Protectionism as setback for Africa’s aviation industry

The first-ever FAAN National Aviation Conference may have come and gone, but the lessons learnt from the summit should enrich the country’s aviation industry. WOLE SHADARE who was at the summit listened to divergent views of panelists on the Single Africa Air Transport Market (SAATM) and the fear of liberalizing air transport in Africa. These fears can be confronted if Africa truly wants to develop its air transport

 

A burgeoning region

Africa is considered a growing aviation market with the International Air Transport Association (IATA) forecasting a 5.9% year-on-year growth in African aviation over the next 20 years, with passenger numbers expected to increase from 100m to more than 300m by 2026 and SAATM is a way to tap into this market.

The benefits of SAATM to African countries include job creation, growth in trade resulting in growth in GDP, and lower travel costs resulting in high numbers of passengers. However, is Africa ready for a Single African Air Transport Market? That is a huge question considering the fact that if all the necessary issues are not resolved, it may go the way of the Yamoussoukro Decision (YD) which never saw the light of the day more than 30 years after the idea was set in motion.

 

Some Nigerian airlines

 

Solemn declaration

The failure of YD gave rise to the SAATM with a solemn declaration by about 35 African nations to forge ahead with the air transport liberalization in the continent because of the exponential benefits it brings to Africa.

At the weeklong FAAN National Aviation Conference (FNAC) held in Abuja last week, some were of the view that the SAATM initiative was good but hinted that the African Civil Aviation Commission (AFCAC) must come up with a regulatory framework that would see to the speedy implementation or operability of the Africa Union Agenda.

The scope of this project is continental. Thus, beneficiaries include all African countries’ population of approximately 1.2 billion people.

Considering the major objective of reinforcing the YD and SAATM executing agency to deliver on implementation, the key beneficiary of the project is AFCAC. The project is also designed for AFCAC to extend support to member states, airlines, and airport operators.

AFCAC fine-tunes regulatory framework

The institutional support for the implementation of SAATM is the first multilateral support received by AFCAC. The SAATM is considered a crucial logistic infrastructure and a facilitator for the successful operation of the African Continental Free Trade Area (AfCFTA) complemented by the protocol on the free movement of people and goods and the African passport.

At the commemoration of the 50th anniversary of the African Union – held in Addis Ababa, Ethiopia, on September 14, 2013 – the union expressed its desire to foster Africa’s socio-economic development and integration agenda. Thus, it introduced the African Union Agenda 2063, which highlighted flagship projects that could substantially change the face of the continent, including a single African air transport market (SAATM) and an African passport.

In 2015 the African Union Heads of State and Government Assembly adopted the Declaration for the Establishment of a Single African Air Transport Market and issued a commitment to implement it by 2017. At that time, 11 African member states championed the declaration and committed to creating the market. The SAATM was formally launched on January 28, 2018, during the African Union Summit in Addis Ababa.

Air Peace’s Embraer 195-E2

Nigerian airlines cry out

Why all the beautiful things said about SAATM look good, not a few the view that while the idea sounds good, there is a need for the Nigerian government to protect its airlines.

Chairman of Air Peace Airlines, Mr. Allen Onyema categorically stated that the reason for the promotion of the liberalization of air transport in Africa was simply because many African airlines have their eyes on the huge eyes on the Nigeria aviation market.

He further stated that SAATM implementation was worrisome because some African countries do not cooperate or stifle competition against Nigerian carriers, adding, “Nigerian airlines can never support SAATM because of the half-baked implementation. Some countries are not allowing it to work. Whatever Air Peace makes on the domestic market, it squanders on West Coast operations”.

An aviation consultant, one of the panelists at the summit, Dr. Daniel Young disclosed that Nigeria was one of the earliest nations to sign the SAATM agreement, wondering why it is taking so long for the project to fully commence, warning that Africa must not allow the SAATM to go the way of (YD) if Africa truly needs to liberalise air transport in the continent.

Chief Executive, Belujane Consult, Mr. Chris Azu Aligbe advised the carriers to take advantage of the opportunities SAATM offers while calling on the operators to lobby the National Assembly and engage it more to push for policies that would help them break most of the barriers to profitability.

To him, the SAATM project is a moving train that is about to get to its destinations, advising the Federal Government to do more in the area of implementation.

Good examples

Where African nations have liberalized their air markets, either within Africa or with the rest of the world, there have been substantial positive benefits. In early 2000, Kenya and South Africa saw a 69 percent rise in passenger traffic.

Ethiopia’s pursuit of more liberal bilateral on the intra-African routes saw it benefit from 35-38 percent higher frequencies and 10-12 percent lower fares. Ethiopian Airlines is one of the largest and most profitable airlines in Africa.

Regional Director, Advocacy and Strategic Relations, Africa, International Air Transport Association (IATA), Adefunke Adeyemi who represented former Secretary-General of AFCAC, Ms. Iyabo Sosina said the continuous existence of various Bilateral Air Services Agreements (BASA) among member states tend to hinder the quick implementation of SAATM.

 

African airlines

 

Sosina further stated that unfounded fear of some states to liberalise their markets leads to unnecessary protectionism coupled with a lack of political will of some states that have dragged back the process of implementation.

 Protectionism, core of the problem

Protectionism is the core of the problem that has seriously slowed down the implementation of SAATM inspite signing of the agreement by 35 African countries including Nigeria.

Aviation protectionism is simply preventing other airlines from operating in a country principally due to the fact that governments want to protect their national carriers. This doesn’t give room to competition; a variety of products and it is against the open skies principles. It rather breeds inefficiency, monopolies, and outright failure to provide the consumer (travelers) with various choices to decide.

Nowhere in the world are these obstacles greater than the African skies. In Africa, only 20% of those crossing national borders arrive by air, with the percentage much higher in advanced and developed countries. Over the next decade, most studies and estimates suggest that the travel industry will double its already sizable contribution to Africa’s economic growth, especially as Africa continues to sign trade partnership deals with China and Europe.

Despite very strong protectionism, we are all witnesses to the short life span of most of the African national carriers with an average life cycle of 05 years maximum.

Some Nigerian airlines

Those that succeed to cross the five years period survive due to the permanent injection of huge sums of money in the guise of subventions at the detriment of taxpayers or better still there survive due to the political insistence of regimes for the drive to have the flag of the nation fly above despite the huge debts it incurs and the operational inefficiency and risks at stake.

Last line

If African governments accept ‘Cabotage’ it will be beneficial to their people in terms of cheaper fares due to new entrants in the domestic market, the foreign direct inflow of revenue to domestic markets through taxes, job creation, hotel payments, handling charges on aircraft and above all improve movements of people and goods within the country.

Wole Shadare