International Air Transport Association pushes for open air space

airzimbabwe_

Passengers have been avoiding the undercapitalised AirZim.

THE International Air Transport Association (IATA) says it will seek Zimbabwe’s endorsement of a study that looks at the advantages of freeing up African skies when regional airlines converge in Victoria Falls next week.
Global aviation industry experts will also be part of 250 executives who will attend the conference during the IATA Day on May 18, according to Raphael Kuuchi, the body’s vice president for Africa.
“During the event, IATA will be looking to secure endorsement by the government of the Republic of Zimbabwe for the study prepared for IATA in partnership with AFCAC and AFRAA,” said Kuuchi.
AFRAA is the African Airlines Association, whose president is Air Zimbabwe (AirZim)’s acting chief executive officer, Edmund Makona.
AFCAC stands for African Civil Aviation Commission.
The IATA study is titled Transforming IntraAfrican Air Connectivity: The Economic Benefits of Implementing the Yamoussoukro Decision.
“This is flowing from the 24th session of the assembly of heads of State and government of the African Union held in Addis Ababa, Ethiopia from 30th to 31st January 2015. Clear decisions were taken to establish a single African air transport market in Africa by 2017 and (there was a) solemn commitment made by 11 African Union member States to ensure the implementation of the Yamoussoukro Decision towards the establishment of a single African air transport market by 2017,” a statement from IATA said.
Completed in July 2014, the study said reluctance by governments to open up to foreign competition has undermined growth of African economies.
It said closed markets limit access to the region, as well as prolonging the time that goods arrive to destinations.
In 1999, African governments made bold moves to deal with these shortcomings at a conference in Yamoussoukro, Ivory Coast.
But even after 44 countries committed to liberalise their skies, this has remained a pipedream 17 years on.
IATA said this would come under the spotlight in Victoria Falls.
“While many air markets between Africa and countries outside of Africa have been liberalised to a significant extent, most intra-African aviation markets remain largely closed, subject to restrictive bilateral agreements which limit the growth and development of air services,” said the report.
“This has limited the potential for aviation to be an engine of growth and development. While many air markets between Africa and countries outside of Africa have been liberalised to a significant extent, most intra-African aviation markets remain largely closed, subject to restrictive bilateral agreements which limit the growth and development of air services. This has limited the potential for aviation to be an engine of growth and development,” the report said.
It noted that liberalisation leads to increased air service levels and reduced fares, thereby stimulating traffic volumes as well as boosting tourism and trade.
“There is considerable evidence that liberalisation of international air markets has provided substantial benefits for passengers and for the wider economy. For example, one study of the EU (European Union) single aviation market found that liberalisation had greatly increased competition on many routes, had resulted in many more new routes operating, and had led to a 34 percent decline in discount fares in real terms. Furthermore, other studies have demonstrated a link between increased air traffic and growth in employment and gross domestic product (GDP). One study estimated that each 10 percent increase in international air services led to a 0,07 percent increase in GDP,” says the report.
It says after South Africa and Kenya agreed to a more liberal air market 15 years ago, the two countries have registered a 69 percent rise in passenger traffic.

Ethiopian Airlines is one of the largest and most profitable airlines in Africa.

Ethiopian Airlines is one of the largest and most profitable airlines in Africa.

The report also noted that where African countries have liberalised their skies, either within or with the rest of the world, there has been significant benefits to their markets.
These benefits include:
•The agreement of a more liberal air market between South Africa and Kenya in the early 2000s led to 69 percent rise in passenger traffic.
•Allowing the operation of a low cost carrier service between South Africa and Zambia (Johannesburg-Lusaka) resulted in a 38 percent reduction in discount fares and 38 percent increase in passenger traffic.
•Ethiopia’s pursuit of more liberal bilaterals (on a reciprocal basis) has contributed to Ethiopian Airlines becoming one of the largest and most profitable airlines in Africa. Research has found that on intra-African routes with more liberal bilaterals, Ethiopians benefit from 10 to 21 percent lower fares and 35 to 38 percent higher frequencies compared to restricted intra-Africa routes), say the report.
The report also said in liberalised markets, there are also substantial benefits to passengers. These benefits include;
•Fare savings: Passengers travelling between these countries are expected to benefit from fare reductions of 25 to 35 percent, providing a saving of over US$0,5 billion per annum, the report says.
•Greater connectivity: Of the 66 country pairs between the 12 counties, 34, or about 52 percent, had some form of direct service in 2013. With open skies, it is forecast that an additional 17 country pairs will benefit from direct service, so that 75 percent of country pairs will have direct service, according to the report.
•Time savings: New routes and greater frequencies will shorten the flying time between many cities. For example, in 2013 there was no direct service between Algeria and Nigeria. The most convenient routing available was via Morocco (Algiers-Casablanca-Lagos). The minimum journey time for this routing is nine hours, but depending on connecting times it could be as much as 17 hours. A direct service would reduce the travel time between Algiers and Lagos to approximately 4,5 hours.
•Greater convenience: Of the 34 country pairs with direct service in 2013, only 21 had service operated at daily frequencies or better. Many had seasonal services or services operated at less than daily frequency, adds the report.
However, African governments, which largely control struggling flag carriers, have been reluctant to commit to this agreement, which has triggered the collapse of scores of domestic airlines.
In Zimbabwe, passengers have been avoiding the undercapitalised AirZim, preferring well resourced airlines that have fifth freedom rights on some routes.
Part of the open skies policy, the fifth freedom traffic rights allow airlines in transit to pick passengers in Zimbabwe, even to destinations where AirZim would be servicing.
In many African countries, these rights are tightly controlled to protect domestic carriers.
IATA, with a 260 strong airline membership, works with airlines and the air transport industry to promote safe and reliable air travel.
Its membership represents over 80 percent of the global air traffic.
The question for Zimbabwe is: Will the country’s airlines cope?
Well-capitalised airlines can easily flex their muscles and outfox the struggling domestic carriers, especially in a market like Zimbabwe, where both the national and private operators are under capitalised and are battling with subdued passenger numbers.
New entrants into the domestic markets are contemplating reducing routes, and are reportedly failing to pay staff.
This should be the time to rebuild AirZim and let FlyAfrica and Rainbow Airlines become viable first.
This is not something out of this world.
It is happening in other markets. This is the logical way to go.
As this newspaper has pointed out before, AirZim or FlyAfrica will never be granted the rights to service domestic routes in South Africa or other markets.
Until this happens, there is need to tread carefully. But domestic airlines must not relax.
If they disappoint as they have done before, they can then be opened up to punishing international competition.
newsdesk@fingaz.co.zw

Follow us on Twitter @FingazLive and on Facebook – The Financial Gazette