New Telegraph

Reappraising SAATM’s benefits to Africa’s air transport

Aviation is the foundation of many established and emerging economies and SAATM could help stimulate Africa’s air transport market. WOLE SHADARE writes

 

Adoption

 

In 2015, 23 African countries, including Nigeria, adopted a declaration on the establishment of a Single African Air Transport Market (SAATM) to fully implement the Yamoussoukro Decision (YD).
The fear

The air transport policy had come under scathing criticisms from Nigerian airline operators.

They were of the view that with SAATM, the nation’s carriers could be driven out of the West Coast and had advised the Nigerian government not to endorse the treaty yet until certain issues that could hinder equal competitive environment was sorted out.

 

The operators under their umbrella body, Airline Operators of Nigeria (AON), had appealed to the Federal Government of Nigeria not to go ahead with the full implementation of the Single African Air Transport Market and noted that while the idea may be noble on paper, there was a need for government not to lose sight of the facts and the dangers of the direct impact of the decision on the Nigerian economy and Nigeria as a whole and the future of youths.

AON said it was concerned that the timing was not right, as there were several unresolved issues and challenges being faced by Nigerian aviation that would ultimately undermine the perceived gains of this Treaty that might be an illusion for the country.

 

Accord

The YD is a multilateral agreement between 54 countries in Africa reached in 1999 furthering the concept of air transport liberalisation in Africa under the Yamoussoukro Declaration of 1988.

Despite Nigerian airlines’ opposition to it without looking at the benefits it would create for them on the long run, it is sought to build on the idea of the Yamoussoukro Declaration and focus on how the African air transport market could be fully integrated.

However, the YD was not fully implemented by its signatories. Therefore, in January  2018, the African Union (AU) heads of state and government, with a stronger and more ambitious will to implement the continent’s socioeconomic development and integration agenda, named the SAATM as one of the flagship projects of the AU’s Agenda 2063.

This led to the formal launch of the SAATM, an ‘Open Skies Treaty’. The SAATM initiative is geared at creating a single unified air transport market in Africa through the liberalisation of civil aviation.

The SAATM specifically seeks to achieve the full liberalisation of intra-African air transport services in terms of market access; free exercise of first to fifth freedom traffic rights for scheduled and freight air services by eligible airlines; full liberalisation of frequencies, tariffs and capacity; safety and security standards for African carriers; eligibility criteria for African carriers; and mechanisms for fair competition, dispute settlement and consumer protection.

 

Benefits

The benefits of the SAATM to Nigeria and Africa as a continent will be unrivalled, as it will open and connect markets, facilitating trade and enabling African organisations to link into global supply chains.

The SAATM if implemented will enhance air connectivity, raise productivity by encouraging investment and innovation, improve business operations and efficiency, access to cross-border investments and mergers and promote greater cooperation between African airlines.

It will also increase job creation, growth in trade resulting in growth in GDP and lower travel costs resulting in high numbers of passengers. The International Air Transport Association (IATA) recently reported on the benefits if only 12 countries including Nigeria implement the SAATM.

According to the IATA, air connectivity across these 12 countries would provide an increase in trade by $430 million, an additional 155,000 jobs, $1.3 billion in annual Gross Domestic Product (GDP), 35 per cent reduction in ticket prices and a potential five million passengers a year would be able to travel because of lower fares.

Stakeholders’ observation

Many industry observers are of the view that for SAATM to work and benefit African carriers and also meet the objectives behind its establishment, there must be regulation in the charges and these charges should be uniform.

Also, member nations should also review downwards taxes on air transport in order to ensure that airlines operate profitably. Profitable airlines will stifle the erosion of the African market by foreign carriers, create jobs in the region and serve as pivot for economic development.

Nigeria airlines are supposed to benefit from the treaty but indications show that they are losing dominance of the West Coast.

Open market without access

Since the demise of the Nigeria Airways, which dominated the West and Central Africa air travel market, competing with Ghana’s and Cameroon’s national carriers, these sub-regions, known as the West Coast, have remained an open market.

Nigeria has vibrant airlines as supposedly believed but has not yet tapped into the market owing to so many factors of wrong use of equipment and over saturation of the route without strategic thinking in a market that is populated by 60 per cent of Nigerians.

As a result of this, international carriers like Air France, KLM, Lufthansa and other European carriers and later Ethiopian Airlines became the dominant carriers into these regions.

 

 

Sirika’s view

Aviation Minister, Hadi Sirika, called on African governments to embrace full liberalisation of the aviation sector, invoking the Yamoussoukro Decision, which established an arrangement for the gradual liberalization of intra-Africa air transport services.

According to him, “Nigeria today has all its bilateral air service agreements with the Yamoussoukro Decision (YD) and was also among the first 10 countries that signed a commitment to implement the Single African Air Transport Market (SAATM).”

This came as the African continent is rallying to ensure that air transport system is at the forefront of all their collective objectives to realize Africa as a single economic bloc of 1.3 billion people with a Gross Domestic Product (GDP) of almost $3 trillion, for which they want to begin to focus and increase trade among themselves, as well as investment.

Sirika, who was among experts that met recently to chart a course for African aviation going forward in response to COVID-19, which has impacted and wreaked havoc in the sector in the continent, called for government supported loans, and other stimulants to aid the sector bounce back better.

Last line

With SAATM, Africa has a ready-made mechanism to add power to the economic recovery. It faces a much slower recovery if it relies on hubs outside the continent to re-establish connectivity. Now is the time for the 34 governments that have committed to SAATM to actually implement it. And the other governments should make plans to catch-up quickly.

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