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Call for end to 'open skies' to help SAA not that simple - aviation expert

Nov 30 2017 22:00
Carin Smith

Cape Town - At the end of the day, politicians and policy makers have to weigh up the greater economic and social development benefits that market access and increased air connectivity will deliver to their constituents and voters, versus increased protectionism to shield an airline performing sub-optimally, aviation expert Linden Birns told Fin24 on Thursday.

Fin24 asked him to put a call by ANC MP Pinky Kekana regarding "open skies" in SA into context. During a briefing of Parliament's standing committee on finance by SAA on Wednesday, Kekana said it could be time for the state-owned airline to talk to the minister of transport about reviewing the open skies policy in the country.

At the briefing SAA said it estimates that its losses will amount to more than R4bn at the end of the current financial year.

"Our skies are too open. We are not saying a plane should not come straight from Dubai to Cape Town, but sometimes it brings unintended consequences to our own national carrier," said Kekana.

"Without wanting to disallow provinces to also do their thing, there must be high level consideration of [open skies]. It is our national carrier. There is no way we cannot support it."

Birns explained that SA’s domestic air travel market was deregulated in 1991 to introduce competition. Prior to that SAA held a monopoly on all but a handful of routes, for instance flights to the Kruger National Park.  

"Deregulation was not extended to cover cross-border or long-haul international flights. Those are still governed and conducted in terms of tightly prescriptive bilateral air traffic agreements, which are negotiated on a government-to-government basis," said Birns.   

"Most importantly, the bilateral agreements are based on the principle of reciprocity. Under this system, both of the states nominate an airline [or airlines] from their country to operate flights between the points specified in their agreement."

In the local context, this means that for each foreign airline that is permitted to operate a service to and from SA, the nominated South African carrier is permitted to operate a reciprocal service to that other country.  

In addition, these agreements stipulate the number of flights per week or month which can be operated between the two states. Some agreements even determine a ceiling on the number of seats that can be offered on the route, according to Birns.

He added that some bilateral agreements are more complex than others, with the complexity usually reflecting the level of demand for air travel and cargo between countries and the number of destinations which can be served.

"It sometimes happens that one country’s airline decides not to use its traffic rights and instead enters into a joint venture - usually a code-share or a block-booking arrangement - with a carrier from the reciprocating country," he explained.

"SAA’s decision to stop flying to cities such as Dubai, Singapore, Kigali and Addis Ababa are good examples of this. In each case SAA decided it made better sense to have commercial agreements with the reciprocating countries’ airlines - for instance Emirates, Singapore Airlines, RwandAir and Ethiopian Airlines."

Birns emphasised that the issue of ownership of an airline should not come into the equation as there are some very good examples of efficient, innovative and profitable state-owned airlines, such as Ethiopian Airlines, Emirates and Singapore Airlines.

He said it is also worth remembering that already in 1988 the member nations of the Organisation for African Unity (the AU’s predecessor) signed the Yamoussoukro Declaration which called for open skies in Africa.

"This immediately hit a brick wall when member states determined it was too liberal and should be refining in scope. They convened again in Mauritius in 1999, this time under the AU, where they signed the Yamoussoukro Decision," said Birns.

"This narrowed the scope to open skies in Africa, but only for African airlines. Very little progress has been made since then to open up Africa’s markets and dispense with the archaic tangle of restrictive bilateral agreements." 

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saa  |  aviation  |  airlines  |  sa economy
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