Africa Business Communities

[Column] Bob Koigi: Africa open skies pact will change global business landscape

Flying within Africa is a dreaded experience with many routes having no direct fights, forcing passengers to contend with expensive and circuitous flights sometimes involving going through Middle East and Europe to access an African destination in one of the biggest barriers to trade.

This, a microcosm of the numerous challenges facing the African aviation industry spanning from exorbitant fares, poor quality of services and unreliable flight schedules that have made the continent airlines unfavourable choices for air travelers while revenues thin on competition from European, Turkish and Gulf carriers.

 Airport passenger charges are up to five times higher in Africa than the rest of the world as is fuel which is 2.5 times more expensive.

The ripple effects are obvious. In 2015 African airlines made cumulative losses of $700 million that climbed to $800 million in 2016 with the trend expected to continue in coming years according to The International Air Transport Association.

At the heart of this mess is the long held protectionist policies by individual countries who feel that ceding their space would invite competition and kick out of business their local airlines.

Yet the idea of opening up the skies, harmonizing air policies across Africa and intra-continental collaboration has immense benefits for tourism, enhanced trade flows, job creation, increased air passenger traffic and fostering integration, a fundamental principle in achieving African Union’s Agenda 2063.

In fact, an IATA survey showed that by having just 12 vital African countries open up their skies, an extra 155,000 jobs would be created while $1.3 billion would be added to these countries’ GDP each year. This, while growing traffic by 46 per cent, reducing fares by nine per cent and increasing frequency by 41 per cent.

Which is why the recent decision by heads of states and governments at the African Union summit to establish the Single African Air Transport Market, SAATM, couldn’t have come at a better time and deserves full backing across the continent.

It is a landmark step towards achieving the 1999 Yamoussoukro Decision, a pact agreed upon by aviation and transport Ministers in Cote d’Ivoire to fully liberalize intra African air transport, harmonize tariffs and push for adoption of the transformatory fifth freedom rights for passenger and freight air services allowing non-national carriers to land pick and drop passengers destined for another country. For example South African Airlines can land in Rwanda, drop passengers and pick others destined for Nigeria.

Such a move would also contribute to growing Africa’s stake in the global aviation industry. At the moment Africa accounts for less than 4 per cent of the global air service market despite being home to 17 per cent of the world’s population.

But the open air pact needs calculated and focused approach if it is to materialize. This involves getting everyone on board. Currently only 23 of the 55 African states have committed to the arrangement.

Industry players must work to calm nerves and assure countries like Nigeria who feel that the liberalization scales don’t tilt to their favour and stand to threaten their local industry.

Such concerns explain why it has taken this long to have this agreement in place. Mistrust among African nations has seen most of them having more bilateral open sky agreements with partners outside the continent than intra continental.

Air travel demand within Africa is poised to grow to 240 million annually in 2035 from the 75 million in 2016 and a liberalized air market is the most feasible route to ensuring nations reap the full benefits of aviation.

Single market aviation agreements like the Internal Market for Aviation in European Union are living testimonies.

Multiple award winning Kenyan journalist  Bob Koigi  is the Chief Editor of East Africa at Africa Business Communities


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