Securing Regional Market for African Airlines through SAATM

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Aviation

After the demise of many national carriers in Africa, the continent lost its air travel market to mostly European and Middle East carriers, which now control over 70 per cent of the market. So the African Union established the Single African Air Travel Market to increase market share for African airlines and rejig the economy of the region. Chinedu Eze writes that African airlines must work together for SAATM to succeed

For the aviation industry to develop and contribute significantly to Gross Domestic Product (GDP) of many countries in Africa, create thousands of jobs in the continent and produce skilled manpower as pilots, engineers, air traffic controllers, schedulers, airspace managers and others, African airlines must dominate the African market.

Today, international airlines have over 70 per cent of the market share of African destinations, as many African airlines are literally limping. Many of them are infected by short-term disease, which ensures that they don’t thrive for a long time. This is because they manage the remnant of the routes left for them after the lucrative destinations have been mopped up by European and Middle East mega carriers.

For example, in Nigeria airlines like British Airways, Air France, KLM, Qatar Airways, Turkish Airlines leave Nigeria everyday with high load factor, operating large body double isle aircraft. Their African competitors are Ethiopian Airlines, Kenya Airways and Rwand Air. These African carriers may not have more than 30 per cent of the Nigerian market and there is no domestic carrier to compete with them, except Air Peace that is only operating two international destinations, Sharjah in United Arab Emirates and Johannesburg.

It is this reality that prompted the African Union to establish

The Single African Air Transport Market (SAATM) in 2018 as a way to push African airlines to begin to nibble into the huge market dominated by foreign carriers.

Liberalisation of African Airspace

The Single African Air Transport Market is a flagship project of the African Union Agenda 2063, an initiative of the African Union to create a single unified air transport market in Africa to advance the liberalisation of civil aviation in Africa and act as an impetus to the continent’s economic integration agenda.

According to the International Air Transport Association (IATA), SAATM would ensure aviation plays a major role in connecting Africa, promoting its social, economic and political integration and boosting intra-Africa trade and tourism as a result. IATA explained that SAATM was created to expedite the full implementation of the Yamoussoukro Decision, which was earlier decision taken by African leaders to liberalise the continent’s airspace.

IATA believes that SAATM would open up Africa’s skies and promote the value of aviation throughout the continent. It would also open air arrangements and agreements, boost air traffic, drive economies and create jobs.

IATA said if just 12 key Africa countries opened their markets and increased connectivity, an extra 155,000 jobs and $1.3 billion in annual GDP would be created in those countries.

Recovering the African Market

The Chief Commercial Officer, Ethiopian Airlines, Mr. Esayas WoldeMariam told THISDAY recently in Addis Ababa that African airlines constitute only three percent of the total aviation market in the world and that 80 percent of the three percent is operated by non African airlines, only 20 percent is left but that with SAATM, African airlines would dominate the African skies.

“We are not just working towards SAATM only, we created it. When Nkosazana Dlamini-Zuma was the head of the African Union Commission, Ethiopian Airlines spearheaded the push to have SAATM because before that there was what you call the Yamoussoukro Decision, which became defunct, so we needed something modern that could work. Zuma then told us to go and bring along some other airlines, so we brought a few airlines together and we went in. She was convinced of the initiative; afterwards, the African governments discussed and ratified it,” he said.

WoldeMariam said SAATM would give opportunity to African airlines to dominate African skies.

“Right now, from Africa to the world and from the world to Africa, our airlines constitute only three percent of the total aviation market by IATA and 80 percent of that three percent is operated by non African airlines, only 20 percent is left for us. But with SAATM, we would dominate the African traffic.

“We would work with each other and not against each other and we would try to connect cultures, people and goods in Africa and that is why Ethiopia started making visa online and visa on arrival for all Africans. This is because many African countries delay or deny visa for fellow Africans citizens while they give to people who are coming from the northern hemisphere,” he said.

WoldeMariam explained that instead of building 30,000-kilometer railway, a three-kilometer runway for the aircraft would enable air travel to connect in a cheaper way all people in Africa to buy and sell from each other.

He disclosed that Africans are transacting only 10 percent business with one other and 90 percent with overseas partners and “we want that to change so that employment and capital will remain within the African soil.”

“So SAATM is our making and we are working very hard towards its success because that would be the best thing for all African airlines. The African Union Commission for Trade and Investment is working seriously for its realisation and they are going to push for that so that the rest of the African countries would follow suit,” WoldeMariam said.

To date, 34 countries in the continent have signed up to the SAATM, which include Benin, Botswana, Burkina Faso, Cabo Verde, Cameroon, Central African Republic, Congo Brazzaville, Cote d’Ivoire, Egypt, Ethiopia, Equatorial Guinea, Gabon, Gambia, Ghana, Guinea (Bissau), Guinée, Kenya, Lesotho, Liberia, Mali, Morocco, Mozambique, Namibia, Niger, Nigeria, Democratic Republic of Congo, Rwanda, Sénégal, Sierra Leone, South Africa, Swaziland, Tchad, Togo, Zimbabwe and IATA has noted that these countries represent over 80 per cent of the existing aviation market in Africa.

SAATM’s Gains for Nigeria

Air Transport Specialist and former Managing Director of the Federal Airports Authority of Nigeria (FAAN), Richard Aisuebeogun has identified key factors that must be met for domestic airlines to benefit from the SAATM.

Some of these key factors include using appropriate equipment (aircraft), on-time performance, consistency in service delivery and using diplomacy with the support of Nigerian government to overcome aero politics, which tend to inhibit smooth inter-country connectivity in the sub-region.

In Africa, Nigerian airlines have Central and West Africa as their turf, where they have dominated for years because Nigeria has the highest number of existing airlines in the West Coast at any time. Central and West Africa sub-regions have 23 countries where many Nigerians live and do business and always longed for direct flights to their home country.

Aisuebeogun noted that Nigerian airlines had dominated the West African region in the past three decades with airlines like Okada Air, ADC Airlines, Bellview Airlines, Virgin Nigeria Airways controlling over 80 per cent of that market but that dominance started waning when external factors like protectionism began to take root. On the side of the airlines, he observed that internal factors like poor management, lack of understanding of the market in terms of yield and revenues, operating aging aircraft became a hindrance to the potential success of the airlines.

He however stressed that protectionism through arbitrary charges by airport management of various countries and lack of appropriate pricing were reasons that led to gradual withdrawal of airlines that operated from Nigeria to the West coast.

The market contracted further for Nigerian operators when some countries in the sub-region opened their airspace to fifth and sixth freedom rights to foreign airlines, thus cementing multiple designations in a region that was not fully liberalised and this affected the profitability of Nigerian carriers.

New Vista of Hope

The Minister of Aviation, Hadi Sirika is optimistic that if Nigerian airlines are strategic and operate the right equipment with on-time performance, it would dominate the West and Central Africa under SAATM.

Sirika who spearheaded Nigeria’s support for SAATM said that Nigerian airlines should be willing to compete and added that Nigeria has secured Bilateral Air Service Agreement (BASA) from many countries in West and Central Africa.

Also, travel expert and oragniser of Akwaaba African Travel Market, Ikechi Uko, told THISDAY that SAATM would succeed if each country were willing to open its airspace for other African carriers and noted that Nigerian airlines, which hitherto dominated the West Coast as stated above, have lukewarm attitude towards SAATM and think they need to fully exploit their local market first.

The travel expert also noted that SAATM was established to pressure countries to open their airspace to African carriers as leeway to retrieve the African market from international carriers for the benefit of airlines from the region, so countries in the region should adopt the policy of diplomatic reciprocity that would encourage partnership and cooperation for the airlines in the continent.