Air Namibia’s economic impact downplayed
FROM a reading of the economic data, the idea being mooted to liquidate Air Namibia appears ill-advised and would only benefit existing – predominantly white-owned – airline monopolies and hurt the national economy.
It is also shocking to learn that government could not intervene to rescue the debt-laden parastatal that has temporarily lost the bulk of its fleet to its creditors, and the possible closure of our flagship airline would be regressive – if not catastrophic.
With West Air, a privately owned airline being granted a passenger operating licence recently, the financial chaos at Air Namibia appears to be used as justification to close the airline and pave the way for West Air to replace our national air carrier.
It is clear that Air Namibia is beset by management problems and financial woes, but government must address the root causes of these problems instead of entertaining notions of shutting down the airline without considering the wider economic impact on the country.
According to Oxford Economics, a reputable global research think-tank, in 2015/16 Air Namibia’s operations and aviation-related capital spending supported a N$704 million contribution to Namibian GDP.
The airline’s operations are estimated to have sustained 4,550 jobs in Namibia in 2015/16, including 750 people directly employed by Air Namibia and 2,700 indirect jobs that are supported in the airline’s local supply chain, as well as at least 1,100 derivative jobs in other sectors.
It is estimated that Air Namibia’s contribution to Namibia’s air connectivity boosted the country’s productivity by some N$1.4 billion in 2015/16, around 0.9 percent of the national GDP, underling the wider benefit the airline brings to the economy.
Spending by visitors arriving in Namibia by air offers a clear example of the benefits derived from Air Namibia’s connectivity. Without air transport services it is likely that many international visitors to Namibia would not have travelled to the country.
In 2015/16, the estimated international visitors carried by Air Namibia spent slightly more than N$1 billion in the Namibian economy. The spending of these visitors is estimated using Oxford Economics’ spending per visitor forecasts for Namibia, produced in cooperation with the World Travel and Tourism Council.
The economic footprint of this Air Namibia-facilitated visitor spending on accommodation, food, recreation and so on is highly significant. In 2015/16, the quantified footprint of the airline’s visitor arrivals in the country was estimated at N$971 million in GDP for Namibia, supporting some 4,400 jobs and generating N$245 million in tax revenues for the government.
That same year, Air Namibia carried 480,000 passengers on international flights to and from Namibia. Among these, some 140,000 were international visitors to the country while nearly half of all arrivals were visitors from the rest of Africa, predominantly traveling on the airline’s network across Southern Africa.
Over four in ten visitors carried by the airline were Europeans, with 60 percent of these using the Windhoek-Frankfurt route. A further nine percent came from either the Americas or Asia Pacific.
The enhancement of Air Namibia’s network will see this impact increase in future years. By 2020/21, the number of visitor arrivals carried by the airline is expected to rise to over 230,000, with their total spending increasing to nearly N$1.8 billion, measured in 2015/16 prices.
As a result, the GDP contribution from visitor spending is expected to grow to nearly N$1.7 billion, sustaining 7,700 jobs in the Namibian economy and raising over N$440 million in tax revenues, also measured in 2015/16 prices.
Had all of these Air Namibia services been withdrawn during 2015/16, approximately 475,000 passenger journeys to and from Namibia would likely not have taken place.
The economic data provide useful context for understanding how the government subsidy underpins the broadly positive economic impact of Air Namibia. Any review and planning around its closure should consider the airline’s contribution to the economy, which extends far beyond the impact of its procurement spending.