Nigeria Joins Algeria, Ethiopia, and Other African Countries in Confronting Blocked Funds and High Operational Costs, While Airlines See Modest Profits in 2024

In 2024, African airlines reported a $100 million net profit, marking their second consecutive profitable year since the pandemic. However, the International Air Transport Association (IATA) has cautioned that the financial environment for airlines in Africa remains razor-thin. The region is operating in one of the most challenging financial environments globally, despite a significant rebound in demand. While African airlines showed resilience, key structural barriers, high operational costs, and blocked funds continue to impede further growth. Countries like Algeria, Ethiopia, and Nigeria are particularly impacted by these challenges.

What Happened in 2024?

Despite the considerable profits in 2024, which were propelled by record-breaking demand, African airlines continue to face financial pressures. IATA’s finalized data reveals that African carriers achieved a net profit of $100 million in 2024. This marked the first back-to-back profitable year for the region since the pandemic, signaling a return to stability for many airlines.

The profit per passenger for African carriers was reported at just $0.90, significantly lower than the global average of $6.14 and far behind North American airlines, which earned $13.00 per passenger. Despite this, the growth in annual traffic (RPKs) was a bright spot, with a 13.2% increase in traffic, placing Africa second only to Asia-Pacific for the highest growth rate globally.

While the load factor hit a record high of 74.5%, it remains the lowest among all global regions, with the global average standing at 83.5%. This discrepancy reflects ongoing inefficiencies and structural issues in African aviation, which continue to hinder more robust financial performance.

Why Is Africa’s Recovery So Challenging?

IATA’s reports pinpoint several structural barriers contributing to the financial struggles of African airlines:

1. Fuel Premiums: Airlines operating in Africa face a 17% higher cost for jet fuel compared to the global average. This is mainly due to limited refining capacity and inefficiencies in the supply chain, making fuel one of the largest cost drivers for airlines in the region.
2. High Taxation: Taxes and charges imposed on airlines in Africa are 12-15% higher than global averages. In some countries, taxes add $60 to $80 to a base fare of just $100, exacerbating the financial burden on both airlines and passengers.
3. Blocked Funds: A major issue facing African airlines is the blockage of funds in countries like Algeria, Ethiopia, and Nigeria. As of late 2025, Africa accounts for 79% ($954 million) of the world’s total blocked airline funds. In these countries, governments restrict airlines from converting local earnings into hard currency (USD), which prevents carriers from paying for critical expenses such as fuel and aircraft leases. This continues to be a significant barrier to the smooth operation of African airlines.

What Is IATA’s “Focus Africa” Initiative?

To address these challenges, IATA has launched the Focus Africa initiative, aiming to tackle the continent’s aviation issues in six critical areas:

1. Connectivity: Currently, only 19% of intra-African routes have direct flights, meaning the vast majority of flights between African cities involve complex, costly connections. IATA is pushing for the full implementation of the Single African Air Transport Market (SAATM), a program designed to allow airlines to fly between any two African cities without restrictive bilateral agreements. This could dramatically improve connectivity and reduce operational costs for African carriers.
2. Safety: Africa’s aviation safety standards are a work in progress. IATA aims to bring African safety standards to 75% implementation of ICAO’s SARPS (Standards and Recommended Practices), as the current African accident rate is much higher than the global average.

What’s the Outlook for 2025-2026?

Despite these obstacles, IATA forecasts a slow but steady recovery for African airlines in the coming years:

• Profit: The industry’s net profit is expected to double to $200 million in 2025 and 2026, signaling a positive trend in the region’s recovery.
• Profit per Passenger: IATA projects profit per passenger will rise to $1.30 in 2025 and $1.40 in 2026, a modest improvement that indicates that airlines will begin to see healthier margins.
• Passenger Demand: Passenger demand in Africa is expected to continue its upward trajectory, with a projected 6.0% growth in 2026, once again outpacing the global average of 4.9%.

What Are the Long-Term Implications for African Airlines?

While the recovery in African aviation is underway, the high operating costs and structural barriers mean that it will take time before African airlines can achieve the profit margins seen in other regions, such as North America and Asia-Pacific. IATA’s initiatives, such as the Focus Africa initiative, are critical to improving the industry’s outlook by addressing inefficiencies and promoting intra-African connectivity. The coming years will be pivotal for the region’s aviation sector as it continues to evolve and grow amid ongoing challenges.

Conclusion: A Difficult But Promising Future

The recovery of African airlines is in its early stages and remains fraught with difficulties. The high operational costs, compounded by issues such as blocked funds and fuel premiums, continue to place significant strain on airlines. However, increased traffic growth, the Focus Africa initiative, and projections for improving profits offer hope for a brighter future. The road to recovery may be slow, but the prospects for African aviation in 2025 and beyond remain promising.

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