Despite the growing number of African airlines, European and Middle East carriers still dominate the continent.
Aviation industry experts have posited that European, Middle East and US carriers would continue to dominate air transport in the African continent until states and investors in the region get their act together and identify the best ways to move the industry forward through policy implementation and cooperation among African airlines.
That was also the verdict on Tuesday when industry experts in Africa and beyond met at the Air Finance Africa Conference and Exhibition in Johannesburg, South Africa, organised by African Aviation Services Limited.
Operators, financiers, suppliers and top government officials from different parts of Africa met to rub minds on ways to make African airlines grow and become competitive in the world air transport market.
The CEO of African Aviation Services Limited and former Secretary-General of African Airlines Association (AFRAA), Nick Fadugba, warned that except African governments take the initiative to find ways to ensure the growth of airlines in Africa, they would continue to lag behind. He noted that air transport holds the key to unlock the economic potential of Africa and urged African states to take advantage of this potential by creating the environment for the airlines to flourish through policies and incentives.
Competition
The Chief Executive, Airlines Association of Southern Africa (AASA), Mr. Chris Zweigenthal, in his presentation, titled: ‘Re-shaping the Africa Airline Industry’, disclosed that in 2016 African airlines would record projected loss of $100 million, adding that in 2015, airlines in the continent lost about $140 million. He said because African airlines have remained uncompetitive, their foreign carrier counterparts are not worried about whether they would lose the African market share to the regional operators.
He identified the factors responsible for the poor performance of African airlines to include high cost of aviation fuel, high charges, poor and high cost of infrastructure, small market size, regulatory barriers and poor funding of airlines.
Zweigenthal expressed the regret that while international carriers controlled 80per cent of the share of the African market; African airlines have only 18, which means that the African market share has been shrinking over the years as the regional carriers continued to be dominated by airlines from Europe, Middle East and the US.
He said that tourism, which is powered by air transport has been identified as the key to economic growth of African states adding for African airlines to grow, they need to have a base for domestic, intra regional and international operation.
“To Achieve this we need leadership; strong political will to implement policies. Government policies must align and interface with interest in aviation and tourism,” he said.
He also suggested that to grow strong airlines in the continent there should be a lot of cooperation among the operators and urged African states to facilitate the establishment of regional union like the European Airline Association.
To revamp African carriers, he suggested that each airline operating in the region should have a credible plan, a credible balance sheet and set objectives on how it can grow and be held accountable.
The Chief Executive of AASA said partnerships also help airlines, noting that the African airlines that joined Star Alliance and other partnerships have benefitted immensely from it.
Political Will
Experts at the conference frowned on what currently obtains in many countries in Africa, where governments show more favourable disposition to international carriers than regional airlines and facilitate their operation to the continent. A good example is what obtains in Nigeria, where the Ministry of Aviation issues out multi designation to international carriers without looking at the benefits for the country or how it could enhance the growth of local carriers in partnership with their foreign counterparts.
The conference also looked at the liberalisation of Africa’s airspace and the implementation of Yamoussoukro Decision. Fadugba noted that since it was agreed that Africa would open up its airspace about 30 years ago, it has not been implemented. The International Air Transport Association (IATA) said open sky Africa would be a win-win situation for all the countries in Africa that embrace it.
IATA said additional services generated by intra- African liberalisation between just 12 key markets would provide extra 155,000 jobs and $1.3 billion in annual GDP. A potential five million passengers a year are being denied the chance to travel between these markets because of unnecessary restrictions on establishing air routes.
“Aviation already supports 6.9 million jobs and more than $80 billion in GDP across Africa. The InterVISTAS research demonstrates that liberalization will create opportunities for further significant employment growth and economic development. The jobs and GDP impact for the 12 countries in the study are listed in the table below,” the world body said.
The failure to open up the region airspace is given as one of the reason why African airlines are not yet very profitable and cannot play at the international level. Added to this is the animosity that seems to define the activities of the regional carriers among themselves.
The acting Chief Executive Officer of South Africa Airways, Musa Zwane, therefore urged African airlines to make sure they defend their market.
“We want to cooperate and not destroy each other. We are fostering relationships, we should come together and work together for us to succeed,” he said.
Cooperation
Also, at a meeting with the CEO of Ethiopian Airlines, Tewolde Gebremariam, in Addis Ababa last year, he shared similar views about African airlines undermining themselves while international carriers are eroding the region’s market.
Gebremariam said so far the African continent has not encouraged African partnership in the aviation sector as much as it should.
“Now, with a renewed initiative in the Yamoussoukro Declaration (YD) we do hope that the African heads of states should see 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.
“Basically what we are looking for in the coming meeting of heads of states of Africa is full implementation of the Yamasokoro Declaration on one hand, which means that the African airspace will 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.
“By this what we mean is, today in the European Union member states treat the European airspace as a single market. So, they have full freedom of the air for their airlines within the European Union but 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,” the Ethiopian Airlines CEO said.
He noted that if one of the European Union member country airlines 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.
For instance, if we want to fly to Paris through Chad in the existing arrangement, we will not be able to do so, while Air France will be able to fly to Addis through one of the member countries in Europe. So, 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.”
Gebremariam noted that because of lack of the two policy instruments, the Yamoussoukro Declaration and unfair competition in the continent the region’s airlines would not grow. And the result of it is that 80 percent of intercontinental traffic between African and the rest of the world is carried by non-African carriers, only twenty percent is carried by African carriers “and this is lopsided and it has to be corrected.”
According to him, in other to correct this imbalance and unfair competition, it is necessary to enact those two instruments explained earlier.
“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.
As Fadugba noted at the Air Finance Africa Conference, there is significant growth potential in Africa, and all indicators point to significant growth in air travel in Africa in the years ahead but African nations have to put their act together to develop that potential to reality by empowering the airlines and creating policies that enhance intra and inter regional flight operations that would strengthen African carriers.
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