The global aviation sector is poised for significant expansion but faces substantial hurdles in its path to recovery from the COVID-19 pandemic. A new report from Oliver Wyman highlights both the promise and challenges ahead for the industry, with a particular focus on Africa’s potential.
According to the International Air Transport Association (IATA), air traffic has nearly rebounded to pre-pandemic levels, reaching 98.2% of 2019 figures in the fourth quarter of 2023. This recovery sets the stage for unprecedented growth in fleet size and maintenance, repair, and overhaul (MRO) spending.
Oliver Wyman’s Global Fleet and MRO Market Forecast projects the worldwide commercial aircraft fleet will grow to over 36,400 by 2034, a 28% increase from today’s roughly 28,400 aircraft. This expansion represents a compound annual growth rate (CAGR) of 2.5%. Alongside this fleet growth, global MRO spending is expected to hit $104 billion, surpassing pre-pandemic highs.
Africa stands to benefit significantly from this growth trend. The continent’s fleet is forecast to expand by about 25% over the next decade, reaching more than 1,400 aircraft by 2034. South African Airways exemplifies this trajectory, with plans to nearly triple its fleet from 13 to approximately 40 aircraft over the next ten years.
Paul Calvey, Oliver Wyman Partner and Head of South African operations, notes, “The growth in Africa reflects an expected expansion of demand. Figures from IATA show that African passenger numbers will nearly double by 2035. This will require airlines to continue to invest in expanding their fleet, as well as looking at new routes to add to their network.”
However, the pandemic’s impact on the industry cannot be overstated. The global fleet’s growth has been set back by six years compared to pre-COVID projections. Africa’s aviation sector was particularly hard-hit, losing $7.7 billion in revenue in 2020 alone, with several airlines ceasing operations.
The road to recovery is fraught with challenges. André Martins, Partner and Head of Transportation and Services for India, Middle East, and Africa regions at Oliver Wyman, outlines several hurdles: “Rapidly rising interest rates have made borrowing far more expensive than it was pre-pandemic. Mounting inflation, meanwhile, has created significant wage pressure across the industry.”
These financial pressures are compounded by shortages in skilled labour, raw materials, and aviation maintenance technicians. The industry must also grapple with modernising production and optimising supply chains while facing increased costs for aircraft components and fuel.
Despite these obstacles, there are glimmers of hope on the horizon. Global economic conditions are expected to improve, with inflation easing and major economies likely avoiding recession. This could lead to reduced interest rates, making crucial investments more feasible.
“Investment is necessary not only to address labour and supply chain optimisation challenges but also to meet the increasing pressure for environmental sustainability. This includes investing in sustainable aviation fuel (SAF), which can significantly reduce emissions,” Martins adds.
For Africa, the path forward lies in collaboration and targeted investment. By focusing on infrastructure development and supporting African airlines, the continent can position itself to capitalise on the projected growth in air travel demand.
