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SEMINAR

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Publisher, AFRICAN AVIATION Magazine. AFRICAN AVIATION. c. AFRICAN ... MAXIM. Aviation Can Be A Vital Catalyst For. Africa's Economic & Social Development' ... – PowerPoint PPT presentation

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Title: SEMINAR


1
SEMINAR 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
2
AFRICAN 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
3
AFRICAN AVIATION
MAXIM
Aviation Can Be A Vital Catalyst For Africas
Economic Social Development - Company raison
d'etre
4
AFRICAN AVIATION
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

5
AFRICAN AVIATION
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?

6
AFRICAN AVIATION
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?

7
AFRICAN AVIATION
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

8
AFRICAN AVIATION
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

9
AFRICAN AVIATION
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

10
AFRICAN AVIATION
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?

11
AFRICAN AVIATION
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

12
AFRICAN AVIATION
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

13
AFRICAN AVIATION
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
14
AFRICAN AVIATION
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

15
AFRICAN AVIATION
External Pressures
  • Air Transport Liberalisation Globalisation
  • Increasing Competition from Larger Foreign
    Carriers
  • World Bank/IMF Strictures on Government
    Subsidies
  • to National Flag-Carriers

16
AFRICAN AVIATION
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

17
AFRICAN AVIATION
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

18
AFRICAN AVIATION
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

19
AFRICAN AVIATION
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

20
AFRICAN AVIATION
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

21
SEMINAR 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
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