“Increased intra-African air connectivity is essential if Africa is to seize the opportunities for growth promised by its demographic and resources advantages,” says Raphael Kuuchi, IATA’s Vice President for Africa. “Aviation in Africa supports nearly seven million jobs and $80 billion in GDP, but it faces challenges in terms of liberalization of markets, safety, costs, infrastructure, and regulation. Only through industry and governments working hand-in-hand can these challenges be overcome, to the benefit of everyone across Africa.”
A key enabler of liberalization is the Yamoussoukro Decision, signed by 44 African countries in 1999. To support economic growth, the agreement committed the countries to aviation deregulation and the promotion of transnational competition in regional markets.
Specifically mentioned was the full liberalization of intra-African air transport services in terms of access, capacity, frequency, and tariffs. The Yamoussoukro Decision further encouraged sub-regional and regional organizations to pursue its implementation due to Africa’s fragmented nature. But, to date, there has been a mixed bag of results at best:
North Africa: The Arab states of North Africa have yet to liberalize air services among themselves, even though certain instruments, such as the Arab League Open-Skies Agreement, exist.
West Africa: The predominant organization, the Economic Community of West African States, has failed to make meaningful progress towards liberalizing air services. The smaller West African Economic and Monetary Union has, however, gone beyond the provisions of the Decision and agreed to an EU model that includes cabotage rights.
Central Africa: The Economic and Monetary Community of Central Africa has implemented all the necessary legislative
and regulatory elements to comply with the provisions of the Decision.
South and East Africa: The Eastern Africa Community has elected to revise bilaterals to align with the principles of the Decision. Conversely, the Southern African Development Community (SADC) has failed to make any substantial advances.
There are many reasons that the Yamoussoukro Decision hasn’t advanced as hoped in the best part of two decades.
The potential dominance of some carriers is a concern for certain governments. Throughout Africa, a number of countries continue to restrict market access under the pretext that their national airline is not ready to compete in a liberalized market.
Discriminatory practices have also hampered the pace of liberalization. Some African countries have opened up to intercontinental traffic despite refusing access to their neighbors in Africa. This is particularly apparent in West Africa, where non-African airlines tend to be given more third/fourth and sometimes fifth freedom traffic rights while African carriers are denied.
As a result, often the best connection between two African cities can be via Europe or the Gulf. “It is absurd that it is possible to travel 13 times a week from Nairobi to London yet impossible to travel directly from Nairobi to Dakar,” notes Kuuchi. “A potential five million passengers a year are being denied the opportunity to travel, trade, and spread economic and social development.”
The problem is exacerbated by the EU’s ban on several airlines for safety reasons. A lack of confidence in safety oversight has resulted in some airlines with good safety records being put on the list. Not surprisingly, about 80% of intercontinental traffic to and from Africa is carried by non-African airlines.
A host of other difficulties exist, ranging from severe shortages in foreign exchange to bewildering documentation procedures. Onerous visa requirements in terms of time and cost for Africans travelling within Africa dampens demand. And another layer of deterrence is added when countries such as South Africa require transit visas as well— requirements that are not necessarily imposed on visitors from non-African countries.
There is one overriding argument for tackling these issues with all possible haste. Liberalization in Africa would be enormously beneficial to the region.
An IATA study, conducted by InterVISTAS—The Economic Impact of Intra-African Air Service Liberalisation—uses 12 countries to show that if these countries were to sign open skies bilateral agreements with each other in accordance with the principles of the Yamoussoukro Decision it would be a very different picture.
The report establishes that the liberalization of air services across the 12 African nations would create thousands of new jobs and boost GDP by $1.3 billion. Some 14,600 direct jobs would be generated in the aviation sector. If the indirect employment gains are included, the total reaches 23,400 jobs, ranging from 1,500 jobs in Ethiopia to 5,400 in South Africa.
Employment would also be boosted by an additional 1.23 million tourism visits among the 12 countries, spending $1.3 billion, an increase of 4.4% on total international tourism spend in 2013. Some 40,000 direct jobs would be created in the tourism sector and a further 35,100 jobs in connected industries.
As for goods, the total value of trade stimulated by liberalization is estimated to be $430 million. South Africa alone would benefit from $245 million extra in two-way trade. Namibia would enjoy the largest increase in percentage terms at 6.9%.
“As an airline, South African Airways has experienced outstanding support in most markets,” notes the airline in a statement. “In those markets where the implementation has been slow, we still have been afforded maximum support by the relevant authorities. Had all states adopted the same level of acceptance and implementation, as the leading states, then one can safely say that our continent would have observed a quantum step change in the opening of our skies to each other—for our mutual benefit as Africans.”
Passengers and airlines
Passengers would be able to take advantage of more than enhanced connectivity. Fares would undoubtedly tumble. The study shows that passengers from the 12 countries featured are expected to benefit from fare reductions of 25%–35%. Savings range from $14.5 million for Tunisian passengers to $139.3 million for South African passengers. In total, liberalization between the 12 countries would save passengers $500 million per year.
This is not bad news for airlines. On the contrary, increased connectivity would make them more efficient and profitable. The report notes that traffic flows would increase 81%, from 6.1 million passenger movements in 2013 to 11.0 million after liberalization.
Angola, Algeria, Tunisia, Senegal, and Uganda would all be projected to see traffic more than double on routes to the other 11 countries, with traffic increases of 153%, 141%, 134%, 131%, and 115% respectively. South Africa would benefit from 800,000 extra passengers.
Extra frequencies would accommodate the surge in traffic, bringing greater convenience to passengers. Connections to points outside of Africa would also become more attractive. Travelers from other regions wanting to visit multiple points in Africa would have a greater choice of intra-African services and more convenient itineraries, further stimulating demand.
This increased network connectivity could lead to alliance membership or other strategic partnership development. Should air service between countries with hubs be liberalized, it is expected that additional passengers will flow beyond a country (or both countries) onto third countries. An example of this would be a passenger flying from Namibia to South Africa and on to Hong Kong.
“This report is a major step forward in quantifying the benefits of liberalizing air services across Africa,” concludes Kuuchi.