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Liberalisation: Key to catalysing the air transport sector in the Central African sub region by Sirri Caroline Nfornah, 18 June 2015

18 Jun

The air transport industry consists of activities that directly involve transporting people and goods by air, which includes airlines, airports and general aviation. It has a vital role to play in achieving sustainable development in the Central African sub region. The expansion of air services is a necessary condition for the development of a more diversified export base across the continent and for the expansion of tourism to the sub region. Improvements in the air transport industry would help to raise living standards and alleviate poverty by lowering transport costs, supporting more rapid economic growth and increasing personal mobility.

According to the African Union, ‘Aviation in general provides the only rapid worldwide transportation network, which makes it essential for global business and tourism – thus facilitating economic growth, particularly in developing countries.’ Liberalisation leads to increased air services, which in turn, facilitates growth in the sectors of the economy by supporting increased trade, attracting new businesses to the region, encouraging investment and enhancing productivity.

Liberalisation also offers efficient, competitive carriers an opportunity to enhance profitability by expanding into new markets, accessing a wider pool of investment and through consolidation.

There’ve been numerous initiatives and good efforts by governments of the Central African sub region to benefit from the opportunities of the aviation industry. The African Economic Outlook reports that there’s been an increased government-led infrastructure investment and modernization of Congo’s aviation sector- from the construction of new airports and the modernization of existing ones, as well as the expansion of the country’s national carrier’s footprint; Equatorial Congo Airlines( ECAir).

The domestic and sub-regional air service industry nonetheless has remained underserved, inefficiently connected, underdeveloped, and uncompetitive. Global bodies such as the International Air Transport Association (IATA), African Union (AU) Commission, Economic Commission for Africa (ECA), and the African Airlines Association (AFRAA), as well as African Civil Aviation Commission (AFCAC) are worried that until African governments liberalise the air transport sector, the much-desired development would continue to be wishful thinking.

Their worries are not baseless because the absence of an air transport policy that would define how the industry would be positioned is not in place. There has to be policy that would assist the industry to chart the way forward for Africa’s in general and particularly Central Africa’s economic development.

The Central African aviation industry has been facing a number of problems over the past decades including; poor management, government involvement, financial constraints, monopoly and increased safety and security measures amongst others. The aim of this write up is to show how the Central African sub region, like the rest of the aviation industry elsewhere is facing challenges as well. The way forward gives various proposals as to how states in the Central African sub region can reap the benefits of opening up their skies and improving the aviation industry which is critical to the African Union (AU)’s Agenda 2063.

So what is behind all these casualties, and how can the countries in this sub region maximise the potentials enshrined in the air transport sector? In other words, the above facts suggest the need to examine the operating environment to identify factors which are stifling efficient aviation in the Central Africa sub region.

The numerous initiatives and good efforts to benefit from the opportunities of the aviation industry in the Central African sub region have either been too little and/or too slow.  Many reasons can account for the above assertion: inadequate infrastructure and man power, political intervention as well as governments’ control and monopoly over the industry.

A report on the implementation of the air transport policy by the Economic Commission for Africa (ECA) reports that more than any reason, the declarations of intent that Central African states have made regarding cooperation and integration have not been effectively carried out because of their lack of initiative, trust and the financial difficulties most of them are going through. While the studies which have been undertaken could have led to positive results, the cultural and political commitments have not been forthcoming.

It seems the abandonment of the Air CEMAC project by CEMAC Heads of State (Cameroon, Chad, the Central African Republic, Equatorial Guinea, Gabon, and the Republic of Congo) during the 12th Session of Heads of State in Libreville-Gabon has fallen foul of this interference. It should be noted that the community had planned for Air CEMAC to improve connectivity between the neighbouring countries in a region long starved of reliable air services. There were also plans for international routes to major cities such as Johannesburg, Dubai, Frankfurt and London.

These states have not been able to take several initiatives to enter into alliances that would have helped them to achieve the objectives of liberalisation. Because people are afraid of themselves, they refuse to integrate fully and completely.

Another challenge is also attributed to the economic and political situation of Central African countries. Since the early 1990s, these states have been experiencing political, economic and social turmoil. Their governments have not had the time they need to concentrate on developing the air transport sector, more specifically, airline cooperation and integration. They are still distrustful of each other and hesitate to commit themselves to cooperation and integration arrangements.

The 1999 Yamoussoukro Decision was signed by 44 African countries in 1999 as a key enabler for air liberalisation. The air transport sector in the Central African region is hampered by the fact that the implementation of the Yamoussoukro Declaration regionally has now become a political decision, because the airline industries ownership within the Central African sub region are mostly state-owned. It appears that fair play is not always observed, particularly with regard to operational approaches, whereby some airlines have tended to unfairly eliminate other airlines in order to monopolize the market.

The potential dominance and monopoly of some national carriers is a concern for certain governments. Throughout the sub region, a number of countries continue to restrict market access under the pretext that their national airline is not ready to compete in a liberalized market. They view airports as potentially monopolistic enterprises to be regulated and controlled.

Camair-Co is Cameroon’s new national carrier, succeeding Cameroon Airlines which collapsed in 2008 after an unsuccessful privatisation process. The carrier has a monopoly on its domestic routes where it had grown capacity in the past years, including a more than 57% increase on the largest route between the country’s biggest city Douala and the capital Yaoundé. Camair-Co continues to hold a monopoly, but profitability remains elusive.

Speaking at the Aviation Africa Conference in Dubai earlier last month, the chairman of Rwandair and former Ethiopian Airlines CEO Girma Wake said that while the ideas of consolidation always made great sense they fall down on political intervention and individual national protectionism and interests.

The problem is exacerbated by the European Union’s ban on several airlines for safety reasons. A lack of confidence in safety oversight has resulted in some airlines with good safety records being put on the list. Not surprisingly, about 80% of intercontinental traffic to and from Africa is carried by non-African airlines.

Local civil aviation companies in the sub region for instance, are often blacklisted because they do not meet international criteria and this black-listing remains a critical challenge for these countries in achieving international recognition in this regard. For example, the expansion of air traffic in Gabon has been affected by an EU blacklist of several Gabonese carriers, after an audit of the national civil aviation authority conducted in 2007 found insufficient compliance with European safety regulations and standards. As a result, some locally registered airlines are currently unable to land in Europe. The blacklist has prevented partnerships with local operators.

The World Bank’s Africa Infrastructure Country Diagnostics (AICD) study provides analysis of infrastructure gaps, including for aviation, where lack of airline competition and the development of regional airport hubs are noted as important constraints. Inadequate airport and other transport-related infrastructure weigh heavily on the sub region. Many airports are incapable of accommodating large aircraft and tend to have very few runways. For instance, air traffic control at the Douala international airport is seriously deficient; tend to be frequently poorly drained and overdue for resurfacing.

These highlight the failure of a number of governments and airport authorities to invest in infrastructures such as air navigation networks to improve safety standards. The poor infrastructure arises from decades of under investment by governments and neglect that has affected development in the air transport infrastructure.

If the aviation sector is to reach its full potential in the Central African sub region, priority should be given to a number of issues.

Firstly, the issues of state-control can be addressed by fully implementing of the 1999 Yamoussoukro Decision which was signed by 44 African countries in 1999 as a key enabler for air liberalisation. Liberalisation is an effective means to fuel the growth of low-cost competition, as well as removing some of the restrictions on air services. Therefore, collective effort from governments of the Central African sub region will be required to push forward the liberalisation agenda by fast pacing unilateral liberalisation, setting up independent regulatory bodies to reduce government involvement.

Governments should also provide other facilitator assistance, such as implementing global standards in safety, security and regulations, reducing high charges, taxes and fees and removing visa requirements for ease of movement across the sub region.

Improvements in the air transport infrastructure have a key role to play as a facilitator of and complement to policies that aim to improve living standards and alleviate poverty. When it comes to rolling out new projects and revamping existing infrastructure for the purpose of fostering economic development, public-private partnerships are key. Infrastructure allows state authorities to be in control of these projects while the management and maintenance is delegated to external, reputable private partners – companies that have the necessary knowledge, expertise and capacity. Private companies from outside can provide world-class expertise that meets international standards especially when one wants to create and maintain a level of confidence.

The Malabo Airport, used by over 600,000 travellers in 2013, has benefited from a public infrastructure investment that has upgraded all airports in the major islands, as well as the Bata International Airport in the continental region. This investment seeks to transform the capital into an air hub for the sub region and for the continent, with the aviation sector forecasted to be worth USD 860 million by 2020.

The Economist (2003) describes the lack of full liberalisation and the restrictions arising from this as one of the biggest dangers facing the global airline industry. Aviation makes a significant contribution to the global economy. In an increasingly competitive global environment, the Central African sub region can no longer remain isolated, but must pursue measures that make its aviation efficient and capable of withstanding the global challenge.

The conclusion is that Central African states need to reap the benefits of the current trend in the aviation industry, which includes building up an extensive global network to realize economies of scale and density and to meet consumer demands.

Mrs. Sirri Caroline Nfornah is the Public Relations Officer for the Central African Centre for Libertarian Thought and Action (CACLiTA), Cameroon. She is equally a trained diplomat at the Ministry of External Relations, Cameroon. She holds a Masters in diplomacy from the International Relations Institute of Cameroon and is currently an Atlas Leadership Academy participant.

Mrs. Sirri Caroline Nfornah is the Public Relations Officer for the Central African Centre for Libertarian Thought and Action (CACLiTA), Cameroon. She is equally a trained diplomat at the Ministry of External Relations, Cameroon. She holds a Masters in diplomacy from the International Relations Institute of Cameroon and is currently an Atlas Leadership Academy participant.

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1 Comment

Posted by on June 18, 2015 in Uncategorized

 

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One response to “Liberalisation: Key to catalysing the air transport sector in the Central African sub region by Sirri Caroline Nfornah, 18 June 2015

  1. Guy Atangana

    January 8, 2016 at 10:41 pm

    la question est, que la régionalisation semble être un contre-poids à la mondialisation et non une étape transitoire, permettant de consolider les marchés africains. Or, les compagnies africaines actuelles n’ont pas la capacité d’absorber leurs propres marchés.

     

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