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IATA VP: What Africa needs is connectivity, not airlines
Raphael Kuuchi is the Vice-President, International Air Transport Association (IATA) for Africa. He has worked tirelessly to help IATA achieve its aim in air transport safety in the continent. He spoke to WOLE SHADARE at the just concluded IATA 73rd Annual General Meeting (AGM) in Cancun, Mexico on air transport liberation, high taxes in aviation and how the continent’s airlines can be profitable and offer quality services to passengers. Excerpts
IATA’s AGM just ended, what are the take-aways for Africa?
The good news is that, I am sure throughout the conference probably for the first time in many years, you haven’t heard Africa mentioned in this way in many ways, which shows that a lot of things are happening positively. To start with, traffic is continuing to grow and IATA 20 year forecast is that Africa is going to be the fastest growing region in the next 20 years to 2025 at 5.1 per cent y/y. Others will grow less. In Addition to that, I am sure you all read the media release of IATA about our safety record in Africa, which is unprecedented with zero hull losses for last year; that is also very impressive and in addition as you mentioned, we got a number of African airlines, which have now come onboard IOSA.
In the same breath, what I have to say on that is that we also lost a number of African airlines, which have come on-board the IOSA register. Whilst we gained five last year, we also lost five in Sub-Saharan Africa. It is five out, five in. This is a trend that we will want not to continue. We want to add more. We don’t want to lose them. We are taking the message to the government that much as we have seen safety improve, the Abuja Declaration targets were announced in 2012 to the extent that now we are recording zero hull loses, we do not want to see airlines that are IOSA register drop off the register and so the government should help us. One of the provisions of the Abuja Declaration was that government should help us and states should make it an integral part of AOC renewal for airlines. We have not seen that in many countries. We would want African governments to ensure that when you are renewing airline’s AOC, you ensure that they have IOSA that is valid. If we do that, they are going to ensure once you are on IOSA registry, you must keep to it.
Why did they fall off IOSA register?
There are number of reasons. Some of them fell off because they could not appoint auditor or an audit organisation to do the audit. Some of them actually got audit organisations but when the auditors finished and submitted their reports, there were findings and they were supposed to close the gaps but unfortunately they do not have the resources to close the gaps. For others, once it expires, they do not bother to renew. So, there are different reasons.
There are number of reasons. Some of them fell off because they could not appoint auditor or an audit organisation to do the audit. Some of them actually got audit organisations but when the auditors finished and submitted their reports, there were findings and they were supposed to close the gaps but unfortunately they do not have the resources to close the gaps. For others, once it expires, they do not bother to renew. So, there are different reasons.
Can you name the airlines?
I don’t think it is proper for me to say the names of the airlines. I don’t think it appropriate to say the names. Let us just leave that for now.
I don’t think it is proper for me to say the names of the airlines. I don’t think it appropriate to say the names. Let us just leave that for now.
Can we have an update on Yammoussoukro Declaration and what has IATA done to those governments that are resisting it?
No government has resisted. There are some countries, which said they are not ready. You cannot force a country to be ready. Angola is a typical example saying that they are still restructuring their airline. They said once their airline is ready to compete, until then, you cannot say they are resisting because of their reasons stating why they are not ready. Last year, I mentioned to you that some progress has been made and we should not always think that nothing is moving. All these are on bilateral basis of Bilateral Air Services Agreement (BASA).
No government has resisted. There are some countries, which said they are not ready. You cannot force a country to be ready. Angola is a typical example saying that they are still restructuring their airline. They said once their airline is ready to compete, until then, you cannot say they are resisting because of their reasons stating why they are not ready. Last year, I mentioned to you that some progress has been made and we should not always think that nothing is moving. All these are on bilateral basis of Bilateral Air Services Agreement (BASA).
All we want to see is a multilateral arrangement that all countries, all operators in the continent can benefit but that is not happening yet. Now, fortunately, following the AU Heads of States summit of 2015 where they decided that we need to come up with a solemn declaration and get states that are willing and ready to open up their markets unconditionally to sign this declaration. To date, we have got 21 countries that have actually signed the solemn declaration. As we speak, we have 21 out of the 54 countries in Africa that have said they are prepared to open up their market. The thing is for the AU and its agencies to fast-track the process of actualising this.
It is one thing for states to say that they want to open up but what is the process? What do I need to do to show that I have opened up for an airline who wants to fly into my country? What should that airline do? Should it just start up one day and start flying there? There should be some minimum requirement. In addition, because airlines are in competitive environment, you need to have competition regulations. You need to have dispute settlement mechanism and you need to have a body that would actually oversee the smooth implementation of this open agreement. So, those regulations were developed by AFCAC. AFCAC sent those regulations last year to the AU but the AU said process of submitting those regulations to the AU was inappropriate.
So, they returned them to AFCAC and they then defined the process of getting them through the AU legal system for them to be reviewed before it goes to the Head of states summit. We met in Accra in March this year made up of AU, AFCAC, IATA and ICAO and then we discussed these issues and what we said was ‘can we prepare towards June in the next AU meeting where we can do an official launch for open market for these 21 countries?’ That was the time we estimated at the beginning of the year. We started working towards it, but unfortunately, towards the middle of last month, we got communication from the AU that the documents that had been submitted to regulations for dispute settlement and the operationalisation instrument cannot be submitted to the Heads of states summit in June when they meet for endorsement as a result, they would push the launch date to January 20, 2018, because as for this one, the next meeting will be January 28.
That is what we are working towards. We are working towards January 2018. However, what we keep encouraging states and airlines to do is if you said you have opened up, why are you waiting for a formal launch, which is a ceremonial event? Just allow the airlines come in, start to actualise it without waiting for official ceremony.Most countries feel that allowing market assess is to allow stronger airlines dominate you.If you have not signed the solemn declaration, I will understand your point and after due consideration of all these elements that you are ready to open up unconditionally that my country is ready to open up to any African country that is ready, then, what is the problem?
Protectionism is hindering progress of African airlines. Connecting one part of the continent is a problem. How do we solve this problem? If you look at Europe, they are talking of Single Sky, why have we found it difficult in Africa to follow suite? Aside YD, how else can we synergise and make aviation work for the continent?
My thought about that is competition is not a bad thing and today, several years and up till now, we have tried to protect our airlines, where are they? How has competition helped us as Africans? I always say this, what Africa needs are not airlines but air transport. What Africa needs is connectivity not airlines. In Nigeria, you have so many airlines, where do they fly to, within the country? Is that what Nigeria needs? You want to have an airline that can connect Nigeria to regions. It is not the number, it is not the quantity that matters, it is their ability to deliver the services that are needed.
My thought about that is competition is not a bad thing and today, several years and up till now, we have tried to protect our airlines, where are they? How has competition helped us as Africans? I always say this, what Africa needs are not airlines but air transport. What Africa needs is connectivity not airlines. In Nigeria, you have so many airlines, where do they fly to, within the country? Is that what Nigeria needs? You want to have an airline that can connect Nigeria to regions. It is not the number, it is not the quantity that matters, it is their ability to deliver the services that are needed.
If we are protecting nothing and we think we are protecting something, I think it is very unfortunate. If we open up to other African carriers, our local airlines cannot do what other carriers can help us do. As a result, if connectivity, as you said, is so bad, a couple of weeks back, I was attending a conference in Tunisia, I had to fly from Nairobi-Istanbul-Tunis and came back the same way because there was actually no way to get between Nairobi and Tunis unless I sleep in Cairo or I sleep in Morocco and I didn’t want to spend a whole day, so I decided I would go to Istanbul. How can we promote trade within the continent if we are not able to operate or allow our neighbours to operate?
When Africans advocate this single sky policy for Africa, they have Ethiopian Airlines in mind because it is a strong airline and that is the reason for championing that cause because it will benefit the carrier.
Let me tell you how it’s going to benefit the small ones. In every business, you do it based on your capacity. For instance, if you open up your market, it is true to a greater extent that the ones that have the capacity and the resources might benefit more than the others but it doesn’t mean that others will lose out completely. If you focus on where your competitive strength are, you would realise that the other carriers operating into your market will leave traffic down for you. For instance, if you are a domestic carrier, you operate to places that no foreign carrier coming into your country operates to; so, you dump all your passengers in Lagos, who takes them to the other places? Or put them in Abuja, who takes them to other places in addition to the normal domestic traffic.
Let me tell you how it’s going to benefit the small ones. In every business, you do it based on your capacity. For instance, if you open up your market, it is true to a greater extent that the ones that have the capacity and the resources might benefit more than the others but it doesn’t mean that others will lose out completely. If you focus on where your competitive strength are, you would realise that the other carriers operating into your market will leave traffic down for you. For instance, if you are a domestic carrier, you operate to places that no foreign carrier coming into your country operates to; so, you dump all your passengers in Lagos, who takes them to the other places? Or put them in Abuja, who takes them to other places in addition to the normal domestic traffic.
Now, you have traffic coming to those points and you doing the distribution. With that, with your efficiencies, you will gradually begin to expand your network beyond domestic. Ok now, you can even partner with these ones to go to points beyond because he is not doing it. I have said; look at the typical scenario of Ethiopian and ASKY? Togo has a population of 2.5 million, how much traffic flows through Lome? How is ASKY sustaining that traffic? On its own? No way. If we can harness and tap into the bigger ones, big should not be the fear. Today, we are allowing traffic to flow through on unusual routes. You will go through Istanbul to go to Tunis. If you have connectivity among African carriers, this traffic will flow among these carriers.
Do you notice that the mega carriers are reluctant to have code-share. The DG IATA said at the AGM that concession is not the answer to infrastructural renewal, what is your view?
For the mega carriers, they have standards. If an airline wants to partner with you and you realised that the standard of that airline are not up to the standard of your airline, chances are they are reducing the value of your product and do not want to dilute it. It is a major concern. Secondly, most of the major carriers want the smaller carriers in Africa to have minimum IOSA certification.
For the mega carriers, they have standards. If an airline wants to partner with you and you realised that the standard of that airline are not up to the standard of your airline, chances are they are reducing the value of your product and do not want to dilute it. It is a major concern. Secondly, most of the major carriers want the smaller carriers in Africa to have minimum IOSA certification.
They want you to be able to operate through the IATA clearing house. If I have to sign a code-share with you and all you are doing is to control all your sales directly and you are not in the clearing house, how can I get my money? We don’t put a structure in place to really be able to achieve this. Because of this, these mega carriers say they don’t want to do any deal unless you come up to that level. That is the simple explanation why most of them will not go into code-share with African airlines. The infrastructure investment; You know that in Africa, we need infrastructure.
The way traffic is growing today, in the next 20 years, we expect 192 million more passengers to be added to what we are flying today. Passengers in and out of Africa will exceed 300 million in the next few years. How are going to move passengers with the existing infrastructure? It is a challenge. So, we definitely need infrastructure in place. Unfortunately, the countries tend to go in for infrastructure without due consideration on the volume of traffic into Africa. The infrastructure they have end up being a burden on the operators and I give you a typical example.
Today in Angola, the traffic into Angola annually is two million passengers. The government of Angola is putting up an airport, which has a capacity of 15 million. Tell me, who is going to pay for that? You have a huge facility with nobody there. Who is going to pay for that? It is these passengers. You worsen your own plight because you are going to over tax these passengers who are coming in. If you put too much tax on them, they are going to go away. Infrastructure is like a house and, as time and demands need, you expand. That is what African airports to do.
What is the inclination of African airlines to invest in aviation?
I think every country needs air transport services and we have demonstrated that with the studies we did and just from that perspective alone, if you want air transport into your country to facilitate movement of people and goods, to stimulate your economic development, you need air transport. To do that, you need to put in place infrastructure and we encourage them to do that, but not to exaggerate things.
I think every country needs air transport services and we have demonstrated that with the studies we did and just from that perspective alone, if you want air transport into your country to facilitate movement of people and goods, to stimulate your economic development, you need air transport. To do that, you need to put in place infrastructure and we encourage them to do that, but not to exaggerate things.
