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Is ‘Open Skies,’ Bilateral Air Services Agreement (BASA) a curse to the country? It depends on the divide one belongs. Despite its lopsidedness, Nigerian carriers can take advantage of the pact to enhance or expand their scope writes WOLE SHADARE
Nigeria holds talks with US
The Nigerian government has begun a very high-powered discussion with the United States Government on how to extend the frontiers of the Open Skies agreement signed 22 years ago, among the two sovereign states.
The Ministry of Aviation led by the Minister, Hadi Sirika, superintended the discussion, which came up on the sideline of the ongoing International Civil Aviation Negotiation (ICAN) conference held in Abuja.
Details about exactly what they discussed or what areas of review they planned to do with the agreements were not disclosed.
To grow the sector and offer customers a wider range of choices by connecting cities and hubs, not a few backed the idea of connecting countries with one another. The idea is even spreading so fast with Africa Union’s desire to promote easy travel seen it push for the Single African Air Transport Market (SAATM). The United States carriers have unarguably been the leader in the sub-sector for several years.
Thanks to the support and consistent policies of its government. The carriers have several things going for them, while several agreements were signed with other countries in a bid to give their airlines the leverage to continue to dominate the global aviation sector. In fact, U.S. carriers have always been comfortable with the policies and their collaboration with smaller and less developed aviation countries.
Govt. inks more BASA deals
Stakeholders and professionals are worried that with the open sky agreement with the U.S., the airlines may eventually turn Nigeria and some other less financially strong countries into their local markets, which may benefit the air travellers, but spell doom for the country and local operators whose passengers would be taken over, especially when there is no national carrier or strong airlines to promote their course.
This is coming as the Ministry of Aviation last week signed a Bilateral Air Services Agreement (BASA) with the Republic of Seychelles. The signing of BASA with Seychelles was a sequel to the approval of the Federal Executive Council, FEC, of the Memorandum on signing and ratification of the air services agreement between the two countries.
During the ceremony, the two ministers underscored the importance of the BASA as it will promote air services and connectivity between both countries, enhance business, and promote tourism. It further said that they both agreed that the signing would further promote the African Union Agenda 2063, and called on citizens of both countries to latch on to the opportunities of the BASA for their mutual benefit.
The ministry in the statement claimed it had either signed a Memorandum of Understanding (MoU), or initial Air Services Agreement (ASA) with Senegal, Benin Republic, Ethiopia, Kenya, Finland, Cameroon, Morocco, Suriname, India, Sudan, and Uganda.
A former Director-General of the Nigerian Civil Aviation Authority (NCAA), Capt Usman Mukhtar, at a press conference held in January 2017, revealed that as of December 2016, Nigeria had executed Bilateral Air Service Agreements with 90 countries.
However, it is quite important to note that only about thirty-nine of these executed agreements are active. Over the years, questions have been raised as to the effectiveness and profitability of these agreements to the Nigerian economy.
The Nigerian perspective
Bilateral Air Service Agreements (BASAs) are treaties signed between countries to allow international commercial air transport services between territories. BASAs promote international air links between countries, which supports and enables the movement of persons, cargo, trade, and tourism. These agreements provide the framework under which identified airlines from the two countries fly into designated ports in each other’s country.
It usually covers issues regarding traffic rights, use of intermediate routes, type of aircraft, safety standards, competition, and policy on ownership, design, and control of airlines among others in order for both countries to benefit from the agreement, fares, and tax issues.
In general, BASAs are negotiated based on the five freedoms prescribed under the International Air Transport Agreement (“IATA”) which are the privilege to fly across a state’s territory without landing, the privilege to land for non-traffic purposes, for example, for refueling, repairs, and maintenance, the privilege of an airline from one country to carry traffic from its own country to another country, the privilege of an airline from one country to carry traffic from another country to its own country and the right of an airline from one country to carry traffic between two other countries, provided that the flight originates and terminates in its own country.
Nigeria is generally viewed as having one of the most liberalised air transport industries in Africa. The country is a signatory to the Yamoussoukro Declaration, a signatory to the Single Africa Air Transport Market (SAATM), and has implemented the declaration into its national air transport policy.
Although Nigeria is on the verge of having a government-backed airline-Nigeria Air, a number of foreign airlines operate to and from the country at varying levels of frequencies to multiple destinations from Nigeria’s international airports located in Lagos, Abuja, Port- Harcourt, and Kano.
In addition, prospective foreign airlines are permitted and encouraged to enter into the country to operate flights to, from, and within the country. Each time the issue of BASA comes up, what comes to the minds of Nigeria is the lopsidedness of the deal tilting against the country.
Nigeria is said to have BASAs with over 58 nations. Some of them have been activated while others are yet to be. In all of these, the country is at the receiving end, occasioned by its lack of capacity by the indigenous airlines to service these agreements.
Nigerian carriers are considered very weak and fragmented. They are not only weak in terms of operations, but they are very small in terms of resources. Put together, all the scheduled airlines do not have up to 70 aircraft in their fleet to operate successfully and profitably on the African continent.
Their presence pales into insignificance when you put them side-by-side with Africa’s biggest airlines that have up to 120 airplanes, including some of the latest aircraft such as Dreamliner and A350.
Even South Africa Airways (SAA), which has seen its fortune plummet in a couple of years, is still regarded as stronger than all Nigerian airlines put together.
Kenya Airways, despite a dip in fortune and backed by state support, is still a force to be reckoned with. But Nigerian carriers are bogged down by so many factors.
Chiefs among them are scarcity of foreign exchange to run their operations, high taxation, and customs duty, among others. Nigeria’s revenue drive is being undercut by about N110 billion annually, which it loses to its BASA with foreign nations that have their airlines operating in the country.
The national carrier argument
Another former Director-General of NCAA, Dr. Harold Demuren, is of the view that government should invest in the revival of the national carrier. The argument broadly circles around Nigeria’s competitiveness under its active BASAs in that it is believed that a national carrier would be able to operate in foreign countries much like Qatar Airways, British Airways, Ethiopian Airlines, and other foreign national carriers.
In addition, it has been argued that a national carrier would be based in the country, thereby creating jobs and business opportunities for the citizens of Nigeria. However, the reality of operating a national carrier is not as clear-cut.
A national carrier, unlike other government-owned institutions, must be run as a business. In arguing for a national carrier, a lot of confidence is inadvertently placed on the Ministry of Aviation’s ability to operate the national carrier as a profitable business.
The Ministry would be expected to take pains to ensure that costing, pricing, advertising, marketing, and other business fundamentals are effectively and efficiently carried out to a professional standard. The national carrier would be subject to the same difficulties being faced by private carriers. As such, the government should focus on creating a more conducive business environment within which a national carrier may strive.
The government had already entered into a Public Private Partnership (PPP) with Ethiopian Airlines, MRS, and SAHCo Plc whose expertise should bring the desired professional and strategic business planning to ensure success.
It is apparent that certain BASAs have been negotiated or renegotiated without extensive consideration of the commercial elements required for the industry to experience the proposed targeted benefits of BASAs nor has there been much emphasis on the economic realities under which the country is operating.
It is recommended that the government considers similar options or other commercial options so as to give an incentive for indigenous carriers to continue operations and possibly expand their operations internationally.Google+