Multiplier effect

The benefits of liberalisation extend well beyond the aviation industry, resulting in an overall positive impact on tourism and employment as well as greater trade and deeper engagement in global production value chains.

Two years after the Yamoussoukro Decision (YD) became binding, the overriding concern of many African countries was uncertainty around the economic effects of air transport liberalisation.

Not a few witnessed this first hand sitting in many Bilateral Air Service Agreements (BASAs) negotiations. While in principle the YD had liberalised the market, meetings were routinely called to revise provisions on the number of weekly flights and rights to pick up passengers in a multi-legged flight.

Setback

While there has undoubtedly been some progress towards liberalisation, after two decades of discussion no African country has yet fully implemented the YD.

This situation persists despite the clear economic rationale and favourable implementation environment in many countries, which have been highlighted in a recent study led by the African Union Commission with support from the World Bank.

Following global trends of air transport market liberalisation, African countries set out to liberalize the aviation market across the continent through the YD in 1999.

The YD was adopted out of the recognition that the strict market regulations that many countries put in place to protect their national carriers have detrimental effects on air safety records while inflating airfares and dampening air traffic growth.

However, full implementation of the YD and its fast-tracking initiative under the Single African Air Transport Market remains pending.

Coming years

Now that there has been ample evidence that liberalisation entails positive returns, a focus on integrating fragmented African air transport markets is paramount.

It is worth noting that the liberalisation of the international air transport market in many parts of the world came about as a natural consequence of deregulated domestic airline markets.

The co-existence of a regulated domestic market alongside liberal international policies is one of the main policy dilemmas facing many African countries. This policy duality has stood in the way of an organic transition from domestic deregulation to regional and continental open skies.

To realise the full benefits liberalisation brings, policymakers should aim at levelling the playing field for all players and achieve meaningful private sector participation and competition both in the domestic and international markets.

This will pave the way for a truly open market, making the BASAs system redundant. Hopefully, we do not have to wait another twenty years for that to happen.

While some of the country’s airlines have embraced the policy, not a few feel that it would open up the country’s aviation market to the predatory instinct of some African airlines without looking at the huge advantages it brings to them while widening their scope of operations.

In 1999, the YD was adopted out of the recognition that restrictive regulatory controls on air travel between African States (codified in Bilateral Air Service Agreements – BASAs) were detrimental to intra-Africa connectivity and the holistic development of the African air transport industry (especially safety and security).

However, the implementation of this agreement has been slow and limited, and thus the potential benefits of liberalising intra-African air markets remain largely unrealised.

In 2018, the Single African Air Transport Market (SAATM) project was launched by the African Union to give fresh impetus to the goal of liberalizing aviation across Africa and to fully implement the YD.

To date, a total of 35 African Union member states (out of 55 in total) have signed the commitment to establish SAATM.

Despite being a continental power-house and signatory to the Single African Air Transport Market (SAATM) treaty, internal wrangling between the Federal Government and its implementing partners, the airlines’ operators, has left the initiative in a balance, with attendant effects on the implementation of the African Continental Free Trade Area (AfCFTA) agenda.

While the Federal Government aims to float a new national carrier to spearhead SAATM, local airline operators said they should not be shoehorned into continental aeropolitics that is allegedly designed to rip off the Nigerian market in favour of bigger African airlines.

Aviation stakeholders, however, fault protracted market protectionism in the face of low connectivity, urging both the Federal Government and operators to wake up to reality or be left behind. Specifically, they request that local airlines complement the acquisition of new aircraft with corporate governance, international certification, and alliances to become competitive in the open market era.

IATA’s survey

IATA survey has it that if just 12 key African countries opened their markets and increased connectivity, an extra 155,000 jobs and $1.3 billion in yearly Gross Domestic Product (GDP) would be created in those countries.

As of today, only a few countries have strengthened operations for the execution of SAATM. They are Ethiopia, through Ethiopian Airlines; Kenya via Kenya Airways, Togo through Asky, and Rwanda via RwandAir.

Nigeria is conspicuously missing and the devil is in the details. The Federal Government has consistently harped on the benefits of open skies. Nigeria Air is said to be around the corner.

It is expected that the carrier and the existing airlines would take advantage of the policy. Operators are generally opposed to executing SAATM with national airlines, citing governments’ protection of the carrier ab initio, which defeats the spirit of the open market and free competition of SAATM.

This lack of progress is reflected in the relatively poor air connectivity for intra-Africa travel. Of the 1,431 country pairs between the African Union countries, only 19 per cent had some form of significant direct service (operated at least once weekly on an annual basis).

Of these routes, 35 per cent were operated daily or better, and only 13 per cent were operated on a twice daily or better basis.

This low level of frequency makes short-duration trips (departing and returning on the same day) very difficult, which is particularly important for business trips. Connectivity levels in Africa were the lowest across world regions even on a per capital or dollar of GDP basis.

To travel between the capitals of two neighbouring countries in 2019 – The Central African Republic and the Democratic Republic of the Congo – required a connecting itinerary of 9.5-15.0 hours via a connecting airport in North or West Africa, whereas a direct flight would take no more than two hours.

In some cases, the most convenient itineraries involved a connection to Europe or the Middle East. For example, the shortest itineraries between the capitals of Tunisia and Gabon involved a connection at Paris CDG airport, taking 10.5-19.5 hours compared with 5.5 hours for direct service.

Expert’s view

A former Secretary-General of the African Civil Aviation Commission (AFCAC), Ms. Iyabo Sosina, at the Aviation Breakfast Meeting with the theme, “Aviation in Nigeria:

What Next,” said Africa had a huge population of over one billion people, adding that in terms of global traffic, Africa accounts for just three per cent of traffic.

According to her, “we have poor air connectivity, and we have low traffic because on some routes, the fares are just too high and so, there isn’t enough traffic.

“The cost of the ticket is prohibitive; a lot of people would want to travel to go see places, to go see people they cannot do it. The cost of tickets is high because the cost to the airlines is also high.

There are various taxes and charges, and we have restrictive visa policies because, in Africa, everybody is afraid that they are coming to steal ideas, to dump people forgetting that Africa is not where people want to go but all the same, they keep protecting their market.”

Last line

The aviation industry is very peculiar and the few countries/ governments and individuals that have come to understand how it functions have, without any reservations, wholeheartedly opened up their skies for new entrance and competition.