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Africa Aviation Outlook: Cooperation, liberalisation and protectionism

11-Jun-2010

As African governments sought a path to successful locally-based airline operations, some attempted to gain the benefits of scale and coverage by forming joint airlines. With a good deal of support from European governments and flag carriers, two early examples of airlines jointly representing the interests of neighbouring countries shared resources, costs and – hopefully - the profits.

These examples of regional cooperation were:

1) Air Afrique, based in francophone West Africa (covering Benin, Cameroon, Central African Republic, Chad, Congo-Brazzaville, Gabon, Ivory Coast, Mali, Mauritania, Niger, Upper Volta (today’s Burkina Faso) and Senegal.); and

2) East African Airways, in ex-British administered countries (Kenya, Uganda and Tanzania) in the east of the continent.

From its founding in 1961, Air Afrique, originally with financial and operational support from France, struggled on until it eventually folded in 2001, reduced to a fleet of only three aircraft and with massive debts.

East African Airways had even earlier beginnings, but was dissolved in 1977, following which each of the three partner countries then set up their own flag carriers.

Another, more commercially-originated grouping was established by South African Airways in 1994, with a joint venture airline, Alliance, an international partnership between SAA, Air Tanzania and Uganda Airlines. However, Kenya Airways proved too competitive for the grouping and it ceased operations. Then there are the cross-border equity/operating investments, such as the now defunct Virgin Nigeria, as well as the more successful KLM-Kenya Airways JV.

In north Africa, a more limited form of alliance, known as the Arabesk Network Coordination Project was formulated in 2005 under the aegis of the Arab Air Carriers Organisation. Arabesk, along with several Arab carriers, includes EgyptAir and Tunisair and was designed to increase the mutual power of its members, coordinating schedules and consolidating joint fuel purchasing.

Individual airlines in countries with domestic markets, stronger economies and longer experience have however been more successful, with South African Airways, EgyptAir, Air Algerie, Royal Air Maroc and Ethiopian Airlines being conspicuous examples of long-term operational survival – often with some help from European airlines and, frequently their own governments. Kenya Airways too has staked a strong reputation since its post-EAA inauguration and there are newer examples which may also prosper, as liberalisation seeps through and private airlines are established.

See related report: Outlook for global airline alliances in Africa

Many African nations have concluded Open Skies agreements with the US – but not with each other

Zambia was the most recent African nation to conclude a liberal “open skiesbilateral air services agreement with the US, but over the past decade, the list has become impressive, as the US gathers supporters to its liberalisation crusade.

African nations with Open Skies agreements with the US

Tanzania

Provisional

11.3.99

Namibia

C&R

2.4.00

Burkina Faso

In force

2.9.00

Ghana

In force

3.16.00

Gambia

In force

5.2.00

Nigeria

Provisional

8.26.00

Morocco

In force

5.2.00

Rwanda

N/A

10.11.00

Benin

N/A

11.28.00

Senegal

C&R

12.15.00

Uganda

In force

10.27.09

Cape Verde

In force

6.21.09

Madagascar

Provisional

3.10.04

Gabon

In force

5.26.04

Maldives

In force

5.5.05

Ethiopia

Provisional

5.17.05

Mali

In force

10.17.05

Cameroon

In force

2.16.00

Chad

Provisional

5.31.06

Liberia

In force

2.15.07

Kenya

C&R

5.30.08

Zambia

In force

16.3.10

However, many of these agreements are still not fully effective, if at all. Nor, in most cases will there ever be direct services to the US from these countries.

However, depending on their precise terms, the agreements facilitate indirect services, a feature that becomes increasingly important (and sometimes surprising to the non-US party) as alliances and codeshare partners are able to exploit the terms more effectively.[1]

The flexibility and usefulness of these agreements in turn often necessitates liberal access terms in the understandings with third countries within the region, if through services are to incorporate fifth freedom operations. These rarely exist, despite the obvious advantages of liberalisation among often excessively jealous neighbours.

The bottom line is that, despite the unwillingness of African nations among themselves to liberalise, these open skies agreements may offer some impetus to reforming local regulation. As the clamour for new sources of energy continues unabated, the prospect increases that foreign airlines will leverage every opportunity to use the agreements to establish new access, either directly or through a combination of bilateral agreements and alliance relationships.

As a minimum, they stand as symbols of what might have been. They also represent a very strong hint to African states that multilateral – or at least bilateral – liberalisation among themselves is the only serious way to proceed.

This is an extract from an article, available for CAPA Members, or by individual purchase, which includes the following sections and analysis:

  • 2. The dilemma: protectionism or liberalisation – or both?
  • 3. Better to look for international partnerships and liberalise intra-regionally
  • Conclusion: In the end the market will have its way; but infrastructure will be found wanting

View the full report now!


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