Development of air transport services in African: challenges and perspectives

/ '

Regional Cooperation and Integration Division (RCID)

Economic Commission for Africa P.O.Box 3001

Addis Ababa, Ethiopia Telephone: (251-1) 5166291 511870

Fax: (251-1)513038/514416 e-mail: rcid-eca@yaboo.com

ECA 1 RCID ICM.CIV A V 19912 Dec. 1999

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F

r91 INTRODUCTION

~.:-] - - : ,

'[·1 'L'

.-:J, L. 11

~ 1. Air transport has undergone major regulatory and technical~;

~idevelopments since the adoption of the1988 Yamoussoukro;~T:

~Declaration on the Establishment of a New African Air:~ ~~

~Transport

Policy. The working group that was established

in[r~'J

~preparation of this Regional Conference of Ministers Respon-

i~·~sible for Civil A viation therefore considered that it was~:.;,

~proper to draw the attention of senior officials responsible forr:~

l~~civil

aviation to matters on the major developments,

the~~~~1

!~challenges and the perspectives both at the international andLeJ

~lAfrican

level in the industry. The document has

beenl;~;J

~confined to the priorities identified by the working group and;]]

!Sthis document mainly deals with these priorities. In addition,i,~!

~~some of these priorities have been developed in view of the[,~j 5importance given by the working group to draw the attention~:

~of policy makers. Duplication in the work of institutions has~~~l [~been avoided as the report is based on the observations and!::·;

~recommendations of some organisations.

'r '

;~~]l

~]II. DEVELOPMENT OF THE INDUSTRY

;~!

L"-l

~~2. The development of the industry as outlined by the Interna-rc,

~}!tional Civil Aviation Organisation (ICAO), the World Trades'

i~Organisation (WTO) , United Nations Conference on Trade~~

§and Development (UNCTAD), the Association of

African~j

~Airlines (AFRAA) could be summarised as follows: ~~

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^1. General development

[2.:

~

[E

eJ3. The civil. aviation industry is one of the best in the ~o~ld.!d rclEvery year It produces a gross turnover of US $1140¹ bllhonL[~:JJ

[2throughout the world and has created 24 million jobs. _], There~ _{L_}

~l is a relationship between the development of air transport andS

i~-,·,!ltourism .as each sector will promote the development of the~~

5

other. During the last 40 years air trans~ort ser~ices havel~:

~developed faster than the world production. SInce 1960~

l=1.'passenger traffic has grown by 9 per cent per annum andS, L='~airfreight by 11 per cent per annum whereas at the same time[jj

~the world's GDP has only increased by 3.5 per cent per:~

-:']!annum. ~1

11'_-

;-iJ , Air transport services are divided into passenger servicesL~

:~~jJ(about 70 per cent in volume), goods traffic (28 per cent) and~~

~~postal

services, whose share is on the decline (2 per

cent).~~

[5] The earnings indicate that passenger traffic is still very[[}

~jJimportant accounting for 88 per cent of the total traffic agajns6~i ,)1 per cent for freight and 1 per cent for postal services. One?l

,~~-~; of the significant observations in the past and which should~

l~~lcontinue in the future in the three areas is the disparity ~~

rr--:~competition between the transporters from several developing~~

~j; countries and transporters from most of the developed coun-~

c: . I i '

;,-JJ trIes. Lr;~'1

Il___ r,.::._

l§5. For the past few years there has been a strong concentra-~

$tion of this

c~vil

aviation market in North America and

Euro~e2 t~

and a growIng market share and growth rates of the

ASla~1

~' ~

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2

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[jSPacific. According to the forecast of ICAO, the latter region[~!!

~in view of its flexible regulatory regime and its trade develop-~i rS1ment will increase its market share fast as wel1 as its growth~2 [Srate during the present decade and the subsequent decade. ~~

~Latin

America, the Middle East

~d

Africa will continue

tO~l

~~progress slower than the other regIon. ,

;~I

~6. Three quarters of the international passenger traffic

.'-"-'11

[~;handled by transporters from the developed countries and a

G: ~t;

~~quarter by transporters from developing countries. In thet:~!

~

same vein about 60 per cent of freight is transported

byr.:-~~

~~;~companies from developed countries and 40 per cent by/c~/

~5companies from developing countries. Asia-Pacific is the:.F:~!

~~~lmost

dynamic of all the developing regions.

~~]

~ ~

~ Ie

~,~JJ 7. From 1985 to 1995 the total earnings from scheduled~::

~airline operations increased from an average of 7.5 per cent~~, rS~per annum that is $ US 166.2 to $ US 291.0 billion. The;;~-·i

~

operational costs (expenses) increased at the same pace

and~-::i

~~5Jwent from $ US 156.0 to $ US 274.5 billion during the sameL::~~

§iperiod. According to the region the earnings and the outpuG~:·~'·

~~i]from operations (profit/losses) in 1996 stood respectively at $i~~~_'~

~USI03.1

billion and $ US 6.2 billion in North America at

$lS~

~US 82.4 and $ US 2.7 billion in Europe, to $ US 68 and $ U~]

~~3.2 billion in the Asia-Pacific region, to $ US 14.3 and $ usE~

;~0.3 billion in Latin America and in Caribbean, to $ US 8.1[[~,

~;and

^$ US -0.2 billion in the Middle East and to $ US 6.6

anq~:,

~i$ US 0.1 billion in Africa. ,-

[2[F' ^J

?J

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~~~8. The ICAO forecast for the period 1995 to 2005 have show~~J

i,j~an increase in passenger traffic from $ US 373 to $ US 680^t_.l,

::4~million with a~r . freight on ~cheduled flights increasing from:;~~~,

~'~=! 13 to 24.4 mllhon tons wIth the number of passenger per:'~!

I _. "

i~~Jkilometre on schedule flights from 1 billion 241 million to 2[:~~1

r~=:billion 395 million and number of tons of freight per ki1ome-:>~:'

;;~}tre on schedule flights from 70, 273 billion to 145, 720 billion.:;~~:

~j"-=:i The deceleration in the economic activity of the Asia-Pacific~~~~

~!:--~'region has led to a drastic reduction in both internal and;~-,5~

__ J, ' ,'-_ .. ,

I~~] international traffic in the region as well as in the traffic flOWS~ __ l~

~!~Ji between this region and the other regions this is why duringiL;;

i~~ the period 1995 to 2005 the growth forecast, (in billions of;~~~

,!jpassengers/kilometres) was revised downwards by ICAO andi^j

~I:.;~"changed

from 1 ,260 to 1 ,081 and the average annual growthr;;:;J I'~~:rate from 8.5 to 7 per cent for the Asia-Pacific region. Fo~~':l Ijtbe whole world this forecast was changed from 3,807 to :-

~,~;?, 629 and the average annual growth rate from 5.5 to 5 peri~:~:

:,~ ~;cent. '

, :!.

From 1988 to 1997 countries classified among the first 1 n~;-:

:'-;-: 'I '

~j~ according to the number of passengers per kilometre in~~~~

I~-iiinternational traffic were the United States of America,:~~;

~~~IUnited

Kingdom, Japan, Germany, Netherlands,

Singapore,:.~~}

i:~={;France, the Republic of Korea, Australia and Canada. Duringi~~l '-~~:the same period, some developing countries were among thel~~-'!

r~i~first 30 in the world according to the number of passengers~c;;

;~~~!per kilometre. Thirteen of the 30 principal transporters werel~, lG,;based in developing countries albeit non-African. "

!,

4

I r ! ~ l! ! -^{1 ' :' I}

according to the annual report of the leAO:--:_{- i} ^1, r,--Jcouncil the total schedule traffic carried out by airlines from;- lf~~the 185 contracting states reached about 1,462 million passen<":

:~:-ligers and about 26 million toones of freight.

i --

11. At the level of the region about 36 per cent of the totaf-:,~~

~.' ~!volume of traffic (passenger/freight/postal services) were:l __

1 - - ,.'

::=~transported by airlines from North America. European ':- ⁱ r~~~\airlines transported 28 per cent, Asia-Pacific 26 per cent",

~C~ILatin America and Caribbean 5 per cent, Middle East 3 per:~_~'

;--·~cent and African airlines 2 per cent. The transporters of the;~."':!

!l~?;three countries, which have dominated the industry ~ were::-_.i' ["~:iUnited States, Japan and the United Kingdom, which com-rl:~~'1

l.- I

rl:~~:bined, transported 46 per cent of the total volume of regular~--,;

~;?passenger

_,J services as well as freight and postal services

and;:-~'J,

_II.~-

~~transported 32 per cent of the international services. Ol1{L:,:

;>/airport operations, the preliminary estimates of leAD fo{:-:

~~~ 1998 show that 25² of the largest airports in the world~:'"

i'~:~received about 992 million passengers and recorded 11 mil-,l-,

,,~-:ilion movements in air transport trade. None of these airport(, :1 r~:;is located in Africa with 17 in North America, 5 in Europe':;"

It::'!'and 3 in Asia. '

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I~f 12. The earnings recorded in 1998 by schedule airlines in the:';::~:

~---~contracting states of ICAO was estimated at $ US 298,500~'.,' .c=~million and their operational cost at $ US 282,000 millions ori^{L !:}

profit estimated at 5.5 per cent from earnings. :: .- 13. During the decade 1989-1998 the number of aircraft'>:

f,-·~operating commercial transport services increased about 6nc'-~

,I __

!._._ ,I ~~ ^{j . ; 1} i; II if i~:! L ;:!;: l: ^i-1 ].!J l,'~ ~I I:

:~~::per cent from 11,353 to 18,139 (excluding aircraft with a~ .. :

I~~jimaximum of takeoff mass below 9T). In 1998, airlinesL'il

i'~~.i:ordered

1,463 engine propelled aircraft for a financial

CoS~~]

';j~estimated

at $ US 84 billion. cd

2. General development in Africa

-- j:'1

; 1. For the 33 airlines which are members of the AssociationrF':~i

:~:;'~~of African Airlines (AFRAA) with information available the'~

_.' ;;development in the industry could be summarised as followed:,~~~~

'c in the period 1987 to 1998: source: AFRAA ^0].'

.11

i:~~

-=:~

~I~~,.I

_{. J . '~ ,}

~~~

~. ^..

~j

~~!'15. During the same period the international traffic consti-;:~jl

!I II

:~:~~~tuted the major market for airlines which were members of0~J

. ^--"

"",;AFRAA accounting for 45.8 per cent of the passenger traffic!~';

';".--1 1~":1

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6

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~and 72 per cent of revenue from passenger per kilometre. ~ [21This international market was characterised notably by a sti~

Sicompetition between the African and foreign airlines. The~2 GJoreign airlines accounted for about 75 per cent of the~

~international

traffic. This situation should worsen in

the~

§future

following the implementation of new policies and

trade~

SJpractices such as the code sharing, franchise, equitable partic-~

:2J

ipation etc.

~

"-'-.1 ,e

~J ~;

~

¹

~. !he interna~io.nal ~affic

ⁱⁿ

Af~ica

rose in 1987 from 9.

7~

~mt1hon to 13 mtlhon In 1998 that IS an average growth of 20S_i tSper cent. . T?e revenue from passenger per

~ilometre i~

~;dlrespect of alflmes members of AFRAA rose dunng the same~

;~period from 24.5 billion RPK to 43 billion that is an increaseS;

l~of 41 per cent. Freight rose from 219 thousands tonnes tO~ll

;;;,JJ t=:.

~278 thousands tonnes; an increase of 26.2 per cent. Therr=;;

~~performance by African airlines is hardly adequate to ensure~:

,5the viability of any of these airlines. ~l

~ ~

r,.=JJ L-,

~ 17. Intra-African traffic develops slowly varying between~~

epositive and negative developments but the situation is chang-~

rs~ing. Following the establishment of certain liberalisation and~-E

~f1exible

measures in the granting of traffic rights, several andr§

Ir~new intra-African connections have been established. As a~._=

51 ~

Sresult the revenue passenger per kilometre in 1998 rose frolIl[[}!

~3.4

billion RPK to 7.5 billion; an increase of 51 per cent.g

§jThe number of pa~s~ngers .on the intra-African routes ~ose~

~from 2.52 to 4.1 milhon an mcrease of 30 per cent and frelgh~

pJrose from 39 to 91.1 tones. :~;:

'''=j] 1---

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518. The domestic passenger traffic has remained at 12 millio~

~passengers and the domestic freight dropped considerably. ~

~ ~

~

19. The information provided by the airlines shows that

there~J

~has

been a substantive increase in the total revenue which roseS rSfrom $ US 3:5 billion in 1987 to $ US

5.~

billion in

1997.~

~However,

this figure

d~s ~~t

sho,,: t?e difference

~twee~

rr=lthe performance of the IndiVidual anlmes. In 1997 It wasS rsobserved from the information made available by airlines:§l

~wh~ch were members of AFRAA that 16 airlines made ~ sprofit of $ US 269 million and 15 made a net profit $ US 201~1

~mi1lion. During the same period 6 airlines made a net loss

ot;@,

51$ US 78 million. In 1998, 33 airlines, which are members 0~1

[~AFRAA, employed in all 93,273 workers with maintenance~S

~engineers constituting 17.9 per cent, pilots 5 per cent, and~

Scabin crew 9.8 per cent, marketing officers 27.9 per cent and~

~other

category of workers 39.1 per cent.

5

~! r~

§

^3.

Development of an economic regulatory ~

r~ framework ~

FJ §,

~ ~

~~ (a) General development

5

~ I~

~ ~

l~20 .. The Chicago .Convention is ~e foundation for ~e o~gani-~

§satlon of world an transport serVIces. The first artIcle m

the~

i-]\Convention is the principle that each state is compietelY5

~sovereign

and has exclusive rights over its air space. The[§i

§convention establishes similar national control over non-:?

~sChedUled

services (article 5) and authorises the states to

limi~

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5cabotage to national transporters and forbids the granting ofCI,

~exclusive ca?ota~e

.rights to a single

p~~er (arti~le 7).~

5

^{However , thiS} pnnclple does not necessanly lffiply a bllateral~' r'~organisation of the traffic. Contrarily, the International CivilJ.~

~

Aviation Conference that was held in Chicago in 1944 in itsl5j I~fmal act adopted two· multilateral instruments that guaranteedit~!

~~ "air freedom" namely the agreement on the transit of interna-~~

~tional air services and the agreement on international airS)

5

transport , the five air freedoms.

~c~

~ _~ 'I~ _--

~~21.

After the failure of a proposed multilateral agreement

on~~J

[§;trade rights in international civil aviation transportation, thei2!

fS,agreement entitled "Bermuda" was signed in 1946 betweel1f~

~the

United States and the

U~ited

Kingdom which served until't-:J

1~1978

as a model for the bIlateral agreements concluded byS

~J !,,"-"Ol

9

states. ~I

; - ~'

~~22. The classical type of bilateral agreement namely Bermuda~:

~ 1 is based on detailed negotiations on three "pillars" - the aitr~

:2

routes (namely traffic rights in the strict sense of the word), ~j

~;capacity and tariffs, as wel1 as various provisions of lesser2

~importance. During the first thirty years each of theseF'~

~Jprovisions evolved with respect to the erosion of g()vernment~~

'[~controL-~-ll

~ ~

~23.

During the years, these bilatera1 practices led to

the~

[~development of services on air routes according to the new?!

t§1types of flights authorised namely: the five freedom rights

as~=~

~approved by the ICAO and commonly known by the countriesoC~;

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• Sixth freedom: the right to a transporter from country to perfonn a service between two countries by going through the country where it registered (combination of third and fourth doms);

• Seventh freedom: the right to a transporter from country to operate services entirely out of its , country and perform a service between two other~;

[ - - -

countries' , ~ 1-

~ l'"c,~~~

• Eighth freedom: the right to a transporter from ar1j country

t?

perform a .service between two

points~;

located 1n the terrItory of another country~j

(cabotage); lt~

:~:

• Ninth freedom.: the right to a transporter from

a~~!

country to operate cabotage traffic strictly

Within~~

the territory of another country. ~~;l :..::JJ (b) Specific developments in the world

~~

_J lL~

~~i:

FJI

[~~24. In 1978, the United States deregulated its domestic marketi:~

~~to

ensure greater expansion of air services through the

elimi-~t2.~

~~~nation of certain non-physical barriers. Since this period,~~~

r~§]liberalisation and regional and subregional agreements havere:

r~lmade progress. In the 1980s, liberalisation in Europe was[;~:

~

ji I J ^{:l f' :1} ,T"I'l ,;-,1 j"fl- r-^I' Ir::ur:"li III r:-j ',11 IFFJ'-I~-1~4

~~-.'; - L~ U _~ ',h-.. : L-j I=- I I .... ·!J ^'.-':j L-.::J I~L::'! I~_ ~~j

ll~ljJn~lJITLJYTJ-'lLtll1lX~1.Jtunur l;)(il ~lil~J:lj: :lLTl1Jfdn,

~lJestablished and was implemented in three phases over

~_~;period of ten years. The Yamoussoukro Declaration on a new[~f:

~African air transport policy was adopted in 1988 but its:~~

S~implementation has not kept pace with the timetable that was\:_::

I~Jset for 1998. The Andean Pact, which was adopted in 1991,~;:

~is I presently operational. The multilateral agreement on the~S-1 L __ _

~jdevelopment of air services in the Caribbean Community ,:~~,;

~(CARICOM) was adopted in 1998 and it is operational. Th~Sl

~~~Fartaleza Agreement was negotiated in 1996 by the countries~~:~

:~Dof MERCOSUR and it has been implemented. The Southrt~:

~?East

Asia Cooperation Agreement was approved in 1998

andS~~;

fr:?! it is in force. The African Economic Communities such as~;,=',

~I ,:---,

~:COMESA, CEMAC/UDEAC, and ECOWS, AMU, SADC~~;

2~ (SATCC-TU) and the signatories of the Banjul Agreement!~~11 r~!have outlined new policies on the regulation of intra-Africa~-~

~and

international air services. These policies are either being2 :§prepar~d or bein~. studied with a view to defining their;:~~

~-Yloperatlonal modalItIes. "

~25.

^All these initiatives and policies are aimed at

ProViding~

e1users with safe and efficient air services at affordable cost

idS]

:::::l Ii.-

~~-)lview of the market competition. 2'~:

~ $

1~26. Through their policy of "Open Skies" ^t the United States~;:!

~jhas succeeded in opening up foreign market in about 35fE~~

~countries

beginning with the Netherlands in 1992 and

morelr~~

[1recent~y ~ith Bahr~i~. This development is ,likely to cont~nue~:

~and snmlar negotIations are underway With some Afncan~_':::.~

11 .. ,--JI

~-]countnes. Lj-

~ 1---

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5127. The Organisation for Economic Cooperation and Devel-~

~;opment. (OECD) is c~ently examining the P?ssibilities or~

't::~ideveloplng cargo servlces through the estabhshment of a~~

~:~multilateral regime. 'E!

~ G

~28. _II All the new policies and initiatives have some differences~~ It __

~;Jbut they are based on a common denominator which is the~

,2:need to adopt a pragmatic and efficient approach to developS

l§i!the civil aviation industry.

E]

~! ~

f1

(c) Technical development ~~j,

~~ }~

I~J~29. In parallel with the development of air service following€

if .. .:=JI

;-~the adoption of new civil aviation policies, there has been a~

~:significant technological development in the industry namely:~

~C~(i) aircraft modernisation; (ii) adoption of norms on aircrafti~;

j~?jnoise; (iii) development and planning for the establishment o~-:

~lcommunications, flight, surveillance and management systems~i~!

S5~on air traffic (CNSI ATM). With regards to the last point.~;

~countries have made efforts both individually and collectively.

5

i:=~The examples are ASECNA, SATCC-TU, COMESA, the~

~S!South

Africa initiative etc. A world conference took place

inr~

~~May

1998 in Rio de Janeiro to discuss the series of measures5

!Eto facilitate the speedy implementation of the systems eNS

0$,

:S;financial, management and training cooperation. Through the2 'Firegional planning groupings and the subregional arrangements

§i

;L::1considerable progress has been achieved in all regions of theis~

~~world ^{in CNSI} ATM. ICAO is pursing this matter including~~

~§=:lthe establishment of a financial arrangement as proposed by§

:E2i . !I.:]]

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~the Rio de Janeiro conference.

~30.

Finally the air transport industry has rapidly adapted

tO~::D

5the development in information technology on the sale,

mar-~1

~keting and access to markets. The imminent launch of an~:

!b~African satellite through RASCOM would assist African~21

dJ ,L. '.

!§jtransporters to use new communication services at least cost. I~~

5 ^~

L c

r~ (d) F a c i l i t a t i o n "

1..:'"--;1 r-"

~ '~

~t 31. The practices recommended by ICAO in the Annex IX o~i

§;the Chicago Convention have been followed more or less bY~=l lc,:~lthe states. However, several developing countries have~~l

rr ,I

~ introduced policies designe~ to ~romote the rapid movement~~~~

~ of persons and goods of theIr nationals. These new measures

C

~have promoted the transportation of passengers in certain[~j tjJcases by airlines registered in these countries, which has

in~;

5effect distorted competition.

t?

~

(e) General agreement on trade in services (GATS)

~

~~:32.

Like the other service sectors, air transport services since[J

tj

¹⁹⁹⁵ are under GA TS. However, air transport services areL~~

~_~~only partially covered. Its present field of operation is:~~~:;

~~-jdefmed in the paragraphs 2 and 3 of the GATS annex oniL::~

'~~~=ltransport services and it is characterised by general exclusivei!-~

l-::.-) ---J

!~I traffic and "services directly linked to traffic rights". How-~c::l:

I;ever, in the provisions of the annex it is stipulated that

the~~-.J:

:~Trade Services Council will examine periodically and at """_~'''L--=-"

!:2~, ~

" 1 ' 'I·

r~1-

^{r--1 ITT '1:1}

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^~JnJ (LI: "

[jur11X\L1nU1UT~lrRinUIT[il_~lJJLr-ln1Jrl~n1rl:rll1- I.UJ~rtU!\UQJ

~every five years the development in the sector and the~

~ implementation of this annex with a view to implementing thel§f

~ Agreement on a wider basis in the air transport sector. This?]

~review will be do~e in the year 2~O. ~t the m~ment the!5

~Gagr~ment deal~ wIth me.~sures on: (1) repalr and ~alntenan~e~

~~servlces for aircraft; (n) the sale3 and marketing of alfiij]

iE!transport services; and (iii) the computer reservation. systemSj f'lJ(CRS). Kenya and Morocco are among the countnes that~

i§have made commitments on repair and maintenance services;

(:1

1~=JIKenya

is among the countries, which have made

COmmitments~

l':-·-l CRS ;~

i:::~;on

.

^~=l

ICj ~.-JJ

~133.

^It should be noted that whereas air transport does

no~~~

l;-==:Jform part to a large extent of the GATS rules, it confonns~

I~nevertheless, to certain GATT rules according to articles 3~~J [7jand 5. Article 3 of the GATT rules states that the principle o~

f~

national processing extends to the internal transportation

ofl~

SgoodS. In this case, the idea of transport means all the modes~]

~~_~of .transportati~n including air transport. Art.icle 5 states ~he~~

!::::.lstnct and detatl areas on the traffic of transIt goods, which~~l

- 1J. I d . ^Ii

[~~~lnC u es aIr transport. I~

~

^(f) Business operation

~

~S34. The issues dealt with by the fourth ICAO World Confer-~:

I~ence held in 1994 have demonstrated that significant changes~~i 7~are taking place in: the concept of ownership of airlines; the2

~designation of airlines; flexibility on the rules governing~

l~:~capacity control, establishment and approval of tariffs; attri-~

~i

§

ib:tXiiJt) .J~L-JJ[j

[J~fln1J]JJ1JrwurTI fttJli1'lJllr;~rn ~[lrlrJJ1Jl[(lrllInLJJlill't JllJrtt1lX1~XlliJI

Slbution of flight slots; stopovers, utilisation of foreign person-~~l

~nel

and market access.

~

c ~~

~!35.

There has been an increasing use of franchise,

Whicht~,

~compl~men~s th~

development of

re~ional

airlines, and hub;2 res; strategIes SInce It enhances the less rIsks toward zones whete[~

~ildirect operations would not be necessarily very viable. The[~~

~objective of franchise is to channel regional traffic towards~i i.~ international and intercontinental flights: It resolves also the~

~provisions pertaining to nationality in the bilateral agreements_L;;

~ a~d.

^{in the}

restri~tions

on foreign participation

~n natiOna1~~i

If:~alrhnes. There IS also the development of allIances andT?.!

~practices

such as code sharing. This latter point has

given[~

~transporters preferential access to protected traffic thrOUghf;l

,~international access point. ~~'L

~) ~36. Finally, privatisation is developing slowly in various~~

~forms in all the regions of the world. Privatisation has me¢"-l

~;with opposition in Africa but at the moment more than lO[2"J :?airlines have been eannarked to be privatised. <:1;

;Sj

(g) The role of governments

L"s~

~ ,-:-~"

~37. In order to enable air transport to play its full role i~~

r-S~globalisation and trade, nearly all the countries in the world~;

f:-j including African countries have undertaken both

individual1y~

~and

collectively far-reaching institutional and regulatory

re-~;

~5i forms on access to air service markets. This has led to th~,~' ^,J

~>Jestablishment of autonomous civil aviation and airport

man-[c!

~~ ~~)11 ^r,r-JFil 711 ifil Ir"^J ,',-'ll lie" !"iUr'nr-1i r'llllUr!-' fill fi-Ul-' inl :rl

[L-Jtb!1 LJ ;.J! lL:J i'd^l '~ l!d b1J ',._1 ,I.." 'o~, J.!:JJ ,_I b!J l.t:.:J U . LLJJ i',-'I I

Lj1rnLrFilJr<'IJfFl~Jnl iJ-t ffil ij-rll.lrl1 fiT [<---1 ""U(-:L' ^,'1- 'L^rr1lI-i' inLPUG",U< A r,~-"-I fr<lU· =r-I:UI;"'l:

L~; U Ll_i : __ ~ .=_, i1J ~ ~ t'-c.!J l=:!.' UJ l~jJ l!d.J L!::lJ ~I ~> 1.:=:1 ~ ^{L __} li :hI 1= l M:::j

5agement authorities as well as the development of infrastruc-~Ji

~tures. Go:ernm~n~s ~e inc~easingly

aware. of the

n~d to~~

~:-i;change theIr pohCIes InvolvIng the protectIon of natlonal~]

~airlines and interference. These policies did not take real1y~~

~;:s]

into account the interest of consumers of air services.

The~

i=;governments increasingly recognise that protectionism has~

9reached its limits. They acknowledge the need to review the~

;~c~nce~t

of owne.rship. of .national airlines which

~ere created~

~~~:

wIth dIfficult twIn ObjectIves that could be combined namely:

~

:~~1provide inter African and international links while participat~§~

[[~l ing in national physical integration and in economic an sociatrS;

~~development. In this regard, the airlines notably were obliged~J

~~to

provide non profitable services to isolated regions

and~TI

b •• I-TI

;~:::ucommumttes. <.3

~ ~

~_3 38. The~e operational methods hav~ d~monstr~ted their limits§

r~and Afncan governments are revIewIng their role throughtr::-'51

~~their withdrawal from the management of airlines and infras-5

~~tructures as well as the reduction and elimination of subsidies~

~Jto these airlines and the liberalisation of the conditions onS;

i-~imarket access without making them compJetely marginal in~J

international scene. ~~

'=:]

(h) Development of non-scheduled services

5

~~

~ ~

~::J~39. Most countries have flexible measures to regulate non-cs;

fsscheduied passenger .and freight fligh~s. Tourism has r~pidlY~!

[L:j,developed therefore in several countnes. Some countnes o11f.2

~7Jthe

other hand conscious to protect their national airlines

haVe[L~;

t=jl -:3

ii:~J-l' c:_ iFl Pit I~l [fl1 Til ^{rr'] fr-j} jf-l rrn-l if

,'--- iLL, t~ UJJ!~ ,CdJ Ll: l,--,J '-'=_ ~I! lJ

~~WiUI\JrUlLfllr1JlbU-WU::lJnLJrtJuJnLL-~ur-=~uruJrull~L_~ .i':llrUT1TIU--~jll.-H~~h

~istrengthened their regulations to discourage non-scheduled~

~~passenger flights resulting in the drop of tourist arrivals. ~2

~/ ;;~~~'I

'J] ~-J

~J (i) Air security and safety 'L~~

1L~ ~-~l

[:~40. Security and safety issues have been dealt with in the~-j

~development

of traffic following the adoption of liberalisationI;

epolicies and flexibility in market access. A world-wide leAOS:

~programme on the supervision of the management of securityiL~~

~has been approved by the ICAO Council. This programme~~-:

~provides

for compulsory and regular checks on security in

all~;

':5:;the states as well as providing for greater transparency in the~

~~~dissemination of the outcome of these checks. The Unitedr;_;~

~ States through its initiative called "Safe Skies" for Africa ha(~

I~~decided in the first instance to assist eight African countries to~~,:

5improve the quality of their air security and safety at

home.t~~;

[~~; ^{Moreover, in} addition to north African couno:ies ~ consider _ ~;J~

lb~~able efforts have been made by Ghana and Ethiopia and they~~.::L

1"-' -:have been classified in category I of countries.

ifJ;

~-J~~

'--Jl [l~ ':::::J)

~/IJ. CHALLENGES FACING AIR TRANSPORTATION

f1=

;::' .. ,1

2~41. International civil aviation is facing challenges such as~"'L :~ institutional structures, the management of infrastructure and?!

21equipment as well as the development of air services by theli~~

~airlines. Ih:'

~I ~

~1

:c_

,c:-~

~JJ ~

DJwlfrllJriLXil~

..

rnljrllnLlnUtlI.fi1Jb1J1fTjlrnlijllS[LfnLTl~llttrUnl§(J

The common world challenges include:

(a) The new role of governments in the aviation industry;

(b) The liberalisation of the economies of the ~L«4.""~L,-,)1

and globalisation;

(c) The emergence of regional and economic integration groupings and access;

(d) The strengthening of security and safety fulfilling the concerns on the protection of environment;

(e) Utilisation of technology and information ser- vices;

(f) The establishment of eNS/ATM.

(g) The mobilisation of resources for infrastruc- ture development as well as the development of communication equipment and services;

(h) The implementation of new regulatory policies including the implementation of rules on out

18

~gV:UTI1J(QrfiljlITllJilj( ~lJtlJf[U,' 'ili

:~ territory competition;

~

~ 0)

The spin off effects from GATS.

I ,-:U

~ ,\'-.1

f,-~ 2. Specific challenges to African air transQort ser-

~vices

:243.

:~j Civil aviation in Africa at the moment is going through[~J

§;a revival following difficulties years due to the manner i~J '51which the states and the operators of air transport services and[(1 2Jinfrastructures did business. In the future, African air trans-,~;

,-~port services will be confronted with several challenges:~~

~ because the continent has lagged behind for more than two0

[;::-, • ,.o.J

r;jdecades. These challenges among others Include: ~1

ri,~ I ,.:1

-'1 Ie

:r~ (a) The role o{governments. privatisation and :t^J i~d geopolitics

_ . The .manner in.which .air and civil aviati~n servi~es a~e~

r~l~provIded IS undergoIng major changes and wIll contInue In~~'~i

r~:;this direction as indicated above throughout the world.~

:[~~~JAfrican countries will have to redefine their role which should:i~

!;JJbe limited to (i) the regulation and implementation and (ii) theiC~:

L,,-," ,- ,

lh~management of security and safety. They should also avoid~l [~~issuing licenses of convenience. Governments will have toi[-'~!

~~implement

pragmatic policies at the regional and

subregional~i

It-:Jjlevel in order to develop and safeguard the African civil~~j

:=J, iL'::::

~aviation industry. In this regard, they should take into?-=-:,

~account globalisation and market competition. MiSgivings~i

IF'- ,

f[Jtjrtr'U-nUr1Lf11lLJTiLf1i1J-llJIKmljJluttiJllru'lUjllJr,1Jl1JlllllX1.!,-~llrLf1Jn~-;rJ1jf1

QJllLri[!llJnUJllJljJUJl1JJi~'1lJr1JrmU;~1JfLLU-LLInlltM

lLU1UfillJl.JUJI t!nuflt,i w ^l,g

I~land excuses on the implementation of international rules as~l

[L-: 11 . . I" 'II n1 . th ;::::J]

i}we as protectIonIst po lCles WI 0 Y serve to Increase e~~

~gap between Africa and the rest of the world in civil aviation~

~matters. ~

'~l ~J

F~ ~

~

45. Governments should create the conditions for

private~

~sector participation in the civil aviation industry. In the2

;~~]emergent

environment, privatisation and the establishment

o~

Scooperation with other airlines seems a pressing option with~

s]considerable potentials for several African governments. At~

~~a time when various options to revive African airlines have~

I~ibeen proposed including a strategic partnership between air-t1l

15

lines and other regional arrangements it is obvious that going[:!J S1it alone has less chance of success. Civil aviation has

become~:

;~too

much of a burden for a single transporter. The

small~;

~;

transporters or African countries individually can not take

up~

:r-' " '-:1J

~:the world challenge alone. In these circumstances, it isS

~imperati:e :hat there should be a gro?ping of airlines and state!§i

;~::Jowned aIrlines as well as an estabhshment of a worthy andF,;

~i?viable enterprise. However, precautionary measures should~

l~be

taken within the framework of state divestiture to preventb

~the African civil aviation industry from being "colonised".

?

:~ ~

:c~i46. Parallel with the change in the role of the state, the?~

SAfrican air transport industry is facing challenges from liber-J?J

~~;lalisation

and the establishment of world alliances. TheseS schanges a~e ~lready ~een. fel~ in Af~ica. . Europe has~l

~~.Jcompleted Its Internal hberahsatlon and IS making an effort

t02

~spread the concept of this liberalisation to its relationship wi~

"~~·I ~

~ll~~111"'111';;;1

^{inl ifi1} fill'

rr~

^TLITlUH !ilU1"

~rll

^{frilJn ,"71:} 1 f \ l 1 111 ir1-1

rlJ:'-I~

^{';':-;'1 fFj! P}

rl'

^{iii I Pp !' f} '-rfJ^fFl1lrnfP_I'

L;"lll LJj [:.~ dJ..' tlll!JJ J1.J ~J l!::!J U,: ,.! :l_U lL: lUI ~ l.,Jj ,,;)1 -- ,-I) ~/ IlJJ iLiIIiJ!~.::!J ~J ~ I~J! LWiLL-J

qJI1JlHlIJfUJnLJITJIL(1JlJlil_rJ!l-,r-TI.liLflllJl'JriU~lJllJrl]jnUJlLrlnur-ll,J~lm011rllJf~

trsJthe third world. The civil aviation initiative of the Americanr[:~:

~

government is aimed at Africa through the arrangements

on(~

~code

sharing and the adoption of an "Open skies" policy.ir§

§the first instance. Other regions of the world have also

started~

~~he process of liber~lisat.ion with these de:~Iopm~nts. Africat~

l;C.;: IS a hostage of past mertla and lack of pohtlcaI wIll as oppose~

Sto other regions of the world such as Europe, Latin AmericaLE~

~etc.

The widely discussed

.in~a-Africa lib~ralisation

^has

still~

~a

long way to go before Its Implementation as well as thei2

~§creation of a single air transport market and the adoption of a[~~

c . .. ^:---·Jl

,~t~common approach m the face of external competItIon.

:5-

~ ~

~ ~

~'JJ (b) Improving the peiformance of bodies responsi--~

2

hie for the regulation and development of ai~

~ services and infrastructures (private sector in-~;

.::.:J' l"--

~~ volvement) l~~

~ ~

r~47. _~ African civil aviation can not play its role without the~~1

I

Slexistence of an autonomous civil aviation authority to carry[~;

:21out its functions independently and possessing the necessaryE:;',

l!:::..>l f, .... I

E.:;technical, financial and human resources. The provision of;.I _.J,

1._-.

l~safe, efficient and affordable services depend on the existence~)

§of strong, autonomous airlines which are managed on

the~l

~basis of economic viability and free from any state interfer-~

S~ence. The infrastructures and equipment should meet the~

~requirement of increased air traffic as envisaged by theg

§internatio.nal o~g~nisa.ti~n. Ho~ever, it ~s been not~d that~

[§,most Afncan clvIl aViation bodIes are gOIng through dlfficult[-?i

~ situation as far as their status are concerned as well as a lackI-~;

~'

c:JillJMlHlWlJJ1JflLJllLlhlli1JI1Utll.

~t[I]Uj1iIlLllIUnlfllfllIJ1;r~UnlfUJn~TIJlUnlf[lJTILrlL1f

llJ.ilUrlUr1.l1LhllD'JJ1U}WQ

~Jof ,financial ~esources and inappropriat~ ~an~gement.§

~Afncan countrIes should therefore use pnvatlsatlon as as smeans of improving the perfonnance of the services and~

~infrastructure of air transport services. ~

~~j ~

~ ~

~l~ (c) Utilisation of services and communication tech-~~i

t=-j n%gies

i5

1'=--1 '9

r

^l~

~

48, The modem world and international trade services

will~

~~ontinue ^{to be} domin~ted ^by ~e util~sation ^of teleco~unica- ~ rg1tlon system and servl~es whIch unfortunat~ly are. still to be~

r'~~mastered or made avaIlable to all the potential Afncan users.~~t

r~ 'r.

~:Jlndeed, certain regions for example are making trials on thes=~

f[~use of electronic systems to reduce the loss of luggage. TheseIT;;1

~ systems are also used to improve ticket sales and marketingf§

;iservices in many regions and thereby reducing operational~~

[~~cost

of the airlines. Likewise, there is a use of a modems

~~telecommunication systems for issuance of tickets, passenger~

:~lcheck-in and attendance to passengers as well as transmissi0nt§

~~of information, the interchangeability of passenger and airport~

~data,

the payment,of,bill.s, the

mana~ement

^{of air}

~d tra~e~

~agreement and dlstrlbution of serVIces etc. Afrlcan alr~

~transportation can not be developed without these services.

!:S:

~. ~

i~!

:dJ

~ ~

§

(d) Air services consumer interest ^lE]

~ d

d

~

~~49. In the past, African civil aviation policies did not take:?

~;wholly into account the interest of users. As a result of their~cl

~monopoly

and protectionist policies in the industry,

African~

~ ~

laF~iU~ltfftUll}JtllJiLIITJrmLJnlA~lJ}lJUJnlHil frlJ1ITJ1LL lldWLfllUrilltJrlJ r~

lo~fllI]1-(ljjlJ~UnlJJilt1rlJl1JrU1JlUT1Lrn lUllLrlU!:lJT~11~l',CnLrnUruTlW-lliill~~

~airlines did not pay the necessary attention to passengers and~

~users

of air services. With competition from

globalisation,[~

§the allian~s and ot~er national. measures taken. by some~

;;jj states , Afncan countnes should gIve greater attentIon to the~~

~rights

of passengers. The African governments and

the~

~~providers of air services should resolve the questions of: ther~~

~availability of information on flights, the regimes on responsi~~

~bility

, physical comfort, the appropriate transportation

o~

is

luggage , over booking, denying passengers the rights to board~

5

aircraft, luggage entitlement etc. It will be necessary that[~~

~:5]appropriate

policies should be adopted by African countries

to~

§p~event

^a

situatio~

of anarchy and

~?itra~io~

in. courts, which2J

~::::J]wlll have a negatIve effect on the CIVtl aVIatIon Industry. ;..~;

~_~I!: ~

_ " l~~

~ (e) Facilitation

ffi

~50.

Africa is lagging behind in airport facilitation. Inter-G;-:,;

~ African and international trade is hampered by the slow nature§

~of the admini~trative. procedu~e, the l~ck of. appropriate~

~personnel and Insufficient technical capacIty, WhICh are com·~1

[§mon features in facilitation at African airports. ~

1 [ - · 1 5

~ ~

~l ^(fJ Participation in tourism development ~

-~S1 rei

IC:::

Fl

!~

51. The World Tourism Council has estimated that this[C

~industry

has a world turnover of US 3,400 billion in 1995

thatir~

~thiS figure will double in 2005 to reach SUS 7,200 billion. ~

~

~,52.

^{In 1998,} Africa, was one of the main tourist destinations inS,

~ !~

c: '5;

ldtlUi'Tt-tLfl1f}JI1UillJL JilJ:[uJ1J:tJlUJlj'll1flUnU~11rlU]lJfLllfljrIlJ1LmUnLJ]1~1l~lJl

world. In 1997, Africa recorded the highest growth tourist arrivals in the world with 9.2 per cent as I""'<J> ... -n, ... AJ ... II:='

1996.

Revised Estimates in 1997

Tourist arrivals in Variations in Variations in thousands

1996 1997 97/96 96195

L~1 J

World Tourism Organization ~'

rE!

l:::"I' IC-'

Egypt alone was the destination in 1997 for about 3.7

5

,U,LL(.U.'-J'" tourists and it earned SUS 3.9 billion that year. I~

1990, Egypt was classified as the fifteenth tourism destinatiol1(j~!

the world. In 1997, Africa earned about SUS 8,712

billionrt~

about 23,537 tourists. !e ~t-~

~

Tourism in Africa depends to a large extent on

air~

which is the most common form of

transportatio~

by international tourists to visit Africa. It is inconceiv-~

to develop tourism in Africa without an efficient,

saf4~

r:tM~ll~,rrlUJlJ~llrJjW_:

24

gwrurlLJTWUtlUr1LH1iJfUUJTllittU]

i~ic ~UJ1UlilJ~\1JtuJnUnl1fTlJJlljlLrL1':~~'Uf1LJMlt1~

:iand affordable transport system. Indeed, the road system is[~

~inadequate and the land transport links both between states~~

2and between continents are not adequately developed. De-~~J

?SPite the fact that ECA has

initi~ted

^{nearly 20.} years ago the?

,2de~elopmen~

of Trans-African

~ghv:ays,

^the

Investme~t

^re-;§

tE(

qUIres to buIld these roads are qUlte hlgh. The constructIon ofr~

~these

roads can only be carried out with the improvement

of[~

~the economies of African countries or when they have paid oft1I:;:

2their debts. Furthermore, financing the construction of these5 s.;roads is facing a dilemma of ensuring maintenance of

the~J!

~present

roads, which are in a poor state at the

mome~t, as~~!

cc=-:well as the reluctance of donors to finance the constructlon

ofi]

~few

^{roads. In} both cases and even though the roads did

exist,~~

?odem tourism especially international tourism could onlY~i

§utilize aircraft as a means of travelling to Africa.

:d

~ .. ~~:

~ (8) Financing of infrastructures and civil aVlatlonip

C activities ~i'

~ bl,

~I fP,

~55.

Despite considerable progress made by African

coun-~~J

5ltries in the improvement of their communication system, l~

§considerable efforts still remain to ^be done to develop

their~1

2airport infrastructures namely: the maintenance and

expansionL~

~ of building, runways, equipment and facilities for the storage}§

~,of freight. ~J

~ ~

~56.

ICAO estimated the sum of $US 350 billion as

invest-~:

~ment

for the development of airport infrastructures of

the~

§world to enable these airports meet the growing traffic needs[t~

~ ~I

[JJUlf:lllr')Jll-J!lJrLll~JlunJJttTTIJITLJ1JnLrunlJnUtlftrl.1fiJlnUJlflUmfLml]D

~lJfl1J1U1IUTfLfl'-lUfllJf(!j:-1lJr11l1UJ11r-=-lUJcmjf1bKlUf!UJTurlUffiJJll[1UnurlLil~l

~SJ ⁱⁿ the next ten years. AFRAA forecasts that Africa WOUld~

~need

by the year 2015, 707 aircraft to meet the growingS

~traffic

needs and for the renewal of its ageing fleet.

Afric~

i§lairlines will need 388 aircraft for fleet renewal and 176 morer21

r2

aircraft to meet the growing demand. The investment re-

S.i

tS;quired will be $ US 38 billion with an additional sum of 5~

~ billion to meet the cost of installations making a total of $

US:2

~43 million. The governments and the airlines would thereforer§~

Shave to seek these funds from the private sector through

the~

_iSlestablishment of new resource mob~lization policies .. In this§

~reg~~, en.co~ragement should b~ given to the es~bhshment~l

~of CIvIl aVIation funds and the strIct use of these funds for the2 Sdevelopment of civil aviation activities. For example, IATA~

~ showed that in 1998 the member airlines of the Associatio at~

=~ "--'

ICSla worldwide level paid the sum of $ US 7.4 billion as landin~

?fees and dues on the one hand and $ US 6.3 billion as fligh~

c2ldues on the other. These sums that have been collected by theC~

rc;,~countries and the African organizations in the form of dues2

~and taxes could be paid into funds to develop the civil aViatio~~

~. d ^;::JI

~ m ustry. l~

r;=J . 'j

2~

'h) Develonment of human resources

L5

l

^{~i ~ ~ - ~}

;~l ~

1'-'-' ~j

~57

. The personnel that have been trained by the majority

Ot$l

Gstates have attained the retirement age and/or should beiT?~

~retrain~d.

to better adapt to

th~

effects of globalization andS

~competlt10n.

Furthermore, durmg the course of the next

20/2

¹

~years

it is estimated that African airlines would have trainedE4

§3,600 pilots and 12,000 technicians to meet the needs for

the~

~~ b

i[' ~3

a~X~1lJJlUr1J1nJillX1LUlUnll1lJMJ1mLlft[nUJlLIrl)TIl.fn1JllUlllJrlU]ll .. rlf~~a

I

I

I

~~l;I-[!JfllJILlLUIT~xtunJJL1lUmlJt~nur lU:

:lJrlXll

JJ=UJlhruliJfllJi1JllJJ1JrllJl]j~

§replacement of its personnel and its growth requirements. ASl2:

~

Africa has limited training institutions, it is obvious that

ther~:-~~

:§present installation cannot cope adequately with the

personnel~

~trai~ng. requ~~ments. .~he go~e~ents should therefore~

~rethlnk: Its tratrung capacItteS for Its skIlled personnel and the~~

i~establishment of the necessary institutions to meet the high~l S]demand and ensure the availability of the personnel. . ~

~ ~

f~ (i) Cooperation between airlines and market frag-~I

Si

mentation ~

I " 'f,.j

?

^~

icj58. The fragmentation of the African air transport industry~

~in small units was inherited at the dawn of independence andre

~it

is among the many issues, which should be given

greaterlt~

~~attention by the management of airlines and African govern-~~

:~~ments in the dawn of the third millenium. Without muchlI~~~

;~consolidation African airlines continue to be small, frag-!!~

'§mented and, in most cases, are inefficient in view of their sizeiI:

:~~land the lack of the required economies of scale. I'd

1-·'-

'-'if

259. Comprising a fleet of about 540 aircraft, which is

~than

the fleet of American Airlines, African airlines are veryrc

~ ~~

[~small, compared to the world norms. The biggest African~j

L2airlines are even smaller than any major American or Euro-~~jJ

~pean

airline. The fragmentation of African airlines and

theL~~

~market will continue to prevent them to attain the requir~;

S~conom~es of ~c~le t~ ~nable them become credible actors ~@

?

mternatIonal CIVtl aVIation. [~

~ ~

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