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Opening up Aviation Services in Africa

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Opening up Aviation Services in Africa Opening Up Aviation Services in Africa Implementing Air Transport Liberalization – Benefits & Opportunities Prepared by: Prepared for: Steer Davies Gleave Infrastructure Consortium for Africa (ICA) 28 -32 Upper Ground c/o African Development Bank London SE1 9PD Funded by the European Investment Bank www.steerdaviesgleave.com www.icafrica.com; www.afdb.org; www.eib.org Contents Executive Summary ....................................................................................................................... i Introduction ................................................................................................................................... i Africa: a demographic and economic overview ............................................................................ii Overview of air transport policy in selected African States ......................................................... iii Aviation in Africa: supply & demand ............................................................................................ vi African airline costs and route economics ................................................................................. xiv Liberalisation – the legal context ............................................................................................... xvii Conclusion and Action Plan ......................................................................................................... xx 1 Introduction ....................................................................................................................... 1 Context ......................................................................................................................................... 1 This study ...................................................................................................................................... 1 This document .............................................................................................................................. 2 2 Methodology...................................................................................................................... 4 Introduction .................................................................................................................................. 4 Literature Review .......................................................................................................................... 4 Review of African countries’ aviation policies .............................................................................. 4 Schedule and passenger movement analysis ............................................................................... 4 Airline costs and route economics................................................................................................ 5 Stakeholder consultation .............................................................................................................. 6 3 Africa: a demographic and economic overview .................................................................... 9 Summary ....................................................................................................................................... 9 Introduction .................................................................................................................................. 9 Africa overview ........................................................................................................................... 10 City rankings ............................................................................................................................... 11 4 Overview of air transport policy in selected African states ................................................. 13 Summary ..................................................................................................................................... 13 Introduction ................................................................................................................................ 14 Legal frameworks in place .......................................................................................................... 14 Policy in practice: stakeholder comments .................................................................................. 18 December 2014 5 Aviation in Africa: supply and demand .............................................................................. 21 Summary ..................................................................................................................................... 21 Introduction ................................................................................................................................ 22 Air services .................................................................................................................................. 24 Connectivity ................................................................................................................................ 33 Hubs ............................................................................................................................................ 35 Fifth Freedom Rights .................................................................................................................. 43 Fleet ............................................................................................................................................ 44 6 Other barriers to the development of aviation in Africa ..................................................... 48 Summary ..................................................................................................................................... 48 Introduction ................................................................................................................................ 49 Fares............................................................................................................................................ 49 Taxes, fees and charges .............................................................................................................. 52 Aviation safety in Africa .............................................................................................................. 55 Infrastructure .............................................................................................................................. 62 Availability of finance ................................................................................................................. 68 7 African airline costs and route economics ......................................................................... 73 Summary ..................................................................................................................................... 73 Introduction ................................................................................................................................ 74 Methodology .............................................................................................................................. 76 Airline fares and costs ................................................................................................................. 77 Load factors ................................................................................................................................ 80 Cost breakdown .......................................................................................................................... 81 Breaking the cycle of high costs ................................................................................................. 83 8 Liberalisation – the legal context ....................................................................................... 86 Summary ..................................................................................................................................... 86 Introduction ................................................................................................................................ 87 Benefits of liberalisation ............................................................................................................. 87 Liberalisation in Africa: a gradual change ................................................................................... 91 9 Conclusion and Action Plan ............................................................................................... 97 Summary ..................................................................................................................................... 97 December 2014 Conclusions and lessons learned ................................................................................................ 97 Stakeholder engagement on the issues during the study ........................................................ 101 Action Plan to facilitate implementation of recommendations ............................................... 103 Figures Figure E.1: African cities: GDP, Population and departing Seats .................................................. iii Figure E.2: Traffic (departing seats) at top 20 airports, by carrier ............................................... vi Figure E.3: Connecting journeys at key African airports ............................................................. vii Figure E.4: Fifth Freedom route in operation in Africa, 2012 ..................................................... viii Figure E.5: Fares analysis: price per km (USD) vs distance ..........................................................
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