Aviation poised for change1.15.15
AVIATION NEEDS OVERHAUL
Liberalization will unlock growth, especially in the landlocked countries.
One of the most dramatic steps African countries can take to boost growth, trade and connectivity is to sweep away arcane rules that restrict commercial aviation, often to protect national “flag” carriers.
In 1999, 44 African countries pledged to liberalize by signing the Yamoussoukro Decision that committed them to deregulation of air services, promotion of regional air markets and opening to transnational competition. Sixteen years later, implementation has been “slow and limited,” according to the International Air Transport Association (IATA).
“Liberalizing would lower fares, improve safety, increase traffic and unlock growth in African economies, particularly the 16 landlocked countries,” says Hassan El Houry, CEO of Agility’s National Aviation Services (NAS).
A recent study for the IATA by InterVISTAS, an aviation and transportation consulting group, shows how quickly there is a payoff for aviation liberalization. Sweeping away restrictions would allow air travel by “several million passengers who can now travel by air, but who are currently unable to do so for reasons of cost, flight availability or convenience,” the IATA report says.
The benefits, according to IATA:
- Fare reductions of 25%-35%
- New routes, more flights, increased traffic and direct service between more countries
- Dramatic time savings for travelers (e.g. 4.5 hours Algiers direct to Lagos vs. today’s 9 to 17 hours Algiers-Casablanca-Lagos)
- 155,000 direct jobs and $1.3 billion in annual GDP in the 12 largest African economies
- $1.3 billion in additional tourism in those 12 countries
Deregulation could have a profound effect in ending the isolation of millions of Africans, who account for 12% of the world’s population but only 1% of its air market.
“The record of deregulation in Africa is a good one. South Africa, Kenya and Ethiopia are the leaders in that area, and they have the strongest, most competitive carriers,” El Houry says.
The World Trade Organization says passenger volumes increase an average of 30% after liberalization. Liberalization of routes between South Africa and Kenya in recent years led to a 69% rise in passenger traffic. Low-cost carrier service between South Africa and Zambia lowered fares 38% and increased traffic by the same amount.
Liberalization entails nine distinct “air rights” involving freedom to overfly territory of other countries without landing there, to make refueling stops, and to carry passengers and cargo between countries.
“You get all kinds of knock-on effects. Businesses are more productive. They can visit customers and look for new markets cheaper and more quickly,” El Houry says. “Countries that have liberalized see immediate job creation and investment in offices, manufacturing and warehousing clustered near the airport. They can attract production because there will be efficient air cargo and the ability to do special handling of raw materials, perishables, pharmaceuticals, high-tech goods and products that are part of just-in-time inventory supply chains.”
Rwanda has invested in airport expansion and development, increasing traffic 30% in two years at Kigali International Airport, and Ivory Coast is set to do the same at Abidjan International Airport. “They know there are spin-off benefits for the larger economy if they get the aviation piece right,” El Houry says.
NAS, a specialist in aviation services for frontier and emerging markets, is working with aviation authorities in several African countries to modernize infrastructure and introduce world-class ground handling and other services.
Registered air carrier departures* annually:
Worldwide 31.1 million
USA 9.7 million
Sub-Saharan Africa 631,000
*These are domestic takeoffs and takeoffs destined abroad of air carriers registered in the country.