Title: SEMINAR
1SEMINAR AVIATION IN TRANSITION CHALLENGES
OPPORTUNITIES OF LIBERALISATION 22nd 23rd
March, 2003 - Montreal, Canada PRIOR TO THE
5TH ICAO WORLDWIDE AIR TRANSPORT
CONFERENCE Presentation by Nick
Fadugba CEO, African Aviation Services
Limited Publisher, AFRICAN AVIATION Magazine
2AFRICAN AVIATION SERVICES LTD
Company Profile
1. Aviation Publishing 2. Aviation Conferences
3. Aviation Consultancy With A Special Emphasis
On Aviation Finance Aircraft Leasing
Maintenance Aviation Safety Security
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MAXIM
Aviation Can Be A Vital Catalyst For Africas
Economic Social Development - Company raison
d'etre
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Air Transport Liberalisation
- The Underlying Theme of the 5th ICAO Worldwide
- Air Transport Conference is Not WHETHER to
- Liberalise but HOW to
- Liberalisation is said to be Inevitable
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Africas Share of Global Air Traffic
- Today, African Airlines have only an
approximately - 2 Market Share of Global Air Traffic
-
- If International Air Transport is further
Liberalised - Will Africas Global Market Share be
- Increased or be Reduced?
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Challenges Opportunities of Liberalisation
- Further Air Transport Liberalisation could
provide - several benefits, such as enhanced air travel,
economic - trade and tourism
-
- But the Key Challenges are How Air Transport
Liberalisation - can be Structured and Implemented so as to
ensure - that African airlines are not disadvantaged
and - put out business and their staff put out of
work?
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Africa Socio-Economic Environment
- Large Growing Population
- Mainly Small Weak National Economies
- Low Per Capita Income
- Little Disposable Income for Air Travel
Tourism, etc. - Political Instability Conflicts in Several
Countries
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Key Challenges Facing Regulators in Africa
- Implementing Monitoring the
- 1999 Yamoussoukro Decision on
- Air Transport Liberalisation in Africa
- Providing Effective Aviation Safety Oversight
- Ensuring Equitable Economic Regulations
- Harmonising Civil Aviation Regulations
- Enhancing Aviation Security
- Funding Modern Aviation Facilities
- Expanding Aviation Training Education
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Air Transport Liberalisation in Africa
- Is Any Progress Being Made?
- Yes, Slowly but Steadily.
- Thanks to the Efforts of Organisations Like
- The UN Economic Commission for Africa ( ECA)
- The AU, The African Civil Aviation Commission
(AFCAC) - ICAO, COMESA, SADC, ECOWAS AFRAA, etc
- Notably, Some African Governments Have Been
- More Supportive Than Others
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Obstacles Dilemmas
- Some African Governments Are Reluctant
- to Cede Control to Truly Autonomous
- National Civil Aviation Authorities
- Who Will Benefit Most From Liberalisation in
Africa - African Airlines or Foreign Carriers? - Can A Developing Country Promote Open Skies
Still Protect its Own Airline Industry?
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African Position on Liberalisation
- It Must Be Consistent With the Yamoussoukro
- Decision of 1999
- Foreign Investment National Legislation
- Should Determine the Level of Such
- Investment
- Market Access Should Continue to Be Based
- on Bilateral and Multilateral Agreements
- Must Be F air Competition Safeguards
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African Position on Airline Franchising
- African Governments Should Require Prior
Authorisation Verification of Any Franchise
Agreement - Franchising Between African Carriers Should Be
Authorised Subject To The Airlines Meeting the
Designation Eligibility Criteria of The
Yamoussoukro Decision - Third Party Franchising Should Not Be Supported
As it Adversely Impacts Competitive Position of
African Carriers
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High Operating Capital Costs
- Insurance - High Premiums
- Aviation Fuel - Up to 50 Higher
- Lease Rates - 15-30 Higher
- Air Navigation - Most Expensive
- Handling Fees - Very Expensive
- Maintenance - Little Co-operation
Source The World Bank
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Internal Pressures
- Mainly Small Domestic Air Traffic Markets
- Low Load F actors
- Higher Operating Costs than Other Regions
- Government-Regulated Air Fares
- Political Interference in Airline
Decision-Making - Management Instability Lack of Continuity
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External Pressures
- Air Transport Liberalisation Globalisation
- Increasing Competition from Larger Foreign
Carriers - World Bank/IMF Strictures on Government
Subsidies - to National Flag-Carriers
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External Pressures (2)
- African Market is Dominated by European Airlines
- - BA, Lufthansa, Air France, KLM, etc
-
- Asian Airlines Are Now Showing Greater Interest
in Africa - - Especially South Africa
- Threat By European Charter Airlines - Countries
at Risk Egypt, - Namibia, Kenya, South Africa, Mauritius,
Tunisia, Morocco, etc - North American Airlines Have Minimal Presence in
Africa - - Previous Attempts by USAfrica Airways
World Airways Failed
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Cape Town Convention
- Gives Aircraft Lessors and Lenders the ability to
repossess their assets worldwide in the event of
default - Provides Aircraft Collateral Assurance
- 60 Day Repossession / With Support of
Governments - Should Expand The Sources of Asset-based Finance
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Airline Industry Key Regulatory Issues
- Airline Ownership Control Local or Foreign?
- Airline Market Access Free for All?
- Airline Product Distribution
- Fair Competition Versus Protectionism
- The Provision of Essential Air Transport
Services Vital - To National Economic Development
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Airline Growth Strategies
- Strategic Investment By Foreign Airline Partner
- Kenya Airways / KLM
- Airline Franchising
- BA/Comair, South Africa BA/Regional Air, Kenya
- Low-Cost Carriers Kulula.com, South Africa
- Joint Ventures Royal Air Maroc/Air Senegal
International
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Summary
- Africa Has Made Some Headway in Implementing Air
- Transport Liberalisation, But Still Has Much To
Achieve - Air Transport Liberalisation in Africa Must
Directly Benefit The African Aviation Industry -
21SEMINAR AVIATION IN TRANSITION CHALLENGES
OPPORTUNITIES OF LIBERALISATION 22nd 23rd
March, 2003 - Montreal, Canada PRIOR TO THE
5TH ICAO WORLDWIDE AIR TRANSPORT
CONFERENCE Presentation by Nick
Fadugba Email nickfadugba_at_africanaviation.co
m