Why International Carriers Will Continue to Dominate Nigeria’s Airspace

Delta Airlines PlaneDespite the progress being made by African airlines in recent times, the continent is still dominated by international carriers. Chinedu Eze writes that governments’ unfavourable policies and inter nation rivalries impede the growth of African carriers.

There are statistics that are irritating about air transport in Africa. In spite of over one billion population of the continent, it contributes only two per cent of the world aviation market. It has the highest air crashes in the world and foreign carriers from other continents generate $10 billion from the region, while its own airlines have a market share of only 20 per cent from the continent.

When the number of aircraft owned by African carriers are put together, they are less than the fleet of some international airlines like Delta Air Lines and over 98 per cent of African airlines are at the verge of bankruptcy. The cost of operating airlines in Africa is the highest in the world and cost of aviation fuel in the continent is also the highest in the world and this include countries that are oil producing like Nigeria.

The major problems of air transport in Africa could be described as self-inflicted. Countries in Africa refused to liberalise their skies for free entry and exit for African airlines. Policies enunciated and implemented by African governments tend to be anti-business and this affect profitability for African airlines.

And there is always policy summersault in many countries, whereby policies change as new aviation ministers are appointed. Most policies are not followed through but changed midway. Finally, there is the attitude of Africans to stand against their own, but open doors to foreign airlines, an attitude that is attributed to colonial mentality.

Many of these were brought to the fore last week when African aviation experts, top government officials in aviation and international aviation financiers and aircraft manufacturers met in Addis Ababa at the African Aviation Summit and Air Finance for Africa organised by the African Aviation Services Limited.

Opening African Skies

According to World Bank report on air transport in Africa, the continent is home to 12 per cent of the world’s people, but it accounts for less than one per cent of the global air service market.

Part of the reasons for Africa’s under-served status, according to World Bank study, is that it refused to open its skies by implementing the Yamoussoukro Decision, which was adopted by African states in 1988 aimed at libralising the continent’s airspace, as many African countries restrict their air services markets to protect the share held by state-owned air carriers that were established in the 1960s, many of which had gone under.

So World Bank report said liberalising air transport in the continent would deliver improved safety, lower fares and increase traffic in Africa.

The CEO of African Aviation Services Limited and former Secretary General of African Airlines Association (AFRAA), Nick Fadugba, said the African Heads of State and Government approved the Yamoussoukro Decision (YD) in 2000 as legally binding instrument on all African Union member states and according to the United Nations Economic Commission for Africa (UNECA), the YD was intended to create a conducive environment for the development and provision of safe, reliable and affordable air transport services in Africa.

Fadugba therefore called on the African States and the African Union to launch African aviation initiative that could move the continent forward.

“It is not acceptable for Africa to have only two per cent of the world aviation market. Inter nation rivalry should be discouraged. You will recall that Yamoussoukro Decision was established in 1988, but over 20 years later it is yet to be fully implemented. We are in danger of being a laughing stock to the rest of the world,” he said.

Fadugba said it was ironic that the main beneficiaries of Africa’s recent air traffic growth have been non-African airlines, adding that air transport is critical to Africa’s economic advancement and “I believe that African government and African Union should take urgent steps to help remove the hurdles that hinder the growth of commercial airlines, as well as business and general aviation operators.”

Discernible Growth

The CEO of the most successful and most profitable airline in Africa, Ethiopia Airlines, Tewolde Gebremariam, noted that in Africa the aviation industry accounts for about $70 billion of the continents GDP and supports seven million jobs.

“With Africa’s rise, these should have been exciting times for African aviation. However, Africa’s bright economic prospects are not being translated into opportunities for the African airline industry. Far from it! It is ironic that in the golden years of Africa’s economic boom, our industry in Africa is fighting for its very survival due to the very high operating costs in the continent, uneven and stifling foreign competition, infrastructure challenges and traffic rights restriction.”

Poor Infrastructure

President and Chairman of the Board of Directors African Export-Import Bank (Afreximbank), Mr. Jean-Louis Ekra, said air transport in Africa is beset with underdeveloped infrastructure such as airport facilities and poorly equipped airlines.

He also observed that poor record of safety and security as compared to international standards; lack of effective enforcement of safety regulations as well as absence of political will on the part of some governments, especially in relation to the implementation of the Yamoussoukro Decision are some of the problems facing the growth of aviation in the continent.

“As you are aware, the Yamoussoukro Decision is an African Union instrument intended to liberalise activity in the aviation sector and, in so doing, improve efficiency and contribute in attracting capital investment into the sector.”

He however remarked that there is ineffective control and supervision of licensed institutions in charge of delivery of Aviation services and there is also lack of up-to-date systemic surveillance structures, among others.

Growth

Although air transport in Africa has increased in recent years and it was projected that at 6.1 per cent, Africa would be the third fastest growing regions in the world by 2015, but foreign carriers would still dominate the region’s airspace.

Also the volume of African airline business is expected to treble in the next 20 years from its current level to about $200 billion.

It is further projected that the industry would grow in terms of its impact on African economies in the next 20 years and job creation is projected to be around 879,000, but this would be dependent on how African states cooperate to empower airlines in the region through favourable policies and liberalisation.

Mr Zemedeneh Negatu, Parter, Ernst & Young, Ethiopia said if African airlines were prioritised to compete globally they would be contributing 24 per cent to Africa’s GDP, which is about $2 trillion annually.

Negative Perception

But he lamented that the perception of Africa as a place to do business is negative and for the continent to progress, this perception must be changed, observing that global media are still very negative about Africa.

Negatu therefore recommended that for African airlines to succeed they must have to cooperate.

“The root cause of bankruptcy of African airlines is bad governance through interferences, change of policies. Ethiopia Airlines is 100 per cent state owned but it is run like a business,” he said.

Some of the delegates that spoke at the summit noted that for African airlines to cooperate, African nations must show the desire that they wish to relate with one another, adding that African airlines should have one sky because it would be to the benefit of all to do so.

Some of the problems of African airlines were identified and these include market access. While non-African airlines have easy access to the continent, it is sometimes very difficult for African airlines to have access to Europe and the US.

Globally, competition is said to be uneven and it is said that the African environment is costly in doing air transport business.

Aviation as Strategic Sector

The CEO of Ethiopia Airlines, Gebremariam, said aviation in Africa should be considered as a strategic sector for the socio economic transformation and integration of Africa.

“This means no more excessive taxation and fees imposed on our industry. It also means no more fragmented small markets of 55 African countries, which will inevitably lead to a certain death of the African aviation industry.”

Gebremariam said the creation of single African aviation market should be a priority in African Union Agenda 2063, adding that the continent should be one market governed by continental rules with supra national institutions to enforce these rules and with an African external aviation policy when dealing with third parties outside the continent.

“With Africa projected to be the next and perhaps the last frontier in globalisation, we cannot let our indigenous industry die in front of our eyes and allow our continent to be a mere consumer base for the global economy. This is what will surely happen if we continue with business as usual,” he said.

The Nigerian situation epitomises the problem of air transport in Africa. In Nigeria, airlines find it difficult to survive because of the hostile environment which includes high charges, high cost of fuel and inimical policies. Policies are made at the whims and caprices of the Minister of Aviation or the government in power and could be changed arbitrarily.

Nigeria can afford to sell fuel at prices lower than the international benchmark, government can facilitate single interest rate for long term loans for Nigerian airlines and government can introduce policies that soften aircraft manufacturers and lessors who see Africa and Nigeria as a harsh environment to do business and therefore heighten insurance premium of aircraft and also raise the cost of leasing aircraft. This could be achieved through cooperation

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