Local African currencies are another obstacle to open skies because multiple currencies and exchange rates can create added complexity and costs for airlines that operate across multiple countries, added Carreira.
SOUTH AFRICA – WTM Africa recently held two thought-provoking panel discussions on the Single African Air Transport Market (SAATM) that brought to light the substantial roadblocks hindering the realisation of open skies in Africa.
These obstacles include visa restrictions, exorbitant costs, and protectionism. Until these issues are effectively addressed, airlines will not be able to achieve the required load factors to make their routes financially viable, rendering the benefits of open skies irrelevant.
Rui Carreira, non-executive Board member of TAAG, explained that the African Union elected the African Civil Aviation Commission (AFCAC) as the executing agency of SAATM. However, AFCAC currently lacks the power to enforce regulations, which poses a challenge to the implementation of SAATM.
AFCAC can only rely on voluntary compliance by airlines and national authorities, explained Carreira. This, in turn, leads to uneven implementation of SAATM across different countries as some countries fully embrace liberalisation, while others are hesitant to do so. The result is an uneven playing field for airlines and limited investor confidence.
Local African currencies are another obstacle to open skies because multiple currencies and exchange rates can create added complexity and costs for airlines that operate across multiple countries, added Carreira.
David King, Project Manager: Cape Town Air Access, pointed out that visa accessibility is another massive challenge. Although visa controls are necessary, the process should be easy and seamless. The lack of visa accessibility is currently preventing airlines from attracting passengers. This, in turn, hinders the development of SAATM.
Carreira agreed and reiterated the importance of opening up borders and removing obstacles to enable airlines to explore new markets and grow the economy. He explained TAAG is keen to embrace open skies and explore more countries in Africa, but first, the challenges need to be addressed.
“The benefits of SAATM are undeniable,” said Carreira. He explained that TAAG was forced to close some African routes because load factors were simply too low to justify weekly flights. “It is imperative that Africa follows the example of the EU. The EU started as an economic community of just six countries, and gradually expanded over time to include more member states. The region also developed a common market and customs union, which have helped to eliminate trade barriers and promote economic growth within the region.”
Carreira pointed out that similarly to the EU, African countries can start small and focus on building economic partnerships and regional integration at a smaller scale before scaling up. African countries could also benefit from developing institutions to promote intra-regional trade and economic cooperation.
The panellists acknowledged that the benefits of open skies are immense. Afzal Parambil, regional manager Southern Africa at Emirates, explained that the SAATM would help all airlines, not just African carriers. This is because the opening up borders would help connect passengers to secondary and tertiary destinations in Africa, which is currently a significant challenge.
Adebayo Adedeji, CEO of Wakanow.com, stated that commerce should be a driver in the aviation strategy. The benefits of opening up countries commercially are evident, he said, as airlines need at least an 80% load factor to continue operations.
Parambil also noted that liberalisation would change the game, as it did for Emirates and Dubai. He explained that by taking advantage of new opportunities created by open skies agreements and establishing a strong hub-and-spoke model, Emirates has been able to expand its operations and become one of the world’s leading airlines.
The aviation industry is an essential player in driving economic growth and job creation in Africa. According to King, for every 100 tourists arriving on a plane in Cape Town, one job is created. “Every flight that enters your airport is valuable and grows the economy,” he said. It is vital to remove obstacles and achieve open skies to enable airlines to connect African countries and passengers to their destinations and grow Africa into a global and powerful aviation hub.
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.
