Is open skies the magic wand that will drive African airlines’ competitiveness?

For one to travel from Kigali to Algeria, they have to pass through Turkey in Eurasia to get to the final destination. Equally, someone travelling to Morocco from Kigali has to pass through the Middle East. There are, literally, no direct flights connecting these African countries, with travellers spending long hours or even days in transit. The situation is similar across Africa, with infrequent commercial flights that are also expensive and circuitous. These are some of the main challenges that African Heads of State and Government will be examining at the forthcoming Africa Union summit in Addis Ababa, Ethiopia towards the end of this month. During the meeting, the leaders are expected to officially launch the single African air transport market initiative on January 28 as part of the 2063 Agenda, which is tipped to usher in a new dawn for the continent’s aviation industry as it will “completely liberalise” air transport markets in Africa. But is this initiative the magic bullet that will help solve the many challenges faced by the sector? Patrick Nkulikiyimfura, an industry expert, says that there is still no political will at the continental level to drive air transport. Because of the increasing protectionist policies, airlines are being pushed out or blocked from some markets, he adds. Ironically, carriers from outside the continent, like Etihad or Emirates from the Middle East have easy access to the continental aviation market, which has greatly impacted on African airlines. This is an example of the underlying challenges that most African airlines are facing. Blame all this to a combination of protectionist legal barriers and regulatory hurdles, in addition to inadequate infrastructure, high taxes, and protectionism, experts say. Nkulikiyimfura notes that every protectionist influenced movement is a lost opportunity. Alex Macheras, an aviation analyst, observes that, currently, Africa has more bilateral aviation agreements with actors outside of the continent than within. “If this (trend) continues it will slow down the acceleration and growth of African aviation and airline industry as a whole,” he says. The International Air Transport Association (IATA) semi-annual economic performance report released last month indicated that several African airlines are likely to close this year with a $100 million net loss as sluggish economies across the continent continue to weigh heavily on the industry. The association, which is made up of 275 airlines, including RwandAir, also indicated that, while passenger numbers among African carriers are growing, their sustained failure to attract more travellers will continue to erode their revenues. IATA projects losses for African airlines in 2018 due to sluggish economies, coupled with poor infrastructure, high taxes and protectionist policies by some governments. Many players and analysts are wondering whether the impending open skies initiative by African Union member countries will, in itself, help carriers on the continent return to profitability. Promoting open skies policy A single air transport market is one of the goals of AU’s Agenda 2063, aiming to connect Africa through aviation and other transport infrastructure to achieve integration and boost intra-Africa trade. The open skies policy also seeks to boost tourism and drive growth across the continent. Experts indicate that at the moment, airlines that are best positioned to dominate African skies are often based in Europe or the Middle East, urging countries in Africa to support and embrace the open-skies policy being pushed by the African Union. Macheras notes that agreeing on adopting open-skies policies among countries on the continent will be a game-changer for the industry as it will ease market entry and boost demand and increase traffic. “An open skies policy would help modernise the air travel industry in Africa, and provide an incentive to airlines from the continent and elsewhere to fly more freely, helping to boost the demand, increase frequencies, and help turn key cities like Kigali into aviation hubs,” he says. Priority sector But Macheras says that there needs to be a priority for African carriers if they are to compete with global airline giants. “Africa has the potential to grow various aviation hubs. However, airlines also need to create more partnerships with airlines that do domestic air transport to ensure seamless connections to secondary cities. “Such partnerships can help make the entire air travel process ‘easier’ and, therefore, more attractive for passengers flying to, from and around the continent,” he adds. To achieve all this, he notes, African countries and their respective airlines should come together to secure more partnerships with each other. He believes this strategy would be the key driver to a “united and single air transport market for Africa”. Nkulikiyimfura calls on political leaders to support the liberalised air transport, adding that the initiative by AU to promote open skies across the continent is “long overdue”. Improve air connectivity Aviation currently supports 6.8 million jobs and contributes $72.5 billion in GDP to Africa. Over the next 20 years, passenger demand is set to expand by an average of 5.7 per cent annually. However, the continent also faces great challenges with many airlines struggling to break-even. And, as a whole, the African aviation industry will lose $1.50 for each passenger it carries, according to IATA’. The Yamoussoukro Decision, which seeks opening up of intra-Africa aviation markets, has been signed by only 23 states, including Rwanda, most of which are also yet to follow through on their commitments. IATA believes that the African Union’s single Africa air transport market will boost intra-Africa air connectivity and unlock other opportunities. “Opportunities are being lost simply because convenient flight connections are not available. While we cannot undo the past, we should not miss out on a bright future,” it adds. Dr Elijah Chingosho, the former African Airlines Association (AFRAA) secretary general, recently said up to $1 billion airlines’ cash is currently blocked, affecting the industry’s capacity to reinvest.

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Is open skies the magic wand that will drive African airlines’ competitiveness?