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Final Report P a G E | I Table of Contents

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Final Report P a G E | I Table of Contents Socio-economic Impact of an Air Transport Liberalisation Agreement in the Southern African Development Community Graham Muller Associates 30 August 2010 Final Report P a g e | i Table of Contents Executive Summary ....................................................................................................................................... v Introduction .............................................................................................................................................. v Literature Review ...................................................................................................................................... v The nine freedoms of the air ................................................................................................................ v The Yamoussoukro Decision ............................................................................................................... vii Assessing and forecasting the impact of air transportation liberalisation agreements ....................... x Economic Impact of an air transport liberalisation agreement in SADC ................................................xiii Overview of current status of the SADC Aviation Industry .................................................................xiii Cost-Benefit Analysis Methodology .................................................................................................... xvi Cost Benefit Analysis Results ............................................................................................................. xvii Impact of an air transport liberalisation agreement in the Southern African Development Community ................................................................................................................................................................. xx Impact of an air transport liberalisation agreement reflecting the investment and capital expenditure in airport and navigational infrastructure .............................................................................................. xxi Introduction .................................................................................................................................................. 1 1 Literature Review .................................................................................................................................. 2 1.1 Introduction .................................................................................................................................. 2 1.2 The nine freedoms of the air ........................................................................................................ 3 1.3 History of aviation agreements ..................................................................................................... 5 1.3.1 Chicago Convention 1944 ..................................................................................................... 5 1.3.2 Formation of state owned or sponsored airlines.................................................................. 6 1.3.3 Liberalisation of aviation agreements................................................................................... 7 1.4 Assessing and forecasting the impact of air transportation liberalisation agreements ............. 15 1.4.1 The case study approach .................................................................................................... 15 1.4.2 The trends model ................................................................................................................ 16 1.4.3 The gravity model ............................................................................................................... 16 Socio-economic Impact of an Air Transport Liberalisation Agreement in SADC: 30th August 2010 - report prepared by Graham Muller Associates P a g e | ii 1.4.4 The stimulation model ........................................................................................................ 17 1.4.5 Air transport cost analysis ................................................................................................... 17 1.5 Case Studies ................................................................................................................................ 18 1.5.1 United States – United Kingdom ......................................................................................... 18 1.5.2 The European Union ........................................................................................................... 20 1.5.3 India – United Kingdom....................................................................................................... 22 1.5.4 Impact of an international air transportation liberalisation agreement ............................ 26 1.6 Forecasted effects of air transportation liberalisation agreements ........................................... 26 1.6.1 Infrastructure, regulatory body, skills and market size limitations .................................... 27 1.6.2 Spread of development from hubs to outlying areas ......................................................... 31 1.7 Concluding Comments ................................................................................................................ 32 2 Impact of air transport liberalisation agreement in Southern African development Community ..... 34 2.1 Introduction ................................................................................................................................ 34 2.2 Overview of the Current Status of the SADC Aviation Industry .................................................. 35 2.2.1 Angola ................................................................................................................................. 35 2.2.2 Botswana ............................................................................................................................. 36 2.2.3 Democratic Republic of the Congo (DRC) ........................................................................... 39 2.2.4 Lesotho ................................................................................................................................ 40 2.2.5 Madagascar ......................................................................................................................... 41 2.2.6 Malawi ................................................................................................................................. 43 2.2.7 Mauritius ............................................................................................................................. 45 2.2.8 Mozambique ....................................................................................................................... 47 2.2.9 Namibia ............................................................................................................................... 49 2.2.10 Seychelles ............................................................................................................................ 51 2.2.11 South Africa ......................................................................................................................... 52 2.2.12 Tanzania .............................................................................................................................. 57 2.2.13 Zambia ................................................................................................................................. 60 2.2.14 Airports in SADC .................................................................................................................. 63 2.2.15 Fleet size of all SADC airlines .............................................................................................. 68 2.3 Analysis of Questionnaire Results ............................................................................................... 70 Socio-economic Impact of an Air Transport Liberalisation Agreement in SADC: 30th August 2010 - report prepared by Graham Muller Associates P a g e | iii 2.3.1 Airlines ................................................................................................................................ 70 2.3.2 Airports ............................................................................................................................... 74 2.3.3 Other Stakeholders in the aviation industry ....................................................................... 76 2.4 Cost-Benefit Analysis Methodology ............................................................................................ 82 2.4.1 Model .................................................................................................................................. 82 2.4.2 Direct Impacts ..................................................................................................................... 92 2.4.3 Indirect Impacts .................................................................................................................. 99 2.4.4 Airport and Navigational Infrastructure ........................................................................... 102 2.5 Cost-Benefit Analysis Results .................................................................................................... 107 2.5.1 Direct Impacts ................................................................................................................... 107 2.5.2 Benefit to airlines .............................................................................................................
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