Since independence, the growth of Africa has mainly been driven by primary production and exports despite high rates of unemployment and poverty. However, over the last ten years, we have seen Africa’s economy growing faster than Japan’s with her GDP expected to grow at 5% annually between 2016 -2025. And while unemployment rates remain high, Africa’s growth outlook remains optimistic for 2018.
Africa’s Growing Middle Class; An Opportunity for African Airlines to Boost Revenue?
As Africa continues rising, IATA’s report on the future of Aviation 2035 reports an equally rising trend in Africa’s ageing and middle-class population. But what does this mean for Africa’s airline industry? With more travellers expected from non-traditional markets where a middle class is growing, it will be important for airlines to understand not only where the customers are but how they will consume; this includes their travel preferences, price sensitivity and the role of diaspora communities. Most importantly, African airlines will have to dispel the notion that flying is expensive. But How?
3 Ways African Airlines Can demystify “Flying is Expensive” Using Technology
- African Low-Cost Carriers Should Create Awareness Via Digital Media
With over 300M estimated internet users in Africa, creating a digital strategy to educate Africans on the benefits and conveniences of air travel over road transport could prove useful in getting more people to fly. When Fastjet launched in 2012, they understood that air travel in Africa was perceived as a luxury and that most airlines did not have the best reputation. To counter this perception, they leveraged Africa’s rising mobile penetration rate by using online platforms like social media and a mobile-responsive website to create awareness of their affordable services while building a community of loyal customers. A few months after their launch, Fastjet’s website hard garnered 50,000 visits while it’s page had 5,000 likes. Today, Fastjet estimates that about 40% of its passengers to date have been first-time fliers.
- African Airlines Should Use Data to Create Value
Uber’s recently announced that they would be reducing prices in 48 cities in the US yet guaranteeing that drivers will make more. How do they do this? They analyze customer data to understand how best to maximize customer demand, the driver’s earning potential and thus their own profit capture. African airlines have always been good at collecting data, but they haven’t always been good at using it. For example, data collected through the several touch points of any trip (booking,check-in, security), can help identify customer behavior patterns and know that if a customer does A and B, then that customer will probably respond to an offer for C. The intended results are a better customer experience and an improved bottom line for the airline.
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- African Airlines Should Embrace Mobile Payment
According to SITA, adopting alternative forms of payment (online, offline & mobile) help extend an airline’s market reach to diverse market segments such as lower-income households and older travellers. It’s no secret that companies accepting mobile payments are growing faster and more profitable than companies that don’t. After all, mobile payments make it quick and convenient for passengers to search for, book, redeem miles, upgrade and pay for air travel services from mobile devices.
Taking a flight between cities in different African nations is often viewed as expensive and unsafe. However, as the continent looks to the future, improving Africa’s air travel is key to boosting collective GDP as well as creating job opportunities. By leveraging technology, African airlines can expect increased participation from the local market leading to improved economic prospects, especially from landlocked countries.