Diminishing Growth of African Airlines

image011Chinedu Eze writes that the failure of African nations to embrace open skies for the region’s airlines as enunciated by Yamoussoukro Declaration would perpetuate the dominance of European airlines in the continent. Addressing journalists who attended the Aviation Media Day of the International Air Transport Association (IATA) on December 10, 2014, the Director-General and CEO, Tony Tyler expressed concerns that many years ago after African nations came up with a lofty policy to open their sky to indigenous airlines in the Yamoussoukro Declaration, they have failed to implement that policy over a decade after.

African states met on November 13 and 14, 1999 in Yamoussoukro, Ivory Coast to ratify the decision to eliminate restrictions and open their skies for airlines owned and operated in the continent. The ratification followed the Abuja Treaty, which was the establishment of the African Economic Community. The Article 61 of the Treaty related to the integration of air transport in the continent and Article 10 of the Treaty related to the authority of the Assembly of Heads of State and government to adopt the decision. On October 7, 1988, African states recognised the objectives of the Yamoussoukro Declaration, which primary purpose was to create a conducive environment for the development of intra-African and international air services.

Also in September 1994, African ministers responsible for civil aviation met in Mauritius and urged the acceleration of the implementation of the Yamoussoukro Declaration, especially those relating to granting of traffic rights and regional cooperation in air transport and the role of governments in implementing the policies. So, the objective of the Declaration was to harmonise air transport policies in order to eliminate non-physical barriers that hamper the sustainable development of air transport services in Africa. Little wonder therefore that Tyler was surprised that after these efforts and more than 15 years after its adoption, Africa was yet to implement the Yamoussoukro Declaration (also known as Yamoussoukro Decision).

Gains of the Declaration

African airline operators believe the implementation of the Yamoussoukro Declaration will help to sustain the airlines and make them profitable. It will also help the airlines to dominate the African airspace, which is presently under the control of foreign airlines, especially European carriers. According to IATA, greater air connectivity in Africa would stimulate wider-spread economic and social prosperity on the continent. It said, to achieve this, air rights for intra-African flights should be liberalised. Speaking to Ethiopian and African Union air transport policy makers, regulators and industry representatives on its recently commissioned study, IATA said indications had shown that Africa was well-placed to enjoy sustained economic growth, but that, with notable exceptions such as Ethiopia, this was being held back by tightly controlled access to markets for African airlines within Africa. That was the conclusion of the study titled, “Transforming Intra-African Air Connectivity, the economic benefits of implementing the Yamoussoukro Decision”.

The global body said these restrictions to connectivity result in lost opportunities for job creation, business and GDP growth, innovation and competitiveness. “It also weakens the performance of many African airlines. In December IATA issued its 2015 forecast, showing African airlines are expected to report a combined US$200m net profit representing a 1.4 per cent profit margin on revenues – the lowest of all regions worldwide. IATA noted that Ethiopia’s pursuit of more liberal reciprocal bilateral air transport agreements with other African nations has contributed to becoming one of the largest and most profitable airlines in Africa and one of the fastest-growing air traffic in the world. “Research has found that on intra-African routes with more liberal bilaterals, Ethiopian’s benefit from 10-21 per cent lower fares and 35-38 per cent more flights on routes compared with those which were still restricted,” explained IATA’s Vice President for Africa, Raphael Kuuchi.

“Increased intra-African air connectivity is essential if Africa is to seize the opportunities for growth promised by its demographic and resources advantages. Aviation in Africa supports nearly 7 million jobs and $80 billion in GDP, but it faces challenges in terms of liberalization of markets, safety, costs, infrastructure and regulation. Only through industry and governments working hand-in-hand can these challenges be overcome, to the benefit of everyone across Africa,” added  Kuuchi.

Regional Partnerships

The Chief Executive Officer of Ethiopia Airlines, Tewolde Gebremariam said last week during an interview with selected Nigerian journalists in Addis Ababa that thus far Africa has not encouraged regional partnership in the aviation sector as much as it should. “Now, with a renewed initiative in the Yamoussoukro Declaration we do hope that the African heads of states would declare that Africa should have a single sky, a single aviation policy, a single aeronautical policy, whereby African carriers can cooperate, African countries can cooperate to double up their aviation sector with free access to their markets to African carriers.”

He said what the airlines in the continent basically expected from such meetings was full implementation of the Yamoussoukro Declaration on one hand, which means that the African airspace would be treated as a single airspace. “So, any African carrier will be able to fly from any point to any point without any restriction in the continent. The second objective which we are pushing as African airlines, the African Airlines Association (AFRAA) and the African Civil Aviation Commission (AFCAC), which is headed by a Nigeria lady, is to formulate an aviation policy, single market for Africa which will have the same community clause as the European Union has today.”

Gebremariam explained that Yamoussoukro Declaration should create open skies policy that is similar to that of the European Union member states which treat the European airspace as a single market in order for them to have full freedom of the air for their airlines within the European Union, but that when it comes to air services agreement negotiation between member states of the European Union and other countries outside the European Union, the European Union will act as a single market. “For instance, today as it is, if one of the European Union member country airline wants to fly to any country in Africa; in the air services agreement there will be a clause mandating the European airline to fly to that country through any other European country. For instance British Airways can fly to Addis through Paris with the European Union community clause. But unfortunately Ethiopian Airlines or Kenyan Airways or Aril Air will not be able to fly to European countries through other African countries which doesn’t have an airline,” the Ethiopian CEO said.

He further explained that an African airline may not be able to land in any other country if it is operating, say, from Paris to the Chadian capital, considering the existing air service agreements. “While AirFrance will be able to fly to Addis Ababa through one of the member countries in Europe, an African airline may not have such opportunity in Africa. So, it is this kind of block to block, the African Union as a block, and the European Union as a block, block to block negotiation should be there to make it competitive and create level playing ground for everybody,” he said.

Unfair Competition in Africa

Gebremariam said the failure to implement the Yamoussoukro Declaration has given rise to unfair competition in the African market whereby foreign European carriers take advantage of the existing flight restrictions in the continent to exploit the market. This is because while the African nations open their door to European airlines, they restrict their skies to the airlines owned by their African neighbours.

“So, because of lack of these two policy instruments, the first one is the Yamoussoukro Declaration and the second one is what I explained now, what we see today is unfair competition in the continent. And the result of it is that 80 per cent of intercontinental traffic between African and the rest of the world is carried by non-African carriers, only twenty per cent is carried by African carriers and this is lopsided and it has to be corrected. And in other to correct this imbalance and unfair competition, it is necessary to enact those two instruments that I explained before. And I hope and I wish and I sincerely hope that Nigeria will lead the change because Nigeria is a big aviation market; she is the most populous country, the largest economy now in the continent, so Nigeria has a lot of ways to drive this initiative,” Gebremariam said.

Reluctance to Embrace the Declaration

It is not all the countries in the continent that are enthusiastic about the implementation of the Yamoussoukro Decision and that is why the policy has not been implemented all these years. Some countries that do not have developed aviation system feel they are being exploited by other African countries, with developed airlines. Unfortunately however, these countries open their doors for European, Middle East and American airlines while they protest against the operations of African airlines.

This attitude has historical bearing. Many countries that were colonized by European countries naturally allowed the carriers of those countries to operate to these African nations. The domination of these European carriers is even pre-colonial and it has remained so, even when some African countries established their national carriers after independence. Deputy Managing Director of Arik Air, Captain Ado Sanusi told THISDAY that the concept of Yamoussoukro Decision was good but there were problems. One of these problems is that some African airlines use the unrestricted market to exploit other countries. For example, Sanusi noted that Ethiopian Airlines established Asky in Lome, Togo exploit the Nigerian market. At the same time it avoids any commitment to the country where it airlifts the highest number of passengers from the continent.

But Gebremariam said that the objective of Ethiopian Airline is to provide connectivity to African passengers, no matter where they are, without hassles. However, Sanusi noted: “The YD has not provided everybody with a level playing field. It gives advantage to countries like Kenya Airways and Ethiopian Airlines which have developed airlines which they use to exploit other African countries that do not have well established airlines. These countries use their airlines to develop their tourism at the expense of other African nations. They put a lot of money in their airlines which provide the vehicle for the development of other industries like tourism.

“Look at Rwand Air, the government of Rwanda knows the airline is not making money but it is providing the capacity which other industries, including the tourism industry are, using to make money”. The question that is being asked is, since it  has become inevitable that even if the African carriers do not benefit from the air travel markets in the region other airlines would, is it not better that African airlines are given the chance by their sister nations to utilise the market and develop and grow?

http://www.thisdaylive.com/articles/diminishing-growth-of-african-airlines/199297/

Likes:
0 0
Views:
134
Article Categories:
2015Edition 92

Leave a Reply

Your email address will not be published. Required fields are marked *