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Single African Air Transport Market Is Africa Ready? Single African Air Transport Market Is Africa ready? May 2018 Single African Air Transport Market | Is Africa ready? Single African Air Transport Market | Is Africa ready? Executive Summary “In 2017, more than 4 billion The liberalisation of civil aviation in Africa as an impetus to the Continent’s economic integration agenda led to the launch of the Single African Air passengers used aviation to Transport Market (SAATM). The Open Sky agreement, originally signed by 23 out reunite with friends and loved of 55 Member States, aimed to create a single unified air transport market in Africa. ones, to explore new worlds, to do business, and to take advantage of Africa is considered a growing aviation market with IATA forecasting a 5.9% year-on-year growth in African aviation over the next 20 years, with passenger opportunities to improve themselves. numbers expected to increase from 100m to more than 300m by 2026 and Aviation truly is the business of SAATM is a way to tap into this market. The benefits of SAATM to African Countries include job creation, growth in trade resulting to growth in GDP and freedom, liberating us from the lower travel costs resulting to high numbers of passengers. However, is Africa restraints of geography to lead better ready for a Single African Air Transport Market? lives. In Deloitte’s opinion, SAATM needs to consider various aspects in regards to ownership and effective control, eligibility, infrastructure, capacity and frequency De Juniac, IATA (2018) of flights. In this situation, we turn to various international treaties as guideposts where these Open Skies agreement have been done relative success. However, of uttermost importance is that, these agreements ensure that they put in place mechanisms that ensure fair playing ground to all signatory countries. These mechanisms look at competition rules, ownership and control, consumer rights, taxes and commercial viability. These mechanisms are integral to an open sky treaty to ensure the realization of the benefits to the signatories. From Deloitte’s research and conversations with industry stakeholders, the low commitment from AU Member States is likely to be brought on by the treaty’s lack of a proper implementation framework. This framework is necessary to harmonise existing differences between airlines as well as provide a level playing field going forward. From our research, we have identified several gaps within SAATM that need to be addressed to attain successful implementation. 2 3 Single African Air Transport Market | Is Africa ready? Single African Air Transport Market | Is Africa ready? The first open skies The Convention on International The Chicago Convention also established agreement was signed Civil Aviation (1944), also known as the core principles permitting international the Chicago Convention prepared a transport by air and led, through article in 1992 between the framework within which civil air transport 43, to the creation of the International Civil Introduction could function. The Convention established Aviation Organization (ICAO)2, which is Netherlands and the rules of airspace, aircraft registration charged with coordinating and regulating United States of America, and safety, and detailed the rights of the international air travel. In January 2018, The African Union Heads of State and which gave both countries signatories in relation to air travel. The Government launched the Single African Air Transport Chicago Convention put in place important Game changer – Freedoms of air Market (SAATM) more commonly referred to as the Open unrestricted landing rights articles such as: One of the ways that ICAO works to on each other’s soil. harmonise air transport is through the Skies Treaty. This initiative is one of the flagship projects • Article 1: “...every state has complete and freedoms of the air. These freedoms are of the African Union’s (AU) Agenda 2063. The initiative is exclusive sovereignty over airspace above fundamental to the implementation of its territory where territory.” geared at creating a single unified air transport market in open skies globally. The freedoms of the air are a set of commercial aviation rights Africa through the liberalization of civil aviation in Africa. • Article 2: “...the territory of a State shall be deemed to be the land areas and granting a country’s airlines the privilege This is seen as an impetus to the continent’s economic territorial waters adjacent thereto under to enter and land in another country’s integration agenda1. The International Air Transport the sovereignty, suzerainty, protection or airspace. They are the fundamental mandate of such State.” building blocks of the international Association (IATA) has welcomed the launch of the SAATM commercial aviation route network. initiative by the AU to open up Africa’s skies and improve • Article 6: “No scheduled international air service may be operated over or intra-African air connectivity. At the publishing of this into the territory of a contracting State, report, 23 out of 55 Member States have committed to except with the special permission or the single air transport market. other authorization of that State, and in accordance with the terms of such permission or authorization.” This ensures that every State has, to the What is open sky? • to liberalize the rules for international exclusion of all other States, the unilateral The open sky principle is an international aviation markets and minimize and absolute right to permit or deny entry policy concept that calls for the government intervention as it applies to into the area recognized as its territory liberalization of the rules and regulations passenger, all-cargo, and combination air and similar right to control all movements of the international commercial aviation transportation as well as scheduled and within such territory. This means that industry—especially commercial charter services; and no other state can go to another states’ aviation—in order to create a free-market • to adjust the regime under which military territory without permission hence open environment for the airline industry. For and other state-based flights may be skies is all about agreements between open skies to become effective, an (bilateral permitted. states. or multilateral) air transport agreement must be concluded between two or more nations. Its primary objectives are: 2 1 The Single African Air Transport Market Convention on International Civil Aviation (1944) 4 5 Single African Air Transport Market | Is Africa ready? Single African Air Transport Market | Is Africa ready? Freedom of the Air Seventh Freedom First Freedom The right for an airline to carry on The negotiated right for an airline from flights that originate in a foreign A B C country (A) to overfly another country’s country (B) bypass its home country (B) airspace. (A) and deposit the passengers at A B another international destination (C). Home Country Home Country Second Freedom Eighth Freedom The right for a commercial aircraft A B The right for an airline to carry from Country (A) to land and refuel passengers from one point in the A B C (commonly referred to as a technical territory of a country (B) to another stop) in another country (B) point within the same country on a Home Technical flight that originates in the airlines home country (A). This freedom Country Stop Home Point 1 Point 2 is also known as Cabotage and is Country Pick up passengers Deliver passengers extremely rare outside of Europe. Third Freedom The right for an airline to deliver revenue passengers from the airline’s A B home country (A) to another country. Home Ninth Freedom Country The right for an airline from a A B C particular country (A) to originate a flight in a foreign country (B) and carry passengers from one point to Fourth Freedom another within the foreign country. Home Point 1 Point 2 The right for an airline to carry revenue Also known as the stand-alone Country Board Passengers Deliver Passengers passengers from another country (B) to the A B Cabotage. It differs from the aviation airlines home country (A) definition of true Cabotage, in that it does not directly relate to one’s own country. Home Country Fifth Freedom Freedom Rights for SAATM For SAATM to work, there would be fifth (Sometimes referred to as beyond rights) SAATM would allow airlines the fifth freedom rights that would give other The rights for an airplane to take passengers freedom rights, which allow airlines to carry country airlines to pick passengers and from its home country (A), deposit them at A B C traffic to a third country, provided the flight drop them in another country. A good destination (B) and then pick up and carry originates or terminates in the partner example would be looking at Rwanda Air passengers on to another international country. These open-air agreements that has fifth freedom rights with Kenya destination (C) allow carriers of two or more countries to and Uganda where RwandAir moves from Home operate any route between the countries Kigali, drops and picks passengers in Country without interference in decisions about Nairobi Kenya and then flies to Entebbe routes, capacity and pricing, making it Uganda where it can do the same. Sixth Freedom easier for carriers to provide affordable, (Combination of third and fourth freedoms) convenient and efficient air service for The right for an airplane to carry passengers A B C consumers. or cargo between two foreign countries (B & C) provided the aircraft touches down in the airline’s home country (A). Home 6 Country 7 Single African Air Transport Market | Is Africa ready? Single African Air Transport Market | Is Africa ready? First Package This package started to relax established rules. For intra-EU traffic, it limited the right of governments to object 1987 to the introduction of new fares. It gave some flexibility to airlines concerning seat capacity-sharing.
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