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Big benefits from 'open skies' in Africa - report

Jul 09 2015 17:08
Carin Smith

Windhoek - A potential five million passengers a year are being denied the chance to travel within Africa because of unnecessary restrictions on establishing air routes, according to Raphael Kuuchi, vice president for Africa of the International Air Transport Association (Iata).

Iata commissioned the Value of Aviation for Africa econometric report, undertaken by independent economic consultants InterVistas, to examine the impact of liberalised air transport for South Africa, Namibia and ten other African countries, including Angola, Egypt, Ethiopia, Ghana, Kenya, Nigeria, Senegal and Uganda.

”Employment and economic growth are just the tip of the iceberg in terms of the benefits of connectivity. Aviation plays a major role in helping to fulfil the African Union’s mission of an integrated, prosperous and peaceful Africa,” said Kuuchi.

Aviation already supports 6.9 million jobs and more than $80bn in GDP across Africa. The InterVistas research demonstrates the additional services generated by liberalisation between South Africa, Namibia and the other ten key markets will provide an extra 155 000 jobs and $1.3bn in annual GDP.

The research found that liberalisation would cause airfares to fall by between 25% and 37% in the 12 countries under review, making air travel more affordable to more people.  In turn, this will help to stimulate an 81% increase in traffic flows between the 12 countries within two to three years.  

In terms of passenger trips, this translates to an increase from the present 6.1 million passengers to 11.0 million passenger trips - an additional 4.9 million passenger trips.

The study concludes that the additional jobs and economic activity created directly by the airlines and indirectly by an open skies framework facilitating increased trade, investment, business, tourism and productivity, will drive faster GDP growth.

This would be accompanied by wider-spread prosperity for people in the participating countries.  

READ: Africa aviation faces four big challenges - Iata

Namibian impact

One of the major findings of the report was that more jobs could be generated and additional economic growth achieved in Namibia if intra-African markets were opened up to permit greater airline transport connectivity, according to the report.
 
The report will be presented to Namibia’s Minister of Works and Transport Alpheus !Naruseb.

The report found that Namibia stands to benefit from an additional 10 600 jobs and $94.2m (about N$1.17bn) additional gross domestic product (GDP) per year if just the countries in the study were to implement the 1999 Yamoussoukro Decision to open Africa’s skies to African airlines.

“This report demonstrates beyond doubt the tremendous potential for Namibia if the shackles on aviation are taken off. But for the full benefits to be realised, Namibia should work to encourage all African states to embrace the Yamoussoukro agenda," said Kuuchi.

For Namibia alone, this would be a 92% increase with passenger movements swelling to 1 107 200 from 577 800 recorded in 2013. The bulk of this growth would be on the air services linking Namibia with Angola and South Africa.

READ: African airlines to post thinnest profit - Iata

Deregulating air services  

The Yamoussoukro Decision of 1999 committed 44 signatory countries to deregulating air services and to opening regional air markets to transnational competition. Implementation of this agreement, however, has been slow, according to Iata, and the benefits have not been realised.

Iata said Africa is well-placed to enjoy sustained economic growth thanks to a young, expanding and urbanising population, combined with abundant natural resources. But because intra-African aviation connectivity and the economic health of its airlines are weaker than they could be, opportunities for job creation, business growth and innovation are being lost.  
 
“African airlines are expected to return a profit of just $100m in 2015, on a net profit margin of 0.8%, the thinnest of all aviation regions. While other regions are experiencing robust growth this year, demand for air travel within the regulatory-constrained intra-African market is only expected to grow by 3.2% this year," said Kuuchi.

"Smarter regulation, giving African carriers greater access to all intra-African markets, would stimulate competition and with it demand for travel as businesses and traders were able to expand into those markets. The net result is much stronger growth not only for the airlines, but for the economies of those countries that embrace the 'open skies'."

ALSO READ: Aviation industry should work closely with govts - body

iata  |  namibia  |  africa  |  africa economy  |  aviation
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