Widespread adoption of open skies policies still key to Africa’s economic growth

The stellar growth in Africa’s appeal as a future economic powerhouse is well documented and widely accepted. However, it is as widely recognised that for the continent to realise this potential, it has to place a priority on enabling and facilitating global trade and investment. One of the cornerstones of such enablement is ensuring effective commercial air service.

According to The World Bank, while Africa is home to 12% of the world’s population, it still accounts for less than 1% of the global air service market. In its study entitled Open skies for Africa: implementing the Yamoussoukro Decision (YD), the Bank cites the continued restriction of air services over many African countries as one of the key contributing factors to Africa’s apparent inability to capture its fair share of global air traffic.

Even a cursory glance at the growth in market share of the air service market by European and US countries since adopting the YD in 1999 appears to confirm this deduction. The intention behind the YD was primarily to replace bilateral air usage agreements with open and transparent airspace access for the benefit of all stakeholders in the air service market.

The vast majority of countries in Europe and America were quick to sign and implement the YD, and have subsequently derived significant benefits ranging from lower barriers to entry and better price structures due to increased competition, to steadily increasing passenger numbers resulting in sustainable growth and profitability for their commercial aviation industries.

In contrast, very few African countries have adopted the open skies policies espoused in the YD, and the negative consequence of this has undoubtedly been evidenced in Africa’s inability to grow its share of international and, even, intra-continental commercial air traffic.

While some progress has been seen in recent years in terms of certain aspects of open skies policies being adopted in Central and West Africa, the skies over southern Africa, with the exception of South Africa, remain largely closed to free commercial use. Ironically, international carriers currently enjoy more airspace rights than most intra-African airlines in these southern African regions. This is caused largely by lingering protectionism and fear of competition within many African countries. These fears need to be overcome if Africa’s airspace is to be fully liberalised so that commercial aviation can become an effective enabler of economic growth.

A key component of the challenge to truly open skies over Africa appears to be national pride. The vast majority of countries place a priority on having national airlines, or flag carriers. Unfortunately, while these flag carriers may contribute to national pride, international history has shown that they are often too cumbersome and weighed down by regulatory limitations to be able to effectively compete with other commercial airline companies.

For many countries in Africa, the short-term solution to this problem has simply been to place restrictions on those competitor airlines, typically by limiting their free use of airspace, thereby enforcing a measure of monopolisation by the national carrier. While this restriction of competition may seem like a logical way of securing the sustainability of a national airline, the opposite is true; since a lack of competition almost always results in unfair consumer practices and the eventual collapse of the monopolistic entity.

The need for Africa as a whole to recognise the unsustainability of such aviation business models is becoming increasingly pressing, particularly given the fact that without open skies, the continent will never realise its full global economic potential. For starters, strong government leadership is required that has the best interests of the African countries, and the continent, at heart rather than merely pushing financially unviable flag carrier agendas purely for the sake of national pride.

Another challenge that requires intervention by African governments is the restriction placed on many of the continent’s airlines by the EU banned list. This list continues to restrict many airlines based on historical perceptions of poor safety. However, while the banned list targets perceived unsafe airlines, in Africa the real safety challenge often doesn’t lie with the airline itself, but rather with the issue of safety oversight and airspace regulation by the various national civil aviation authorities. Closer involvement in aviation safety by governments would go a long way towards lessening the case for the inclusion of many African airlines on the EU banned list, which, in turn, would open more opportunities for the continent’s airlines to compete internationally.

Non-physical barriers to open skies also remain a key concern. Many African countries still make it exceptionally difficult for foreign visitors to acquire the necessary visas, which obviously limits the appeal of travelling to those countries significantly.

Lastly, lingering airport infrastructure limitations in many African countries continue to be a major hindrance to the full implementation of open skies policies in Africa. It’s all very well to have open skies over Africa, but unless the airports are open and the lights are on, a policy alone will do little to encourage or enable economy-building commercial aviation activity.

Ultimately, a truly open skies approach to aviation in Africa – accompanied by a real commitment to the necessary infrastructure and safety levels – is a vital key required to unlock real economic opportunity for most of the countries on the continent. The recent Ebola outbreak in West Africa, accompanied by border closure reactions of a number of African and international countries, represents another obvious setback to what little progress has thus far been made in this regard on the continent.

However, short-term health scares or security concerns aside, Africa cannot afford to lose the momentum it has started to establish because, only by fully opening our skies will we open ourselves to the full benefits to be had from our rising appeal as a global economic hub.

James Geldenhuys is the head of aircraft finance at Nedbank Capital.