success and not limited to a select few.
Data as of August 2023.
Disclaimer: The purpose of this blog is to provide general information and not to provide advice or guidance in relation to particular circumstances. Readers should not make decisions in reliance on any statement or opinion contained in this blog.
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