Open skies still up in the air.
The African Union is as old as the European Union. The European Union has achieved a lot, and the African Union has not achieved as much. So said Tewolde GebreMariam, chief executive of Ethiopian Airlines, during the annual meeting of the African Airlines Association (AFRAA) in Congo Brazzaville in November.
GebreMariam has earned the right to pass judgement. Since taking the reins at Ethiopia's flag carrier in 2011, he has continued and expanded the ambitious growth strategy designed by Girma Wake, his illustrious predecessor, who laid the groundwork for Addis Ababa to become the continent's pre-eminent aviation hub. Today, the only thing growing faster than Ethiopian Airlines' fleet is its bottom line -- net profits have quadrupled over the past four years.
Elsewhere on the continent, however, aviation success stories are few and far between. The AfricanUnion must accept some of the blame.
In 1999, 44 of its members promised to tear down the bilateral restrictions that curtail flying rights between African countries. Their pledge, the so-called Yamoussoukro Decision (YD), was to create a single air transport market across Africa by 2002, mirroring the open-skies movement in Europe that fostered the growth of low-cost carriers Ryanair and easyJet. More than a decade on, little has changed.
The virtuous circle that deregulation catalyses is well understood by all: tough competition between airlines boosts efficiency, pushes down airfares, and stimulates latent price-sensitive demand. As more people travel, economic output rises and yet more demand for leisure and business travel is created. According to IATA, an industry trade group, cross-border liberalisation between just 12 African countries would create 5m new passengers, $1.3bn in annual GDP and 155,000 jobs. Yet still Africa's skies remain closed.
Hopes for long-overdue reforms started rising in April, when the African Civil Aviation Commission (AFCAC) announced that 11 countries have reaffirmed their commitment to implementing YD by 2017. That figure has since risen to 13. The new drive is partly down to lobbying by GebreMariam, whose airline has the most to gain from liberalisation given its marketleading position on the continent.
"We went to the African Union and said this is not correct, because if Africa is going to grow, if Africa is going to see its vision of peaceful, prosperous Africa by 2063, air connectivity is a critical, essential part of that equation," he told delegates at the conference. "We asked the African Union ... to copy the European model for aviation."
For Henok Teferra, chief executive of ASKY Airlines, the multinational West African carrier partowned by Ethiopian Airlines, bilateral liberalisation is just the first step towards a fully open marketplace.
When it is eventually implemented, YD's initial focus will be on the so-called third and fourth freedoms of the air: the right to fly from one's home nation to a foreign country (for an outbound journey), and from a foreign country back home (for a return journey). In West Africa, however, thin demand on many routes forces ASKY to lean on the fifth freedom of the air: the right to fly from one foreign country to another foreign country (for an onward journey). Convincing governments to approve fifth-freedom rights is particularly challenging. And even this, Teferra said, is not enough.
"We are beyond fifth-freedom," he told African Business. "It should be cabotage [the right to fly domestically within a foreign country] ... That's how Ryanair fly, that's how easyJet fly. We are always one battle behind in Africa, unfortunately."
Many in the industry echo Teferra's downbeat assessment, sensing that the prospects of liberalisation have been overstated by AFCAC. Their cynicism is justified. Empowering the private sector, although beneficial in the long term, tends to have a disruptive short-term effect on the public sector. Today, the reality is that most African flag carriers still rely on state bailouts and restrictive bilateral agreements to shield them from competition. Open skies would instantly tear down the latter while gradually drying up the former, pushing these parastatals towards either painful restructuring or bankruptcy.
It is a market evolution that has already run its course in the West. Deregulation in Europe precipitated the failure of state-owned flag-carriers like Hungary's Malev, Belgium's Sabena and Swissair.
Others, such as British Airways, changed their ways and transformed into strong airlines.
But for countries like Kenya, South Africa and Egypt -- three of the 13 states now promising to take the plunge -- there is little evidence of words being backed by actions. In Kenya, privately-owned fastjet has just been denied an international licence after years of stonewalling. In South Africa, privately-owned Comair has repeatedly taken the government to court over its bailouts for South African Airways, which it says distort the competitive playing field. In Egypt, Sherif Fathy, the new boss of EgyptAir, openly admits that he has been advised not to pursue YD.
Airline protectionism is easy to spot elsewhere on the continent, particularly in Algeria, Angola and Namibia. Even Morocco, which has signed an open skies deal with Europe, protects its flag carrier by denying Air Arabia Maroc the right to serve West Africa.
Small wonder that many airline bosses therefore prefer pragmatism over optimism. Teferra supports the latest YD push, but he has no intention of waiting for the big day. Confirming his interest in launching domestic Nigerian flights, he said ASKY may ultimately have to set up a joint-venture with local partners. "The ideal is to have countries understand [the benefits of liberalisation] and create a single African market," he affirmed. "But if that does not materialise, then there are other routes we would look at ... We could establish, for example, an ASKY Nigeria."
The joint-venture model is already favoured by fastjet and FlyAfrica, the continent's two pan-regional low-cost carriers, both of which have struggled to secure traffic rights independently. Other airlines are rallying behind the benefits of commercial cooperation, primarily by signing codeshare agreements that allow them to sell tickets for each other's flights.
"If we don't adapt, if we want to fly alone, all for ourselves ... we will not get anywhere," Wake stressed. "We have to accept that fact that we have to work together."
Alongside his call for partnerships, the industry veteran also had a warning for those inefficient flagcarriers that have impeded reforms: "Our heads of state... may give you money to survive for some time, but two years from now, three years from now, when the losses increase, they are going to come back to you and say: 'I have other priorities, find money from anywhere else.' I don't think you should wait for that. You cannot stop the liberalisation in Africa."
Cross-border liberalisation between just 12 African countries would create 5m new passengers, $1.3bn in annual GDP and 155,000 jobs.
If Africa is going to see its vision of peaceful, prosperous Africa by 2063, air connectivity is a critical, essential part of that equation.
[c] Copyright IC Publications 2016 Provided by SyndiGate Media Inc. ( Syndigate.info ).