Oil prices could drop to $40 a barrel, and in Africa that could be either a good thing or a bad thing, depending on who is doing the flying; that was the message at the regional symposium of the African Business Aviation Association in Addis Ababa, Ethiopia.
Low fuel prices are a good thing, said Dawit Lemma, founder and managing director of Krimson ACMC, an aviation consulting firm based in Addis Ababa, during a panel session on the subject. “The cost of fuel is a major portion of operating cost. And in general, lower fuel prices make flying corporate jets more affordable,” he said. Dawit added that more charter flying would also boost earnings for support operations, such as FBOs.
Not all the panelists agreed, however. Some argued that the declining price of oil does not necessarily spell prosperity for business aviation in the long term. Jacobus Phillipus, executive director of National Airways of South Africa, said, “What we need is a stable price.” He cited business in sub-Saharan Africa, which has not picked up despite declining oil prices. “I think there is a good reason for that. Take South Africa and Angola, where the currency does not match with the U.S. dollar. Real oil prices remain the same. Oil does not get less expensive in those countries even if it is cheaper in dollars.”
In addition, he noted that big oil companies are flying less because there are fewer oil exploration opportunities in the region. He concluded, “Business aviation involving small aircraft sees some benefit from the declining price. But that doesn’t make for a significant impact industry-wide.”
For some, in fact, the declining price of oil has a devastating effect. According to Ayo Oyewole, CEO of Nigeria’s Triton Aviation, the declining price was a complete disaster for oil-producing countries. “Ninety percent of Nigeria’s income comes from oil. People stop flying when the oil price drops, and business has been very slow since December last year. Also, the government cuts spending, so there’s an adverse trickledown effect on the overall economy. We keep looking at the commodity price and hope for recovery. We hope to see the price of oil back at $100 per barrel.”
