As the new government contemplates the establishment of a national airline, aviation analyst, Sean Mendis believes such a venture will be a huge gamble Ghana might not be able to afford considering the stories of other African countries who have established a national airline.
Sean Mendis says, historically, other African countries that have established a national airline have been plagued by a huge financial burden which has put extra constraints on their taxpayers.
Speaking to The High Street Journal on the new plans of the government to setup an airline, Mendis says across the continent, the track record of national airlines is littered with massive financial losses and government bailouts. He revealed that, for instance, Air Côte d’Ivoire, despite its ambitions, loses nearly €100 million annually.
Uganda Airlines has lost a staggering $300 million in just five years, while Air Tanzania required a $194 million government bailout last year. Even South African Airways, once a flagship carrier, was forced to write off more than $2 billion in debt during bankruptcy proceedings.
RwandAir, which enjoys significant government backing, continues to rely on nearly €200 million in subsidies each year to stay afloat.
Sean Mendis says with the performance, it is clear that national airlines in Africa are often more of a financial burden than an economic asset. Even Ethiopian Airlines, Africa’s most successful carrier, took nearly four decades before turning its first profit.
He therefore asks if the country has the fiscal stamina to sustain 40 years of subsidies in hopes of eventual profitability.
“Look at the peer state-owned airlines in Africa, especially those set up in recent years. Air Cote D’Ivoire loses nearly €100m per year. Uganda Airlines lost $300m in just 5 years, Air Tanzania had a $194m bailout last year, South African Airways wrote off over $2 Billion in debt during bankruptcy, Rwandair receives government subsidy of nearly €200m every year and so forth. Even Ethiopian Airlines, which is profitable today, took nearly 40 years to turn it’s first profit,” he narrated.
“Does Ghana have the taxpayer funds to spend on 40 years of subsidy to wait for a profit? Or will things go the way that the previous two attempts went? Or is it a social welfare scheme rather than a business?” he further quizzed.
Sean Mendis is convinced that the dream of a national airline may be alluring, but unless backed by a sustainable business model, Ghana could find itself repeating the failures of its peers.
