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Unlocking Africa’s potential via single air transport market

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Unlocking Africa’s potential via single air transport market

The wait is finally over as Nigeria, alongside others, ratify Africa’s Open Skies pact. WOLE SHADARE looks at the huge impact it would have on the continent’s aviation sector.

 

 

Difficult air connectivity

Flying from London to Athens is not generally considered a massive undertaking. It’s a given that the journey will be direct, take three-and-a-half hours, and Europeans will not require a visa. The biggest decision is likely to be which meal to select in-flight. Now imagine if the same journey was routed via Moscow – ridiculous!

Yet that is the situation when travelling across Africa, where convoluted flight itineraries are unfortunately the norm. Let’s take the example of a trip from Algeria to Cameroon, as the crow flies, a journey the same length as London- Athens. There is no direct flight.

The fastest route, via Istanbul, takes 24 hours and involves three separate take-offs and landings. The less time-economical route can take up to 30 hours – half the time it took the Virgin Atlantic Global flyer to circumnavigate the globe. Adding insult to injury, the flight from Algeria to Cameroon costs 80% more than London-Athens. This is truly a disturbing paradox. Sadly, the problems caused by an unconnected Africa are not limited to inconvenient travel schedules.

Far bigger are the opportunity costs to the economies of the continent’s 54 nations and the region as a whole. Trade and tourism is hindered and investment opportunities lost. And it’s not just about economics.

Aviation connects people. Africa would be a less fragmented continent with greater air connectivity. Africa is home to 12 per cent of the world’s people, but it accounts for less than 1 per cent of the global air service market. Part of the reason for Africa’s under-served status, according to a just-published World Bank study, Open Skies for Africa – Implementing the Yamoussoukro Decision, is that many African countries restrict their air services markets to protect the share held by stateowned air carriers.

This practice originated in the early 1960s when many newly-independent African states created national airlines, in part, to assert their status as nations. Now, however, most have recognised that the strict regulatory protection that sustained such carriers, has detrimental effects of air safety records, while also inflating air fares and dampening air traffic growth. Indeed, African ministers responsible for civil aviation themselves acknowledged this in 1999, when they adopted the Yamoussoukro Decision, named for the Ivorian city in which it was agreed.

It commits its 44 signatory countries to deregulate air services, and promote regional air markets open to transnational competition. The benefits of connectivity are clear. Europe’s air liberalization was not only a coup for the industry but also passengers.

In the short space of eight years (1992-2005), the 100 year-old industry witnessed a surge in activity. Passengers enjoyed 88 per cent more flight options and double the number of seats. Suddenly travelling by air became accessible to all, with a 15 per cent drop in ticket prices.

Eliminating physical barriers

The benefits of a connected continent are clear. So why do nonphysical barriers remain? While open skies pledges – 1988 Yamoussoukro Declaration and 1999 Yamoussoukro Decision – are being signed by most African countries, implementation has been unhurried and restricted. Protectionist policies favouring national airlines remain abundant. This is unhelpful.

The continent cannot take off economically while its runway is incomplete. Governments in Africa need to treat aviation as a strategic asset and not as an instrument of foreign policy. Africa’s past has long been defined by national insularity; its future lies in liberalization. Where better to begin than its skies?

How it was established

As a result of the enormous benefits liberalisation would bring to the continent, in 2015, the Assembly of Head of States and Government adopted the Declaration (Doc. Assembly/ AU/Decl.1 (XXIV)) on the Establishment of a Single African Air Transport Market and also issued a commitment (Assembly / AUC/Commitment/XXIV), to the immediate implementation of the Yamoussoukro Decisions towards the establishment of a single African air transport market by 2017.

Eleven African Member States championed the Declaration by signing the Solemn Commitment to actualise the Decision creating the single market. These Member States were constituted as a working group at Ministerial level (Ministerial Working Group) with responsibility to follow-up the implementation of the single market and spearhead the advocacy campaign to urge more Member States to join the single market. The African Union Commission was entrusted with the functions of coordination and facilitation of the process of operationalization of the Single African Air Transport Market. The 11 champion states that signed the initial commitment are namely: Benin, Capo Verde, Repub-lic of Congo, Côte d’Ivoire, Egypt, Ethiopia, Kenya, Nigeria, Rwanda, South Africa, and Zimbabwe. The solemn commitment is open for other states to join.

Market size

The current size of the Single African Air Transport market is comparable to the COMESAEAC-SADC Tripartite free trade area with 26 countries, a population of 527 million persons, a Gross Domestic Product (GDP) of $624 billion and per capita income of US$1,184.

Joining the Single African Air Transport Market is based on a variable geometry principle in accordance with Member State’s commitment to implementing the decisions/declarations of the Assembly.

Secretary-General of African Civil Aviation Commission (AFCAC), Ms. Iyabo Sosina, at the sensitization workshop on the commencement of SAATM in Lagos last week enumerated the benefits of the scheme. Sosina disclosed that the 23 countries that have declared for single air transport market have a combined population of roughly 670 million, more than half of the population (57%) of the continent in 2015, stressing that their combined GDP amounted to $150billion in 2015. She noted that this could double to $300billion because of the enormous benefits it would bring to the continent.

The AFCAC scribe stated in 2015, 63.5 million international tourists were recorded in the continent and the 23 countries accounted for over 54 per cent of international visitors, hinting that the number of countries that have signed the solemn commitment offer significant single air transport market space in terms of traffic volumes and airport infrastructure. In 2015, Africa was reported to have handled 180 million passengers with over 56 per cent passing through airports within the current single market area, whilst airlines within the 23 countries accounts for more than 80 per cent of the intra- African traffic. She listed the 23 countries that have signed the solemn commitment that has increased from 11 as Nigeria, Benin, Burkina Faso, Botswana, Cape Verde, Republic of Congo, Cote d’Ivoire, Egypt, Ethiopia, Gabon and Ghana. Others are Guinea Conakry, Kenya, Liberia, Mali, Mozambique, Niger, Rwanda, Sierra Leone, South Africa, Swaziland, Togo and Zimbabwe.

Nigerian carriers kick

As laudable as the policy is, airline operators under the aegis of Airline Operators of Nigeria (AON) said they were not ready for SAATM implementation. Chairman AON, Capt. Nogie Meggison, who spoke on behalf of airline owners and investors, objected to implementation of the treaty. He questioned the win-win claims of open skies, saying the treaty is rather a subtle ploy to ensure Nigeria, with about 65 per cent of West African population, loosen up to the benefit of other smaller countries. He argued that the move cannot be in the best interest of Nigeria where there is no uniform platform for fair competition or adequate consultation with carriers.

His counterpart representing the Aircraft Operators of Nigeria (AON), Capt. Mohammed Joji, added that Nigeria cannot be talking about sky liberalisation where local policies have not favoured local carriers to face their African counterparts. Joji reiterated perennial problems of foreign exchange, Value Added Tax (VAT), multiple taxation and high cost of aviation fuel, policy flip-flop among others that have collectively killed over 50 airlines in the last 18 years.

Last line

Not a few noted that there is potential for aviation growth in the region with the emergence of a middle class market that needed to be tapped for the growth of aviation in the region.

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