A call for enhanced air connectivity in Africa
With a population of 1.2 billion Africa represents only less than three percent of the global air passenger traffic. The passenger traffic on intra-Africa routes is thin. Air connectivity is under developed. Passengers from Africa to travel to another African country may have to transit in European cities.
The African Airlines Association (AFRAA), which held its 51st Annual general assembly last week in Balaclava, Mauritius, made a call for enhanced intra-African connectivity through collaboration among African airlines in order to better tackle key challenges they face and grow their market share through intra-Africa networks.
Hosted by Air Mauritius the Assembly, which brought together leading airline CEOs and air transport decision makers and stakeholders, examined ways to achieve success in an integrated and interconnected Africa to establish an environment where aviation can thrive and prosper.
Abdérahmane Berthé, AFRAA Secretary General, said stakeholders have underscored that the Single African Air Transport Market (SAATM) and the African Continental Free Trade Area (AfCFTA) are major opportunities for the continent. “But we need profitable and globally competitive airlines in order to reap the dividends. We are certain that the insights and partnerships from our 2019 AGA will contribute to the momentum towards a stronger aviation industry in Africa,” Berthé said.
In his report, Berthé noted that in 2018 AFRAA member airlines expanded their networks on both intra-Africa and intercontinental routes. Six AFRAA member airlines launched a total of 23 new routes connecting 14 intercontinental destinations and nine cities within the continent.
The Assembly also noted that the potential for air traffic growth in Africa is significant and the removal of restrictions and non-physical barriers for the movement of people, goods, and trade as well as the reduction of taxes and charges are vital steps to reduce the cost of travel in Africa and promote the emergence of low-cost carriers.
Somas Appavou, CEO of Air Mauritius, said: ‘’Air connectivity has greatly contributed to the development of our country which makes Mauritius an excellent example of the impact that aviation can have on a country’s economy.’’ In Mauritius, air connectivity contributes 22.6 percent to the GDP representing USD three billion in terms of economic activity. “We are positioning ourselves to further develop the sector. This can only be envisaged within the broader regional and African context. As African airlines, we all have similar preoccupations and AFRAA’s 51st AGA has created a conducive environment for us to ponder on how best to harness the full potential of Africa’s aviation.”
Eric Ntagengerwa, who presented a keynote speech on behalf of the African Union (AU) Commissioner for Infrastructure and Energy, Amani Abou-Zeid (PhD) said that the ultimate goal of establishing SAATM is not only to improve connectivity but also facilitate and improve passenger experience through air transport facilitation and operation efficiency.
The International Air Transport Association (IATA) called on governments and industry in Africa to concentrate on four priorities to allow aviation to drive economic and social development on the continent. In his opening remarks, IATA director general and CEO Alexandre de Juniac listed safety, cost competitiveness, opening the continent to travel, and trade and gender diversity as the key areas African countries should address.
The director general also stressed the need to open intra-Africa air connectivity. “My message to governments on this triumvirate of agreements is simple – hurry-up! We know the contributions that connectivity will make to the UN SDGs. Why wait any longer to give airlines the freedom to do business and Africans the freedom to explore their own continent,” he said.
At the panel discussion African airline CEOs highlighted some of the pressing issues hindering air connectivity in Africa.
High operation cost, market restriction, poor airport infrastructure and blocked funds are amongst the list of myriad of challenges facing African carriers. Prohibitive visa policy is also another challenge hampering free movement of people impacting air traffic in intra-Africa routes.
The CEO of Air Mauritius, noted that the average fuel price in Africa is 35 percent more expensive than the global average. Appavou said exorbitant charges and taxes are making airlines cost of operation higher. “Our ticket price depends on taxes and taxes are high everywhere in Africa. High tax is not helping any airline to reduce cost and give better connectivity. We have to offer affordable fares to improve air connectivity,” he said.
African airlines are losing USD 1.54 per ticket. Due to high operation costs, fares are expensive. “If we cannot lower the cost of operation, we will never be profitable,” Appavou said. Taxes are 15-20 percent higher in Africa when compared to the other regions. “If we could reduce those costs we will be able to accommodate more traffic and therefore we can be profitable,” he said. “There is definitely a problem in Africa as to why people are not travelling by air. I can mention one route in Africa where the tax is as high as 50 percent. If we reduce the tax more people will visit Africa,” he said.
Market restriction is another challenge. African countries use bilateral air service agreements (BASA) to allow carriers to operate. To liberalize the African skies by eliminating restrictive BASAs, the African Union launched the Single African Air Transport Market (SAATM) in January 2018. According to the African Airlines Association (AFRAA), 32 countries out of 54 have signed SAATM. Secretary General Berthe said that 12 states have signed the implementation agreement and only eight of them have implemented the six concrete measures of SAATM.
While some African Airlines CEOs like Tewolde Gebremariam of Ethiopian Airlines are strong advocates of SAATM – others are skeptical about the open skies agreement.
The outgoing CEO of Kenya Airways, Sebastian Mikosz, is one of the opponents of SAATM. Mikosz argues that Africa is not ready for open skies agreement. “There is no level playing field. SAATM is going to benefit a few airlines. There is one airline that gives pills to all the other airlines to swallow,” he said.
Appavou shares Mikosz’s view. He argues that SAATM will benefit the big carries whilst killing the small airlines. “One size fits all concept doesn’t work,” Appavou said. “If you take our small Island, Mauritius, travel and tourism accounts to 23.6 percent to the GDP and supports 110,000 jobs. If we alter the environment without analyzing the consequences, it will have a dramatic impact on the country,” he said.
According to Appavou, the small operators have challenges quite different from the big operators. “Big operators have economies of scale, they do have synergies, freedom of network through code-sharing partners. Applying SAATM might be a different way of doing things. For small operators it is another challenge. We really need to see what its benefits are. If you see it in absolute term of course SAATM is beneficial but the way we get there and how we get there is very important.”
The issue of blocked funds is the other critical challenge raised by the CEOs. Yvonne Manzi Makolo CEO of RwandAir said that blocked fund is a major issue, especially for small airlines. “We have had blocked funds in a particular country for over a year now. This is impacting our airline. It also limits the ability for people to travel in and out of that country. Now we are forced to charge people on cash basis only in US dollars which makes it difficult for people in that country to travel,” Makolo said. “This is a major issue that governments need to look at. The issue needs to be resolved in order to allow better connectivity within the continent.”
In the course of the summit, AFRAA passed several resolutions aimed at enhancing the capacity of the association. Among the resolutions, this year’s Assembly resolved to set up an Instructor Development Program for AFRAA Member Airlines (IDPA) aimed at developing 100 highly qualified instructors in the next five years (20 per year) with sponsored tuitions to support human capital development which is now critical given the fast-growing demand of air transport services in Africa.
The Assembly approved the amended Articles and By-laws of the Association which are aligned with AFRAA’s new mission, vision and strategic objectives to promote better efficiency and effectiveness. The Assembly also launched the AFRAA Aviation Consultancy Unit with the objective of providing support to establish efficient and effective strategies to gain leverage in the market and data-driven studies that are aimed at build winning strategies and business plans to achieve the airlines’ goals.
Two companies were recognized at this year’s awards ceremony namely: Royal Air Maroc in the category of Airline of the Year – global operations for best improved results for the year 2018 and in the category of Airline of the Year – remarkable financial performance and profitability in 2018. Kenya Airways received the award for Airline of the Year in the category – best improved intra-Africa connectivity for the year 2018.
AFRAA, is a trade association of airlines from the member states of the African Union (AU). Founded in Accra, Ghana, in April 1968, and headquartered in Nairobi, Kenya, AFRAA’s mission is to promote, serve African Airlines and champion Africa’s aviation industry. The Association envisions a sustainable, interconnected and affordable Air Transport industry in Africa where African Airlines become key players and drivers to African economic development.
AFRAA membership of 44 airlines cuts across the entire continent and includes all the major intercontinental African operators. The Association members represent over 85 percent of total international traffic carried by African airlines. TAAG Angola will host the 52nd Annual General Assembly set to be held from 22-24 November, 2020, in Luanda, Angola.
Aviation contributes USD 55.8 billion to the continent's GDP and supports 6.2 million jobs. Forecasters expect the demand for air travel to double in the next two decades. With a 4.6-percent compound annual growth rate, Africa ranks as the second fastest-growing region after the Middle East.
By Kaleyesus Bekele, Balaclava, Mauritius