Africa’s open skies

On the eve of the Routes Africa 2018 conference, which will be held in Accra, Ghana, in mid- July, there is an air of optimism across the continent about the future of the aviation sector. As the world increasingly turns its eyes to Africa as a land of opportunity for business, the need to enhance air connectivity across the continent has never been greater. And there are signs that the aviation sector is gearing up to create the internal and external links that will be so important to economic development across the region.

Although Africa is home to a large proportion of the world’s population – more than 1.28 billion, according to UN estimates – its aviation industry still represents a tiny fraction of the global market. In fact, 2016 figures from the International Air Transport Association (IATA) show that the continent has a 2% share of the market, with 84 million passengers travelling on scheduled flights operated by airlines registered in the region. This is in stark contrast to the 35% market share (1.3 billion passengers) or even the 5% share (206 million passengers) of the Asia-Pacific and Middle East regions, respectively.

What the industry does have, however, is great potential and the economic growth on which to build out its services coupled with confidence in rising passenger numbers. After growing in 2016, tourism in Africa jumped by 8% in 2017, according to the UN’s World Tourism Organisation (UNWTO), with a record 62 million international arrivals, and the UNWTO predicts further growth of 5–7% in 2018.

However, many challenges remain. Rising oil prices will have an impact on already high ticket prices, which make it expensive to travel to, from and within Africa. A lack of competition compared with other regions across the world exacerbates this problem, and there is an urgent need to update and modernise the industry’s infrastructure in many countries. Yet there are many signs that these hurdles can be overcome. Although non-African carriers still make up the vast majority of air traffic in Africa, growth among local carriers such as Ethiopian Airlines, Kenyan Airways, South African Airways, Rwandair and Air Cote d’Ivoire continues. Furthermore, the advent of the Single African Air Transport Market provides a platform for more rapid development of the continent’s aviation sector.

A single sky for Africa

The Single African Air Transport Market (SAATM) is a major step forward for the continent’s aviation industry, as it presents a joint stance on the future development of the sector, backed by the African Union (AU), its member states and the industry itself. The launch of the initiative in January this year was greeted with optimism, and 23 countries signed up to the agreement. Now the total stands at 25.

SAATM is the first of the 12 AU Agenda 2063 flagship projects to be launched and is a key part of the broader African Passport initiative that is intended to enable the free movement of people within the continent. The implementation of SAATM builds on the Yamoussoukro Decision of 1999, which marked a leap forward in the principle of liberalising air services, as part of which 44 signatory countries committed to the deregulation of air services and the promotion of regional air markets open to transnational competition.

“In order to make good on the solemn commitment, the concerned member states have addressed provisions in their bilateral air service agreements (BASAs) to ensure compliance with the Yamoussoukro Decision (YD),” stated Moussa Faki Mahamat, chair of the AU Commission at the meeting where SAATM was launched. “In that regard, the Institutional and Regulatory Texts of the Yamoussoukro Decision, which are considered essential for the single market to function effectively, have been adopted. The Commission has also drafted guidelines for the negotiation of air service agreements with three countries and a human resource development fund (HRDF) has been established and placed under the management of the African Civil Aviation Commission (AFCAC),” he added.

The momentum behind the liberalisation of air services did not begin or end with SAATM, but is part of a much larger story in which governments, industry bodies, airlines and international financial organisations recognise the substantial benefits of open skies in Africa, not least for the continent’s economy.

Shortly before SAATM was announced in January, IATA and the African Development Bank (ADB) signed a memorandum of understanding (MOU) to push forward Africa’s aviation sector. In November 2017, in the Nigerian capital of Abuja, the parties committed to a process that will establish a framework for collaboration to boost industry. They will work together to foster the development of a safe, secure and efficient aviation industry in order to accelerate Africa’s economic and social development.

The agreement opens the door to a wide range of projects and programmes that will focus on areas such as technical cooperation for capacity building, improving connectivity, modernising aviation infrastructure and improving safety.

“Aviation in Africa currently supports $72.5 billion in economic activity and 6.8 million jobs,” noted IATA’s Director General and CEO Alexandre de Juniac at the time. “Over the next 20 years, aviation is forecast to grow at nearly 6% per year. This creates significant opportunities. But achieving this potential will not happen by chance; strong partnerships are key. The MOU with ADB will help facilitate the growth and development of Africa’s aviation industry. In doing so, it will expand prosperity and change peoples’ lives for the better in the continent’s 54 nations.”

“The aviation sector is especially important as it opens up doors to investors,” added African Development Bank president Akinwumi Adesina. “Very few invest where it’s difficult to travel to. That’s why ease of access via air travel is strongly correlated to economic growth. We must make regional aviation markets competitive and drive down costs, raise efficiencies and improve connectivity and convenience. Africa’s aviation time has come.”

Engines of the economy

Many of Africa’s busiest airports lie within the boundaries of SAATM, including Johannesburg’s Tambo International Airport, Cairo International Airport and Murtala Muhammed International Airport in Lagos – and if the advantages that have accrued from similar projects in other continents are replicated in Africa, then the potential economic benefits are great.

The European Single Air Transport Market and the liberalisation of air transport markets in Latin America, for instance, have facilitated trade and further opened up international supply chains. One obvious advantage is the greater speed with which fresh produce can be transported from producers to consumers, which will have a significant benefit for agricultural communities. Another key sector to benefit will be the tourism industry, which is essential to bringing in visitors from neighbouring countries, as well as international travellers. The lower fares that are expected to result from liberalisation will be key to boosting internal and external passenger numbers, as are higher levels of service and efficiency.

The airlines operating in the countries that have signed up to SAATM account for a large proportion – in excess of 70% – of the air traffic within Africa. A significant amount of inbound and outbound traffic, however, is handled by airlines from outside Africa, which leading domestic airlines hope to change in the coming years. Among those is Ethiopian Airlines, which is among the continent’s largest operators.

As the largest pan-African airline, Ethiopian Airlines has played a key part in making Addis Ababa Bole Airport an important hub for flights into Africa. Kenya Airways also has a key hub in Jomo Kenyatta International Airport in Nairobi, which is a key access point for the east African region and also provides close links to central and western regions. The southern part of the continent is opened up by South African Airways with its base at OR Tambo International Airport in Johannesburg.

Through a more open policy of air travel across the continent, Ethiopia and Kenya could further stimulate their already high economic growth rates – respectively, 7.5 and 5.8% in 2016 – and the same could be said of economies in the northern part of the continent such as Morocco, Algeria, Tunisia and Egypt, where passenger numbers continue to grow rapidly.

Rwanda’s national carrier, Rwandair, is another airline that is set to benefit from the liberalisation process, under the guidance of its new CEO Yvonne Manzi Makolo, who was recently appointed by President Paul Kagame. Her appointment comes at a time when the airline is seeking to expand its routes, which already include key destinations in Africa, Asia and Europe. The airline is in the advanced stages of planning direct flights to China, and in the near future, it could open up new routes to the US and Israel.

These airlines and many more, along with industry bodies and investors, will have much to discuss at the upcoming Routes Africa 2018 conference.

“With the Single African Air Transport Market set to further liberalise and unify the African skies, it is no doubt an exciting time for the continent’s aviation industry,” Routes brand director Steven Small recently remarked. “Routes Africa will bring together senior decision-makers from Africa’s airlines, airports and destinations to plan new services. They will also discuss increasing the frequency and capacity of the existing routes that are popular with passengers. The negotiations in Accra could lead the way to the busiest African routes of the future.”

Africa’s busiest airports

1. Tambo International Airport – Johannesburg, South Africa

2. Cairo International Airport – Cairo, Egypt

3. Cape Town International Airport – Cape Town, South Africa

4. Bole International airport - Addis Ababa, Ethiopia

5. Mohammed V International Airport – Casablanca, Morocco

6. Houari Boumediene Airport – Algiers, Algeria

7. Jomo Kenyatta International Airport - Nairobi, Kenya

8. Murtala Muhammed International Airport – Lagos, Nigeria

9. King Shaka International Airport – Durban, South Africa

10. Tunis-Carthage Airport – Tunis, Tunisia

11. Nnamdi Azikiwe International Airport – Abuja, Nigeria

12. Marrakesh Menara Airport – Marrakesh, Morocco

Source: IATA

Africa’s busiest routes

1. Johannesburg OR Tambo (JNB) – Cape Town (CPT)

2. Johannesburg OR Tambo (JNB) – Durban King Shaka (DUR)

3. Cairo International (CAI) – Jeddah (JED)

4. Abuja (ABV) – Lagos (LOS)

5. Johannesburg Lanseria (HLA) – Cape Town (CPT)

6. Durban King Shaka (DUR) – Cape Town (CPT)

7. Johannesburg OR Tambo (JNB) – Port Elizabeth (PLZ)

8. Johannesburg OR Tambo (JNB) – Dubai International (DXB)

9. Cairo International (CAI) – Riyadh King Khalid (RUH)

10. Cairo International (CAI) – Kuwait (KWI)

Source: Routes

SAATM signatories

Benin
Burkina Faso
Botswana
Capo Verde
Central African Republic
Chad, Congo
Côte d’Ivoire
Egypt
Ethiopia
Gabon
Gambia
Ghana
Guinea
Kenya
Liberia
Mali
Mozambique
Niger
Nigeria
Rwanda
Sierra Leone
South Africa
Swaziland
Togo
Zimbabwe

Source: African Union