Detriment of protectionism in Africa’s aviation industry

Detriment of protectionism in Africa’s aviation industry
Source: Nowel Ngala | Group Commercial and Ground Operations Director - ASKY AIRLINES
Date: 17-05-2018 Time: 09:05:17:am

Economic scholars define ‘protectionism’ as ‘a theory or practice of shielding a country’s domestic industries from foreign competition by taxing imports’.

Aviation protectionism is simply preventing other airlines from operating into a country. Principally due to the fact that governments want to protect their national carriers. This doesn’t give room to competition; variety of products and it is against the open skies principles.

It rather breeds inefficiency, monopolies and outright failure to provide the consumer (travellers) with various choices to decide.

Such protectionism is mostly carried out by local government authorities through regulations, denial letters and outright verbal refusals out of malicious and egocentric tendencies sometimes due to lack of full knowledge and understanding of the impact of such decisions to the interest of the state and its people.

Reduction of trade barriers lead to global economic growth and tight restrictions and regulations on how people and goods reach markets hampers the expansion of international commerce.

Government officials within the aviation sector should seriously consider this in order to encourage economic growth in Africa.

Nowhere in the world are these obstacles greater than the African skies. In Africa only 20% of those crossing national borders arrive by air, with the percentage much higher in advanced and developed countries.

Over the next decade, most studies and estimates suggest that the travel industry will double its already sizable contribution to Africa’s economic growth especially as Africa continuous to sign trade partnership deals with China and Europe.

Despite the very strong protectionism, we are all witnesses to the short life span of most of the African national carriers with an average life cycle of five years maximum.

Those that succeed to cross the five years period survive due to permanent injection of huge sums of money in the guise of subventions at the detriment of tax payers or better still there survive due to political insistence of regimes for the drive to have the flag of the nation fly above despite the huge debts it incurs and the operational inefficiency and risks at stake.

When these regimes disappear, there go with them giving room for the birth of new born carriers simply just changing names, same old practice and inefficiency, avoiding the debts and vacuum created by the previous. And the cycle keeps going round and round and round again.

  • Tourmai Air Tchad – disappeared and has never been replaced, for Tchad
  • Air Gabon to Air Gabon International (Gabon Airlines) for Gabon
  • Cameroon Airlines (Camair) to Cameroon Airlines Cooperation ( Camair-co) for Cameroon
  • Air Ivoire to Air Cote D’Ivoire for Ivory Coast
  • Air Senegal to Air Senegal International to Senegal International to Senegal Airlines and now back to Air Senegal again, for Senegal
  • Ghana Airways to Ghana International Airlines (GIA) for Ghana
  • DTA (Divisao Los Transportes Aereos) to TAAG (Transportes de Angola) Angola Airlines for Angola
  • Virgin Nigeria Airways to Nigeria Eagles Airlines to Air Nigeria for Nigeria
  • Egypt Air to MisrAir to United Arab Airlines (UAA) and back to Egypt Air for Egypt
  • Compagnie Aerienne du Mali to Air Mail for Mail

And the list goes on and on.

When are we going to learn from this and think of open skies, liberalization and free trade? Can we learn from these mistakes and change approach, have a turnaround plan, as it is required in business when the going gets tough and your bottom line is red.

Amongst us as African carriers, what are we really protecting? We prevent and refuse market access to partner regional African carriers into our markets that will provide complimentary services and alternatives to the travel population, with the message of protecting local national carriers that cannot fully satisfy demand.

If all governments within Africa prevent other regional carriers from not having access into their market, will each carrier stay within its sovereign territory and function within?

Senegal considers surrounding 5th freedom markets / countries such as Guinea Bissau, Cape Vert, Mauritania, and The Gambia as domestic markets for their national carrier Air Senegal and refuses to give 5th freedom traffic rights to other regional carriers to operate via Dakar into these markets due to protectionism of home carrier.

Burkina Faso refuses traffic rights to operate from Ouagadougou to 5th freedom markets such as Dakar, Bamako, Cotonou, Abidjan, Guinea Conakry because there have to protect Air Burkina their local carrier operating these routes.

Therefore should Cote D’Ivoire, Cameroon and The Congos refuse to give traffic rights to other regional carriers to operate to points beyond, and surrounding markets? By so doing, all regions and markets will be better protected only for home carriers.

These are some of the reasons why the Yamoussoukro Decision famously known as the YD declaration was enacted in 1999 and only 44 African states where signatory to this multilateral agreement. And despite their signatures together with those who didn’t ratified this agreement continue to find ways of arguing that each state has its sovereignty and can still decide on which carrier comes in or not.

In recent times tasks teams and organizations such as UNECA, AUC, AFCAC, AFRAA and even IATA have been created and assigned with mandate and legitimacy by the African Union for the concretization of the solemn commitment made by states with the advent of the Single Africa Air Transport Market – SAATM. But till date only 22 African countries have committed.

The point is with this whole notion of protecting local carriers and not letting free trade flourish government is preventing opportunities, competition, development and the right to choose what is better for their own peoples.

The aviation industry is a very peculiar industry and the few countries / governments and individuals that have come to really understand how it functions, have without any reservations, wholeheartedly opened up their skies for new entrance and competition. Some have gone as far as opening up even to ‘Cabotage’.

What is wrong in accepting ‘Cabotage’? If African governments accept ‘Cabotage’ won’t it be beneficial to their people in terms of cheaper fares due to new entrance in the domestic market, foreign direct inflow of revenue to domestic markets through taxes, job creation, hotel payments, handling charges on aircrafts and above all improve movements of people and goods within the country?

The Kingdom of Morocco, (having a flag carrier - Royal Air Maroc fully owed by the government,) signed a separate bilateral treaty with the European Union and its member states on the 29th of December 2006 called the Euro-Mediterranean Aviation Agreement enabling all European Union member states carriers to fly into any point within Morocco, without considering the whole protectionism concept. This has led to an inflow of virtually all European Union member states carriers into various airports within Morocco in Rabat, Marrakech, and Casablanca.

This is tremendously enabling foreign direct entrance of cash with the huge influx of tourists, development of tourism which has a huge contribution to the country’s economy, improves its balance of payment position, created jobs, develop the aviation sector in the country as there is great competition, which gives the nationals the best options to connect to the world.

When analysis are made and compared against the cash flow into the Kingdom due to open skies to all these European carriers against practicing protectionism for RAM, the benefits outweighs protectionism actions.

We are all witnesses of how tourism and economic development have expatiated in The Kingdom of Morocco as a result.  

The USA, European Union and the Gulf region all practice open skies. The consortium of gulf carriers (Emirates, Qatar, Etihad) can freely operate into and out of any one point within the USA.

European Union carriers (Lufthansa, Air France – KLM, Brussels Airlines, British airways, Virgin Atlantic, Easy Jet etc.) can fly into any points within the European Union.

Not to mention the USA carriers (American Airlines, Delta, United) freely operating into any point within the USA.

What is really wrong with Africa?

In Africa we fight to protect what we don't even have, we fight to protect what we didn’t create, we fight to protect innovations and inventions that are not our concepts.

By this protectionism we prevent our own home businesses from thriving and willingly refuse opportunities to our people. When we copy, why don't we copy the right things?

The airline business is a very heavy capital-intensive activity that mostly governments venture into it. Except for very few world-class individuals such as Richard Branson and Warren Buffet with very big hearts that venture into it.

Few governments who have been patient and listen to expertise advice came to understand that it needs to be left in the hands of professionals to run separately with accountability and governments only step in as regulators. 

This is glaring with Ethiopian, Emirates, Singapore owned by governments but managed by industry professionals that is why there are making exorbitant profits.

When we protect we prevent competition, breed inefficiency that leads to unproductivity, poor customer service, operational deficiency and high costs, which are unbearable.

As Africans, we need to open up our skies especially to African regional carriers. The International Air Transport Association – IATA together with Inter VISTAS did recently carried out extensive studies illustrating the importance and advantages of liberalizing Africa’s skies.

Briefly, Liberalization leads to new entrance of competition which will create new routes, increase frequencies to destinations by providing more travel days option, as a result of these new routes there will be shorter travel time and lower fares far better than one carrier having to determine its fares alone.

This leads to traffic growth, which implies increase in tourism, trade and inward investments that enhances productivity, economic growth and job creation.

African governments, this is a call to embrace open skies, for the development of aviation in Africa and a gateway to your country’s economic development.