The African Aviation Industry: Regional Hubs Driving Growth and Opportunity

Africa’s aviation industry is at a turning point, poised for rapid growth and transformation. Air passenger traffic recovered to 108% of pre-pandemic levels in 2023 and is on track to double to 341 million by 2043. The air cargo sector is on a similarly positive track. According to the International Air Transport Association’s (IATA) May 2024 data, African airlines have collectively seen a 16.1% year-to-date increase in total demand. Equally encouraging, air cargo capacity for the continent is up 20.8% year-to-date, indicating airlines are expanding capacity to meet rising demand. With Amazon entering South Africa, other global e-commerce providers are expanding into Africa, and the emergence of home-grown African e-commerce providers such as Jumia and Takealot has extensive potential for air freight expansion in Africa.

While the continent’s pandemic recovery has lagged other regions, the last few years have seen consistent upward momentum across the travel and cargo sectors. Driven by rising prosperity, economic stability, and security in key markets, development is fuelling demand for goods and travel across intra-African and international routes, particularly on the Africa-Asia trade route. In May 2024, demand on the Africa-Asia market increased by 40.6%, outperforming all other routes for the month.

Certain investment risks persist continent-wide, such as political instability, economic volatility, and infrastructural inadequacies. However, stability, growth, and progress, combined with investor-friendly regulatory and policy frameworks in key regional capitals and transport hubs, have attracted significant interest from investors particularly drawn to these areas due to their potential for high returns despite the inherent challenges.

EAST AFRICA – Ethiopia

The state-owned Ethiopian Airlines Group (EAG) dominates Ethiopia’s aviation industry. The group includes Ethiopian Airlines, Africa’s largest carrier by revenue, fleet size, and passengers, as well as seven other profit centres ranging from cargo and ground services to airports and catering. FY 2023 annual income reached $6 billion, and its numbers in the first nine months of the current fiscal year show it is on track to hit an aggressive growth target, including a 20% increase in revenue to $7.3 billion and a 30% increase in passengers.

Over the last decade, EAG has registered an average revenue growth of 20% per year, partly due to the ongoing expansion of cargo transport operations. The group plans to increase cargo capacity from 723,000 metric tonnes (2022) to 3 million metric tonnes annually by 2035. Supporting these growth targets, the Ethiopian government is heavily investing in aviation infrastructure, including expanding EAG’s Addis Ababa base, Bole International Airport. In February 2024, the government launched the development of a $55 million e-commerce shipments handling facility; also, in May 2024, it announced the opening of commercial and cargo flight services to private carriers. The impending privatisation of state-owned sectors like air transport, the creation of special economic zones and investment incentives, and continued investment law reform are expected to enhance further the business climate (Standard Bank Trade Club).

NORTH AFRICA – Morocco

North Africa is an increasingly attractive market for the aviation industry. Data shows North Africa, led by Egypt, Morocco, and Tunisia, was one of the five sub-regions to grow in the first, surging 21% year-on-year.

Morocco stands out for its strategic location and investor-friendly climate, both of which have helped it build one of Africa’s most diverse, resilient, and fastest-growing aviation industries. Activity in the sector dropped by 29% in 2020, compared to the global average of 50%, as a result of the pandemic. Pandemic-related job losses in the sector were limited to just 10%, compared to 40% worldwide. Morocco’s air travel recovery reached 98% of pre-pandemic levels by summer 2022 and exceeded pre-pandemic levels by January 2023, outpacing the global average by nearly a year.

Further distinguishing Morocco’s aviation industry, passenger travel is forecast to grow by 65% in the next 20 years, resulting in an additional 6.5 million journeys by 2037, just in time for the 2030 World Cup, which Morocco is co-hosting. In 2023, Moroccan airports handled nearly 25 million passengers in the first eleven months, a 34% increase from 2022. To fuel and support this growth, Royal Air Maroc (RAM) announced in July 2023 plans to quadruple its fleet size from 50 to 200 aircraft by 2037, primarily through leasing. This fleet growth will help the airline expand its domestic and global destinations, serving 99 to 143 by 2037.

Morocco boasts a strong cargo market as well.  Air freight services in Morocco play a vital role in the country’s global trade dynamics, linking its economy to international markets. The primary airports facilitating this crucial transport sector include Mohammed V International Airport in Casablanca and Menara Airport in Marrakech. These hubs serve as vital gateways for the movement of goods, contributing to Morocco’s expanding trade volumes. To meet growing demand, significant government and public-private investments in the future of airfreight infrastructure are underway, focusing on modernising facilities and upgrading technology.

However, Morocco’s aviation industry extends beyond transporting people and goods. The country’s heavy investment in developing advanced industrial platforms, specialised training centres, and infrastructure has attracted leading aviation companies and partners. Today, aerospace value-added trade is one of Morocco’s fastest-growing sectors. Further, multiple civil and military aviation companies – including Boeing, Airbus, Bombardier, and Safran, among others – rely on Morocco for its manufacturing, maintenance, repair, and overhaul (MRO) services and talent. In addition to its strategic location and investor-friendly business climate, Morocco has successfully prioritised the development of a skilled aviation workforce, establishing specialised training like the Moroccan Aerospace Institute to maintain a growing pool of skilled professionals to meet the needs of world-class aviation businesses.

Given Morocco’s strong and attractive aviation industry, competition for business and investment opportunities can be fierce and present a significant barrier to entry. Complex regulations and fluctuating demand for aviation manufacturing, services, and talent further complicate the market. This demand is linked to the economic conditions in the US and Europe; growth in these regions increases demand in Morocco, while economic slowdowns can reduce it.

CENTRAL AFRICA – Rwanda

Landlocked and comprising roughly 26,000 km² of hilly and forested terrain, Rwanda has long recognised that a strong aviation industry is key to its development and long-term prosperity. To give some context, Belgium is roughly 30,000 km². As Africa’s most densely populated country, it is heavily dependent on imports, but its ground transport network is underdeveloped and insufficient to facilitate the commerce and trade that drives annual GDP growth of roughly 7%, more than twice the global average. The country has the highest rank in Africa in the World Economic Forum’s global competitive index, at 58th out of 137.

Rwanda aspires to become the “Singapore of Africa,” boasting a clean and scenic country, business-friendly policies and incentives, and world-class aviation facilities. The analogy is quite accurate. Similar to Singapore’s position as Southeast Asia’s major transit and trade hub, Rwanda’s location offers a key advantage.

With the dual mission of spurring further economic development within its borders and facilitating international trade, the key to Rwanda’s ascent in the aviation world is a series of successful strategic infrastructure projects that capitalised on its location and transformed it from a largely agrarian economy to an emerging hub for international transit and trade. While its geography was once viewed as a limitation, it is Rwanda’s key differentiator today. Rwanda’s capital, Kigali, is ideally placed to provide both regional and long-haul connectivity to major international cities on the continent and beyond.

Recent infrastructure investments demonstrate the country’s momentum. In mid-2023, RwandAir and its partner Qatar Airways opened the Kigali Cargo Hub, a new, state-of-the-art 4,900m² in size, with an approximate annual handling capacity of 49,000 metric tonnes. The facility has 16 dedicated, relaxed positions segregated for fresh food and pharmaceuticals. The development is part of a long-term strategic plan for the cargo division of RwandAir, which has seen cargo rise by nearly 26% in the last five years.

The initiative will help RwandAir develop Kigali into a regional cargo powerhouse, boosting exports and imports around Africa and strengthening links with key overseas markets. For Qatar Airways, the new cargo hub lays the foundation for building an African air cargo network capable of meeting the continent’s 3%–5% annual economic growth forecast over the next decade.

In a further vote of confidence from Qatar, Qatar Airways has invested heavily in the nation’s state-owned carrier, with a 49% ownership stake in RwandAir. Recent press coverage describes the carrier as the fastest-growing airline in Africa and just as well-run as Africa’s crown jewel carrier, Ethiopian Airlines.

The $2 billion Bugesera International Airport project, in which Qatar Airways owns a 60% stake, is slated for completion in 2026. The new facility, located approximately 40 km south of Kigali, will include a 130,000-square-metre main terminal building capable of accommodating 8 million passengers annually. The development also includes a separate, dedicated cargo terminal capable of accommodating 150,000 metric tonnes of cargo a year. The new airport offers an array of investment opportunities, including aviation, security, infrastructure, planning, logistics, and hospitality.

Rwanda’s investment in the aviation industry extends beyond these two flagship projects. The government is also renovating and expanding the current Kigali International Airport and planning to construct two additional regional airports. The overall investment in aviation infrastructure is estimated at $789 million for 2019–2030.

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EXPLORE THE OPPORTUNITIES

Africa’s aviation industry presents a compelling investment opportunity. While challenges persist, success stories from countries like Ethiopia, Morocco, and Rwanda show how strategic investment and structural change can transform economies. These countries are progressively overcoming hurdles to attract significant foreign direct investment (FDI) and develop strong aviation markets. Effective collaboration among investors, governments, and international financial institutions is crucial for creating a favourable environment for growth.

For investors, the possibility of high returns combined with the opportunity to participate in developing and expanding Africa’s emergent aviation industry makes this a highly promising market. At ABL Aviation, we are well-positioned to support Africa’s aviation growth and the needs of investors and partners who see the value in becoming a part of it. Our Casablanca office facilitates investments and partnerships across the continent. We focus on innovative, sustainable financing solutions tailored to our partners’ needs. We are committed to fostering partnerships that drive growth and connectivity as we expand.