Vice-President, International Air Transport Association, African Region, Raphael Kuchi was of the view that there has been significant improvement in air safety on the continent and urged a downward review of taxes imposed by some countries. He spoke to Chinedu Eze, during the IATA AGM, held recently in Cancun, Mexico. Excerpts:
What improvement has air transport in Africa recorded in the last one year?
The good news is that throughout the conference, probably for the first time in many, many years you havenâ€™t heard Africa mentioned in relation to air accidents, which shows that a lot of things are happening positively in Africa. To start with, traffic is continuing to grow and IATA 20 year forecast indicates that Africa is going to be the fastest growing region in the next 20-35 years and about 5.1 percent growth year in year out. In addition to that, I am sure you all read the media release of IATA about our safety record in Africa which is unprecedented with zero loses for last year.
That is also very impressive. We have also got a number of African airlines which now come onboard IATA Operational Safety Audit (IOSA). In the same breath what I have to say on that is that we have also lost a number of airlines in the IOSA register. So whiles we gained five last year we also lost five for sub-Sahara Africa. Now this is trend that we will want not to continue; we want to add more but we donâ€™t want to lose them. And I will be taking the message to the government that much as we have seen safety improve since the Abuja Declaration (which made IATA Safety Audit mandatory for African airlines) targets were announced in 2012 to the extent that now we are recording zero losses, we do not want to see airlines that are on the IOSA register drop off that register. And so government should help us.
One of the provisions of the Abuja declaration was that states should make the Abuja Declaration an integral part of AOC renewal for airlines. We havenâ€™t seen that in many countries, so we will want African government to ensure that when you are renewing airlines AOC, you ensure that they have IOSA and that the IOSA is valid. Now if we do that, then we are going to ensure that once you are on the IOSA registry you must keep on it otherwise you will not get your next IOSA registration.
What are the reasons why some African airlines fall off the IOSA register?
Well, a number of reasons, the first one is that some of them fell off because they could not appoint an audit organisation to do the auditing. Some of them actually got audit organisations but when the auditors have finished and submitted their reports the airlines find it difficult to close the gaps unfortunately they didnâ€™t have the resources to close the gaps. And some others donâ€™t even border to appoint an auditor or try to get into that at all after the expiration of their IOSA certificate.
What is the update on Yamoussoukro Declaration and how many new nations have embraced the open sky for Africa?
There are some countries which have said they donâ€™t think they are ready and you cannot force a country to be ready to embrace open sky. For instance, Angola is a typical example, they said they are still restructuring their airline and when their airline is ready to compete they will open up. So until then you cannot say they are resisting, they have giving you a reason why they are not doing it now. But on Yamoussoukro, I am sure last year I mentioned to you that some progress has been made and we should always not think that nothing is moving, there is some trust, albeit on a bilateral basis, now what we want to see is multilateral arrangement, that all countries and all operators in the country and the continent can benefit from.
But that is not happening yet, now fortunately, following the AU heads of state summit of 2015 where they decided that we need to come up with a solemn declaration and get states that are willing and ready to open up their markets unconditionally to sign this declaration, to date we have got 21 countries that have actually signed up to the solemn declaration. So as we speak we have 21 countries of the 54 countries in Africa that have said we are prepared to open up their market to other African carriers. Now, the thing is for the AU and its agencies to fast track the processes of actually actualising this. You know it is one thing for states to say I want to open up, but what s the process? What do I need to do to show that I have opened up? If I have opened up and an airline wants to fly into my country what should that airline do? Should it just get one day and start flying there, at least there should be some minimum requirement.
Also because airlines are in a competitive environment you need to have competition regulations. You need to have dispute settlement mechanism and you need to have a body that will actually oversee the smooth implementation of the open environment. So those regulations were developed by AFCAC (Africa Civil Aviation Commission). AFCAC has sent those regulations last year to the AU but the AU said the process of summiting those regulations to the AU was inappropriate. So they returned them to AFCAC and they then defined the process of getting them through the AU legal system for them to be reviewed before they go to heads of state summit.
We met in Accra in March this year, AU, AFCAC, IATA, and the International Civil Aviation Organisation (ICAO). And then we discussed this issue and all we said was, can we prepare towards June the next AU summit where we can do an official launch of the open market for this 21 countries because that was the time we estimated at the beginning of the year? So we started working toward that; unfortunately towards the middle of last month we got communication from the AU that the documents that have been submitted, the competition regulation dispute settlementÂ and the operationalisation instrument cannot be submitted to the heads of state summit in this June; that when they meet for endorsement as a result of that they would push the launch date to January 2018 because after this summit the next meeting would be in January 2018.
So that is what we are working towards, to see the launch in January 2018. However, what we keep encouraging states and airlines to do is, if you say you have opened up why are you waiting for a formal launch which is a ceremonial event, just allow the airlines to come in, start to actualise it without waiting for an official ceremony.
But some states are reluctant to embrace the declaration because they feel that they do not have strong airlines?
The issue is this, if you havenâ€™t signed the solemn declaration, then I understand your point and if your state. after due consideration of all these elements decide that we are ready to open up unconditionally and have signed the solemn declaration which says I solemnly declare that my country is opened up to any African carrier to operate into it, then what is the problem?
I think protectionism is really hindering the continent from actualising that goal. Aside the YD how can we synergise and make African air transport very seamless?
My thought about that is, you know, competition is not a bad thing. Several years ago, we had tried to protect our national carriers, but where are they now? So how has lack of competition helped us as Africans? And I always say this; that what Africa needs are not airlines, what Africa needs is air transport. What Africa needs is connectivity not airlines. For instance, in Nigeria you have many airlines where do they fly to, within the country, is that what Nigeria wants? No. You want to have an airline that can connect your citizens to regions. So it is not the number, it is not the quantity that matters; it is actually the ability to deliver the service that is needed.
So if we are protecting nothing and we think we are protecting something, it is very unfortunate.Â You know if we open up to other African carriers what our local airlines cannot do other carriers can help us do. This is because connectivity in Africa is so bad like you noted. A couple of weeks back I was to attend an AFRAA (African Airlines Association) event in Tunisia, I had to fly Nairobi-Istanbul-Tunis and came back the same way because there was virtually no way I can get between Nairobi and Tunis; unless I sleep in Cairo or I sleep in Morocco. Now how can we promote trade within the continent if we are not able to operate and we are not allowing our neighbours to operate?
Some argue that the open skies will only benefit the stronger carriers, what is your reaction to this?
Now my explanation is this, in every business you do it is based on your capacity. For instance if you open up your market, yes it is true to a greater extent the ones that have the capacity and have the resources might benefit more than the others; but it doesnâ€™t mean the others will lose out completely. If you focus on where your competitive strengths are you will realise that the other carriers operating into your market will put traffic down for you. For instance, if you are a domestic carrier you operate to the airports that no foreign carriers that come into your country operates to, you dump all your passengers in Lagos for them to take to international destinations. Or you put then in Abuja and they will pick them from there. So you can have direct traffic coming to the point and you do the distribution where they cannot go. Now, with that and with your efficiency you will gradually begin to expand your network beyond domestic. Because you then realise that I can even partner with this one to go to points beyond because he is not doing domestic.
Now look at the typical scenario of Ethiopian and Asky, Togo has a population of 2.5 million, how much traffic flows through Lome? How is Asky sustaining that traffic? Is it on its own? No way. So if we can harness and tap into the strength of the bigger ones. Today we are allowing traffic to flow through unusual routes. Like I was saying, I travelled through Istanbul to go to Tunis, if you had connectivity here, among African carriers this traffic will flow among African carriers.
Do you notice that the mega carriers are usually reluctant to have code-share agreement with African airlines?
For the mega carriers they have standards, now if an airline wants to partner with you and them you realise that the standards of that airline are not up to the standards of your airline, chances are you will say I will be diluting the value of my product. Two, most of the mega carriers want the smaller carriers in Africa to have minimum IOSA certification. They want you to be able to operate through the IATA clearing house. If I have to sign a code-share with you and then all you are doing is you control all your sales directly, so how can I get my money if I give you passengers? So we have not put the structures in place that can help the airlines to really be able to achieve this. So because of that this, mega carriers says no I donâ€™t want to play ball with you; unless you come up to that level. That is the simple explanation for why most of them will not enter into that.
The Director General of IATA is of the view that airport privatisation increases financial burden on airlines. How does this play out in Africa?
On the airport infrastructure investment, you know in Africa we need infrastructure. The way traffic is growing today in the next 20 years 192 more million passengers to be added to what we are flying today. So passengers flying into and out of Africa will exceed 300 million per annum. Now how are we going to move these passengers through the existing infrastructure? So we definitely need infrastructure investment. Unfortunately some countries are embarking on airport construction without thinking of the capacity or the passenger traffic. So the infrastructure projects that are put up end up being a difficult challenge or burden on the operator. Can I give you a typical example? Today in Angola, the traffic into Angola per annum is two million passengers. The government of Angola is putting up an airport which has a capacity of 15 million. Now, tell me who is going to pay for that? You have a huge facility with nobody there. And we always tell the government that. Now you are going to worsen your own plight because you are going to over tax these passengers that are coming there and if you are going to put too much tax on them they are going to go somewhere else. So even from the two million you will see the traffic start reducing because of excessive taxes.Â So we want infrastructure but we want infrastructure to be scaled. Infrastructure is like a house, probably this hotel was not built once this size, probably it was smaller but as the customers grew he added facilities. That is what we want African airports to do, rather than just build up a new big thing. Darker is another example.
What do you think is the inclination of African governments not to give the aviation sector the support it deserves?
I think every country needs air transport services and we have demonstrated that with the study that we did. And just from that perspective alone if you want air transport into your country, if you want to facilitate movement of people and goods, if you want to stimulate your economic development, you need air transport. To do that you need to put in place the infrastructure.Â And we encourage them to do that.
How will the industry achieve sustainable fuel supply at good price, looking at what they are doing now with bio-fuel?
I always say that the issue of alternate fuel was slowed down by the reduction in the crude prices. If you looked at the time when the crude price was at $120 per litre, you will see that there was so much interest in developing alternative fuel. All of a sudden the prices collapsed and everybody says is it really worth it. What is the gain? So all of a sudden that process has slowed down, but let me tell you because the materials for bio-fuel are actually coming from natural sources and in most cases the material is grown in lands that otherwise might have no other use, so it has good potential. But the incentive to do it has sort of diminished because of the reduction in crude oil prices because ass oil prices go up people will start again to look for alternatives. For now the capacity to produce alternative fuel is low but if there is a focus on it, if there is an incentive for people to go into producing the raw material people will go in there.
But is it ironical that countries that produce fuel are countries that have high price for Jet A1? What do you think is the problem?
I think in Africa it is not just only in the area of fuel, if you look at everything; yesterday I was just talking to somebody, if you look at countries that produce gold the product is more expensive in those countries. You go to Botswana you cannot buy diamonds but they produce one- third of the worldâ€™s diamonds. Now the issue is this, in Africa the focus is always on the export market and not the local market. So whatever remnant is left for the local market you charge a premium on it. You will see that you go to Dubai to buy the same gold that is coming from Ghana and you find out that it is cheaper in Dubai than you will get it from Ghana. So what sense does it make? But it is because we are so focus on feeding the external market that we donâ€™t focus on the local market. Again, for the aviation, you will see that the oil that we produce is in crude form, and what do we do we export that it, then we import the refined one. Which is cheaper to do, to setup a refinery or to export to import?
African governments see air transport as luxury and tend to tax the sector so much. Is IATA in any way sensitising African countries that air transport is a catalyst to economic development?
I think we are still on that campaign and anywhere we have the opportunity we still tell them about what air transport can do for their countries and how they are constraining the growth of air transport by a certain regulatory bottles necks that they put in the ways of air transport. And we keep urging them to relax those regulations and make air transport more attractive and appealing to other states.
Now, unfortunately I always say that air transport in Africa is a victim of its own organisational ability. Air transport is so structured that it is easy to tax. If you think about generating money, tell passengers you must pay and you have it. You go and do that on a bus and it will be resisted. Because of the way we are organised, we make ourselves a victim, so government sort of take advantage and exploit them. I was telling two of your colleagues two days ago that we see a new trend emergingÂ in Africa now, where we got taxes and charges that are unrelated to air transport at all being imposed on air passengers. And in Benin Republic the government passed a decree and imposed border security charge on the people. Now this is an immigration charge, they got somebody to put equipment on all the borders and to recover the cost of that they are introducing the charge on air passengers.
What has this got to do with air passengers? Because they know if they want to talk to the airlines about it the airlines will protest, they decided to go for a presidential decree. So it is now a law for them to do it. And then I wrote to them and I said this is unacceptable; we donâ€™t do things this way. Then they came back fighting that it is a presidential decree and that there is nothing they can do. And in that decree they even said that IATA will do the collection. So we said as a sovereign state you can introduce whatever decree you want but you cannot compel an external company to come and do the collection for you. We think that behind the scene they are also ill advised.
How do you see the possibility of the success of national carrier? Ghana is planning national carrier, Congo, Nigeria and some will tell you that Africa doesnâ€™t need national carriers, others will tell you that it is very, very imperative for Africa, what is your view?
For me, there is no problem in having a national carrier; my problem is with having government owned airlines that are poorly run. Look, national carrier doesnâ€™t need to be a government airline, you can designate an operator in your country as your national carrier; I donâ€™t have a problem with that. As long as the operator is efficient and he is providing the service there is no problem. Now in these countries that are trying to setup airlines Ghana, Nigeria, Senegal and Congo, the biggest concern is government is the one leading the setup of these airlines, that is where I have a concern.
Why canâ€™t governments in these countries create the right environment, provide the necessary incentives for private sector? Even if you say not foreign interests but my own nationals that are interested to do it you should encourage them. They can waive taxes for startup airlines to encourage them. Why donâ€™t you tell investors that I want to setup a national carrier but I want someone with a capital of X amount who can start an airline, professionally run and I am prepared to waive taxes for these numbers of years so that we can have a solid national carrier. Donâ€™t be the one to go there and drive it; thatâ€™s my own opinion. It is not so much about what stake you take it is actually about government interference on this entity. You might control a small stake but then you want to appoint the CEO, you want to have powerful people on the board, you want to dictate which route the airline should fly. And I told the Minister of Ghana, you have two domestic airlines, why donâ€™t you try and force them to merge and then you designate them as a national carrier. In the same way, Nigeria, which has so many private airlines, you set a minimum capital for setting up an airline in Nigeria that is beyond the reach of any of these individuals, what will they do? They will pack their aircraft and go then you force them to merge.