Is the prospect of ‘open skies’ in Africa a possibility, or is it just pie in the sky? Kate Kennedy investigates
The International Air Transport Association (IATA) reported that 4.1 billion passengers were flown worldwide in 2017, a new record, with a promising forecast to reach 7.8 billion passengers by 2036. At the same time, the United Nations World Tourism Organisation anticipates a rise in international visitor arrivals from 1.3 billion in 2017 to 1.8 billion by 2030.
Those are impressive numbers, with the world’s travel only going one way. Yet, as it concerns Africa, and with the continent home to 12% of the world’s population, it only accounts for less than one percent of the global air service market.
One of the reasons put forward for Africa’s under-served status, according to a just-published World Bank study, Open Skies for Africa – Implementing the Yamoussoukro Decision, is that many African countries restrict their air services markets to protect the share held by state-owned air carriers.
In 1999, 44 countries committed to deregulating air services within Africa by signing the Yamoussoukro Decision. It followed up on the Yamoussoukro Declaration of 1988, in which many of the same countries agreed to principles of air services liberalisation. The idea was to open up the airspace over the continent and make air travel more accessible and affordable.
We’re approaching the 20th anniversary of the Yamoussoukro Decision with virtually no more progress made. Until now. In January, 23 countries launched a new African Union enterprise – the Single African Air Transport Market initiative. Much like the Yamoussoukro Decision, the SAATM aims to increase connectivity, free up the skies and decrease costs.
But the big question is, will it work this time?
“The Single African Air Travel Market initiative is fine in concept but fails in implementation,” says Rodger Foster, CEO of Airlink, a South African-based privately-owned airline. “Most African states are not ready to embrace liberalisation for one reason or another.”
According to IATA, one of the main obstacles to the implementation of the 1999 Yamoussoukro Decision has been the absence of an underpinning regulatory text. That’s why the AU’s adoption of the regulatory text of the Yamoussoukro Decision, which covers competition and consumer protection, and dispute settlement to safeguard the efficient operation of the market, is so important.
But fewer than half of the countries involved have signed the agreement.
South Africa, for example, is a SAATM signatory, but it has yet to sign the agreement that aims to harmonise all bilateral air services agreements and remove restrictions that run counter to the Yamoussoukro Decision.
“Even so, South Africa’s markets are the most easily accessible and Cape Town is enjoying one of the fastest growth rates in Africa, which has been facilitated by the collaborative energies of Cape Town International Airport, Wesgro and the Cape Town Air Access initiative, and is enabled by South Africa’s demonstrated commitment to liberalisation,” says Foster. “However, this is not true for most of the rest of Africa. Unfortunately, most African states have not enabled access to their markets and are obstacles to the propagation of an intra- Africa airline network system. Amongst most of the now 26 signatories to SAATM, most do not practice proactive enablement of air access.”
Despite being faced with evidence that open skies can and have worked elsewhere, African nations continue to be protective of their airlines and airspace. Protectionism has taken many forms – applying restrictions on frequencies and capacity, the type of aircraft operated, volume of traffic to be carried, and routes to be served. It is often motivated by the fear that the national flag carrier will be unable to compete with larger airlines.
“The norm is that everyone protects their domestic markets,” says Carla de Silva, Air Mauritius Regional Manager: Southern Africa and Latin America. “It is imperative that member states overcome the national pride phenomenon over flag carriers, if this initiative is to succeed. We have seen how successful airlines on other continents have been by running business in a highly competitive market.”
“It is important to note that this initiative cannot achieve what was envisioned when it was drafted, if it is implemented in isolation from the other AU Agenda 2063 projects, particularly the establishment of the continental free trade area by 2017, the establishment of the African continental financial institutions, and the African passport and free movement of people. These projects are key in unlocking Africa’s potential, which has a direct impact on the growth in aviation and broader impacts on the continental economy,” says Shaun Pozyn, Marketing, Loyalty & Customer Experience Head at Comair, which operates British Airways flights in southern Africa as well as the low-cost carrier kulula.com.
Indeed, SAATM is just one part of the overall project. Agenda 2063 is the AU Vision of “an integrated, prosperous and peaceful Africa, driven by its own citizens and representing a dynamic force in the international arena”.
Aside from SAATM, there are 11 other projects that have been highlighted for immediate implementation, including, among others, an integrated high-speed train network, the continental free trade area, and the African passport and free movement of people.
“It is our view that SAATM can only be achieved by adopting a phased implementation plan, with the first phase being adopting a common bilateral rights framework,” says Pozyn. “Once this has been achieved, member states can work on finalising the competition and consumer protection framework, as this impacts the individual states’ domestic laws. This would naturally require a cross-functional and co-ordinated approach to create an enabling environment for sustainable success of the African aviation value chain.”
“Achieving open skies in Africa would constitute a major step forward for Africa’s aviation sector and warrants the level of political will to achieve it,” says João Miguel Santos, Managing Director Boeing Sub-Saharan Africa & Director International Sales, Africa, for Boeing Commercial Airplanes. “It could stimulate competition and demand for cargo and seats within Africa, and between the continent and the world.”
Deregulation of the air transport market in any country tends to have far-reaching impact on the structure of the market, the traffic flows, passenger numbers, market entries (and exits), the level of competition and fares.
“In most countries, one of the most significant impacts on the market has been the introduction and subsequent growth of the low-cost carriers, particularly in domestic or short-haul markets,” says Da Sliva. “This has led to growth in low-cost carriers’ market shares of anything from 1% (in highly-protected markets) to 65% of the total domestic air transport market.”
Low-cost carriers have popped up around Africa over the last few years, some with more success than others. South Africa, for example, has a thriving and competitive low-cost carrier industry, and despite the failure of some (arguably, less-prepared) operators in recent years, the country can still count three major players in this space, in the form of kulula.com, SAA’s Mango Airlines, and FlySafair, which entered the market more recently.
Outside South Africa, fastjet has been around for the past six years, and its aim is to become Africa’s first Pan-African airline. But it hasn’t been easy. Fastjet started strong, over-reached and then consolidated, demonstrating that success in the African low-cost space is possible, but not without strong management.
Beginning with routes around Tanzania in 2012, the airline quickly added more flights, both domestically and to other East African destinations. In October 2015, the company obtained an Air Operator’s Certificate for Zimbabwe and announced plans to launch flights between Harare International Airport and Victoria Falls, as well as flights to Johannesburg from February 2016.
Plans for growth were abruptly halted in 2016, however, and Sir Stelios Haji-Ioannou, as the majority shareholder, installed a new board of directors, including former Mango CEO Nico Bezuidenhout, to mitigate the airline’s continued losses.
Fastjet’s network now includes five countries in South-Eastern Africa and connects some of the major commercial centres such as Lusaka, Harare, Dar es Salaam and Johannesburg. “Team fastjet has worked exceptionally hard to develop our markets where we have a brand presence today. In many instances, making air travel accessible to the public for the first time through affordability, sound distribution strategies and market adaptation,” says Hein Kaiser, General Manager Marketing Communication at fastjet. “It continues to be our vision to provide affordable air travel to everyone.”
The cheaper air fares offered by low-cost carriers allow for increased leisure travel, but it also makes perfect sense for business travellers, whether they are new to the game or old hands.
“We are definitely seeing an increase in corporate travel bookings on kulula.com, as more and more companies look at reducing their travel costs, evident by the high demand for the corporate peak travel times,” says Pozyn. “We are also seeing a growth in the commuter market, as more business people make lifestyle moves to the coastal areas, but continue to work in South Africa’s large cities.”
But business travellers’ needs are slightly different to those of leisure travellers. It doesn’t matter which airline they’re flying, or where they’re going, time is their most valuable commodity.
Santos believes that what African business travellers want most is more direct routes delivered by African airlines flying directly between African destinations, rather than through hubs in Europe and the Middle East. This would certainly preserve the commodity of time.
“But in most instances, gaining access by Africa’s airlines to most of Africa’s markets is so tedious and expensive that it simply isn’t worth the effort,” says Foster.
To make their airlines even more attractive to business travellers, low-cost carriers have unbundled their products, allowing travellers to cut out unnecessary expenses and to pay for the services that are important to them – such as seat selection in the front of the cabin to ensure quick departure from the aircraft and the option of waiving a checked luggage fee for free carry-on luggage.
OPERATING IN AFRICA
The International airline community has identified Africa as the continent with major growth potential opportunities, leading to the increase in schedules, capacity and destinations into the region by the Gulf and other international airlines.
When asked what the standout features of flying a route to Africa are, Santos’s opinion is unequivocal.
“High operational and ticket costs, unnecessary stops, long routes and poor infrastructure,” he says.
In 2010, the World Bank found that aircraft departure fees in Africa are on average 30% higher than elsewhere in the world.
“Africa has some of the highest airport taxes in the world,” says Marco Cristofoli, CEO of BCD Travel in South Africa.
Jimmy Eichelgruen, Regional Sales Manager EMEAI of Delta Air Lines, agrees that operating costs in Africa are generally higher than in other markets, which has a negative impact on airlines within the region.
“But Delta has weathered these challenges to stay in Africa for the long-haul,” he says “In fact, Delta has made investments in its African network, including at Accra’s Kotoka International Airport. In partnership with KLM, the airline funded two boarding gates, air-conditioning, more seating and an enhanced experience for customers.”
Santos believes that integration of costs and tariffs, improved standards of management, better access to financing of aviation operations, and automated bookings are what Africa needs to improve to attract more airlines, and thus more visitors, to the continent.
“But, he says, “improved and efficient infrastructures operated by commercial means, not by governments.”
Da Silva agrees.
“Hire professionals, not politicians,” she says. “At the very least, you need governments that allow the management team, in its capacity as the professionals, to run the company on sound business principles.”
This is one lesson Africa needs to adopt from international airlines, but it’s not the only one. Da Silva also believes that African airlines can put other lessons into practice.
“Adopt a clear vision, and then stick to it,” she says. “A strict schedule and efficiencies result in profits, ensuring the set targets are met in a focused manner. Don’t rely on government loans. Governments have to decide whether the airline is a strategic asset or simply a business.”
“Insource infrastructure and skills development. Outsourcing is not always the answer and the understanding of the African market lies with local employees and experienced airline people in the industry based in the local market,” she says.
It’s clear that the African aviation industry still faces major challenges.
These include the lack of sufficient intra-African connectivity, safety, security, political instability, infrastructure, and skills development.
However, there does appear that there is the will to change the status quo, and if the continent’s governments can just push on and get something signed and achieved, sooner rather than later, in terms of opening up Africa’s skies, then, as they say, the sky is the limit.
HOW TO GET IT RIGHT
Delta Air Line’s Jimmy Eichelgruen, Regional Sales Manager EMEAI, believes that there are four important factors that an international airline needs to get right, in order for a route into Africa to be successful:
Demand – You need to employ the correct size of aircraft. “Ensure you match customer demand to the number of seats on each aircraft,” he says.
Network – Operating to large hubs outside of Africa is important. You can then offer same-airline connections to a large number of destinations with well-timed connections.
Product – Trans-continental flights, especially from Southern Africa, are long-haul undertakings, so you need to have the right product for the market. Lie-flat beds in business class are important, as is legroom in economy. And don’t forget about the catering. Menus that reflect local tastes and preferences make a difference.
Innovation – With so many hours spent in the air, with nothing to do but sit, it’s also important to offer customers ways to pass the time. In-flight entertainment is the standard expectation, and many passengers look forward to catching up on movies, but there is always more that you can offer. Wi-fi is becoming the new expectation, so that business travellers can work while in the air.
SEAMLESS PASSENGER EXPERIENCE
“The journey through the airport is often a frustrating experience. Passengers have to verify their identity at numerous points across their journey,” says Alexandre de Juniac, Director General & CEO of the International Air Transport Association (IATA).
“The traveller experience has to improve if we want to achieve the growth potential,” says Gloria Guevara, President & CEO of the World Travel and Tourism Council.
That is why the two organisations have agreed to partner to achieve the benefits of biometrics and deliver traveller digital identity management throughout the travel and tourism sector for a seamless passenger experience.
IATA, on behalf of its member airlines, is promoting a range of innovations to be considered for airports of the future, including the One ID initiative – IATA’s vision of an end-to-end passenger experience that is seamless, efficient and secure, and aims to offer passengers a frictionless airport process, allowing the possibility to walk through the airport without breaking stride.
The WTTC, through its Seamless Traveller Journey programme, will encourage the use of biometric technology and digital identity throughout the wider travel and tourism sector.
British Airways has already begun trialling biometric technology to speed up boarding and arrivals processes in the United States. Its biometric boarding gates at Los Angeles Airport, which remove the need for travellers to present their boarding pass and passport, have resulted in the airline boarding more than 400 customers in only 22 minutes – less than half the time it takes when not using this technology. Customers simply look into a camera prior to boarding, wait for their biometric data to be verified, and walk onto the aircraft.