Open airspace will bring millions of dollars into the region’s economy - study

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A RwandAir plane takes to the skies. Restrictions have affected the growth of the aviation sector in the region.

More than 46,000 jobs and $202 million could be added to the region’s growth domestic product (GDP) per annum if East African Community (EAC) member countries embrace the open sky policy, a new study indicates.

The study by the East African Business council (EABC) estimates that liberalisation of the airspace between the six EAC countries could result in an additional 46,320 jobs and $202.1 million per annum in GDP.

According to the study, there is compelling evidence that full liberalisation of restricted routes will lead to about 9 per cent lower average fares and a 41 per cent increase in frequencies, which in turn will stimulate passenger demand across the region.

“This study demonstrates that increased air service and traffic resulted in positive benefits for the total EAC economy,” said Lilian Awinja, the EABC chief executive officer. Sector players say one of the factors contributing to the slow implementation of the Yamoussoukro Decision principles is a lack of clear and specific information regarding the impacts of enacting air transport liberalisation. “The East African Business Council (EABC) and the EAC secretariat, therefore, commissioned the study on the costs and benefits of open skies in the EAC bloc to understand the impact of implementing the Yamoussoukro Decision in East Africa,” she noted .

She added that  liberalisation of air transport contributes to “greater trade and tourism, inward investment, productivity growth, increased employment and economic development” besides being supported by regional stakeholders.

According to aviation experts, liberalisation offers a means to restructure national carriers and increase profitability by expanding into new markets, accessing a wider pool of investment and through consolidation. “The EAC should therefore harmonise air transport regulations specifically taxes across the region and finalise the EAC Liberalization of air transport regulations while moving to fully implement the Yamoussoukro Decision,” Awinja noted.

According to experts lack of a fully liberalised air space, high taxes and poor infrastructure continue to hurt the industry despite its potential.

 Rwanda is currently leading the project to integrate and liberalise airspace within the Common Market for Eastern and Southern Africa (COMESA)

According to Adefunke Adeyemi, the regional director in charge of external relations at the International Air Transport Association (IATA), establishing a more interconnected air transport system is key to Africa’s economic development.

Eric Ntagengerwa, the EAC senior  transport manager, said though EAC partner states have committed to fully implement the Yamoussoukro Decision as part of the Common Market Protocol there was still need to harmonise many of air transport regulations across the region.

Dr Kato Kimbugwe, the team leader at Economic Growth Department for International Development, urged regional governments to put in place a conducive business environment that will help make aviation more profitable in East Africa.

“Governments need to understand that aviation is a fragile industry and avoid introducing a lot of taxes. They should know that if you reduced charges there will be more trade and prosperity which compensates for the taxes,” he added.

More about Yamoussoukro Decision

The Yamoussoukro Decision calls for full removal all restrictions on access, price, frequency and capacity in intra-African air transport market; free exercise of the first five freedom rights in the air transport and promote fair competition. Experts say this is essential to make aviation sector in the region more competitive and profitable.