Last year, twenty-three African countries signed Single African Air Transport Market agreement in Addis Ababa, on the sidelines of the African Union Summit. This was also re-echoed recently with the recent launch. Although, the agreement is expected to bring down Airfare in the African countries. These are countries who are parties to the agreement through free access to airports for airlines, from the countries who signed the deal. But stakeholders have different views. ANTHONY AWUNOR writes.
For the past few weeks, the Single African Air Transport Market (SAATM) has attracted lots of attention from stakeholders in the African aviation industry and even at the global stage.
The initiative has been on for quite a long time now but only gathered momentum following the regulators’ resolve to force the plan down the throat of African airlines including that of Nigeria. To the regulators, local airlines and their respective governments are expected to get on-board with the (SAATM) initiative or risk losing out on the long run. SAATM was therefore officially unveiled in Addis Ababa recently.
Minister of State, Aviation, Senator Hadi Sirika who made the government’s position on SAATM known recently in Lagos, informed that Nigeria was set to review all the subsisting Bilateral Air Services Agreements (BASAs) to be in consonance with the Yamoussoukro Declaration (YD) while the process of domesticating the decision is currently at the advance stage.
Recall that Yamoussoukro Decision adopted in 1999 was named for the Ivorian city in which it was agreed. It commits its 44 signatory countries to deregulate air services, and promote regional air markets open to transnational competition.
On the other hand Single African Sky is a continental programme that will create a high-level, satellite-based air navigation system for the African continent. The air navigation system, once implemented, experts say will result in full continental coverage for satellite air navigation, increased flight safety as well as cost savings (especially fuel costs) due to shorter flight routes.
The minister who made the disclosure at a one-day sensitization workshop on Single African Air Transport Market (SAATM) at the Nigeria Civil Aviation Authority (NCAA) Annex with theme: Implementation of SAATM: Its impact on the Nigerian Aviation Industry and National Economy”, stated that the future presented both greater challenges and the greatest potentials as a continent striving to reposition itself by leveraging on the immense potentials that the full implementation of Yamoussoukro Decision (YD) through the Single African Air Transport Market (SAATM) offers.
He stated “we must all therefore strive to commit to the full implementation and operationalization of SAATM, we need to leap forward so as to become an effective global competitor in aviation. In this regard, Nigeria being one of the pioneer Member States signatories to YD, one of the 23 states that have so far made solemn commitment to the implementation of SAATM by 2018 has constituted a National implementation committee to review all the subsisting Bilateral Air Services Agreements (BASAs) to be in consonance with the YD while the process of domesticating the decision is currently at the advance stage.”
“Nigeria recognized the need to provide for enhanced traffic growth that will be an offshoot of the full operationalisation of SAATM. Currently some of the International airports are being expanded with the addition of new terminals, the Government has also approved the concession of the major international airports in its efforts to re-position them for better service delivery”, Sirika added.
However, Airline Operators of Nigeria (AON) have kicked against the plan, just as it has appealed to the Federal Government of Nigeria not to go ahead with the full implementation of the Single African Air Transport Market.
AON said that, while the idea may be noble on paper, there is a need for government not to lose sight of the facts and the dangers of the direct impact of the decision on the Nigerian economy and Nigeria as a whole and the future of our youths.
The operators noted that they are concerned that the timing is not right as there are several unresolved issues and challenges being faced by Nigerian aviation that will ultimately undermine the perceived gains of this Treaty that might be an illusion for our beloved country.
Lamenting the implementation, AON Chairman, Capt. Nogie Meggison said: “Some of the problems for Nigeria to take its position and compete favourably in the open skies process include the following:
“The basic issue of free movement of people and trade is an integral aspect of the declaration that will go a long way to determine the fairness of the SAATM project. Sadly, it is a well-known fact that Nigerians require over 34 visas to travel within Africa alone. This is an issue that first needs to be addressed. Before opening the skies, open the visas”, he said .
The operators said Government should come out with a clear policy that will position Nigerian airlines to take full advantage of the open skies.
According to them high bank Interest rates of 28% compared to access to cheap funds provided and guaranteed by the government of most African carriers at a maximum of 2% are some of the challenges.
AON also pointed out that Nigerian airlines pay VAT while most African carriers don’t pay VAT both in their various countries as well as here in Nigeria. This is already a deficit of 5% on a small margin industry from the start for Nigerian Airlines.
“Airlines in Nigeria don’t have access to forex. We only get allocation per percentage of our bids which takes an average of 6 months. Most of the African carriers are subsidized and being funded by their government”.
“Nigerian airlines are at a disadvantage to other African Airlines that are largely government owned and heavily subsidized. For instance, South African Airways got on the average about $350m yearly in the past decade; Kenya Airways got about $600m in 2016, while RwandAir has never published its financial results for over a decade. Yet they will be competing against Nigerian airlines with private finance at 28%”, it stated.
The body also lamented that Nigerian airlines are subjected to multiple charges, taxes, levies and fees.
“ On the average, we pay about 37 different charges that come under the guise of statutory levies and taxes to sustain a staff strength of about 18,000 staff of the various government agencies compared to most African carriers who pay a fraction in their countries to support a staff strength of less than 500”, the operators noted.
It however, said that while they believe open skies is a good idea, they hereby call on the government to have a rethink on the immediate implementation of the open skies and urge them to work with the local technical expertise in the aviation sector by going back to the drawing board and come out with a clear and deliberate policy on how we want to approach, position and take advantage of the open skies to the overall benefit of our beloved country Nigeria.
In her remarks, Secretary General of the African Civil Aviation Council (AFCAC), Ms. Iyabo Sosina who reacted to the statements of the AON stated that the position of the airline body had not changed in over 20years and respectfully added that the issues the airlines mentioned were purely domestic issues and had nothing to do the YD.
Ms Iyabo Sosina explained that protectionism of local market share is not the way forward and that Africa needed to open its airspace within the continent.
On benefits she stated the YD will provide African airlines commercial freedom, wider networks, better aircraft utilization and create a larger market share for the continent and improved access to capital as well as more flexible commercial arrangements such as alliances, codeshares, franchises, interlining, mergers and acquisitions among African carriers.
“As we are aware, the better connected a country is by air, the greater its ability to unlock the economic and social benefits that air transport can deliver through mobility of people and goods to the traveling public, air carriers, airports, other allied service providers, the economy of member states and the continent as a whole
Contrary to Sosina’s views, President of Aviation Round Table ART, Mr Gbenga Olowo has condemned the open skies initiative saying that AON argument is brilliant, sound and forever valid.
Olowo said Nigeria, its Airlines and the economy will remain disadvantaged to Europe, Americas, Near & Middle East and Asia as long as stake holders (Government & Operators) lack the will to evolve strong players in the sector.
“In the event that Government is not forthcoming with solution to the myriad of problems rightly identified by AON, why shouldn’t operators be innovative enough to evolve synergistic solutions derivable from collaborations, mergers and or acquisitions rather than the present parasitic Competition going on in the market place as it were in last 4 decades”, he said.
He however, maintained that Africa will not continue to wait for Nigeria when the rest of the world is progressing with open skies and free market economies just because Nigeria Airlines and its business environment inhibit evolvement of strong carriers.
Chief Executive of WestLink Airline, Captain Ibrahim Mshelia commended the idea of open skies but stated that the airlines needed more preparation to be part of the /and benefit from the the single air transport market.
To former Managing Director of Nigeria Airways, Captain Mohammed Joji open skies initiative is detrimental to the local airlines.
Capt. Joji who is also the President of Aircraft Operators of Nigeria (AON) said that multiple taxation, high cost of aviation fuel, policy somersault are the bane of aviation industry.
Pointing out that over 50 airlines have went under in the last 35 years year, Joji urged government to initiate business friendly environment so that local airlines can thrive.
To an Aircraft Pilot and Aviation Expert, Mr. Daniel Omale, SAATM that was recently unveiled in Addis Ababa, may wipe out all domestic airlines in Nigeria.
Omale, added that if well-funded, domestic carriers could at the same time reap more gains from the project.
He said that in as much as Nigerian government had shown commitment to the open sky project, it would soon realize that revenue generation in the aviation sector would be boosted.
Omale said the government must support some of the sector’s self-funding structures, especially, the Nigerian Airspace management Agency (NAMA) and effectively fund Air Traffic Management (ATM) in the national airspace.
“No one, not even the minister of state aviation, Hadi Sirika, understands the intricacies of this cooperation, but there must be an extension of time to bargain and move the stakeholders in Nigeria along. Failure to oblige to this simple request will undermine the value and efforts of those investing in the industry, who are very capable of truncating the single market project.
“Nigeria is in a dilemma; it has ratified the agreement, just not to be viewed as a foolish big brother; and at the same time, it must find a way to convince the angry domestic players of the industry. As a complex nation of varying identities, the issue of a single African sky would have been settled domestically before committing itself to an international covenant. Sadly, the bureaucrats, who are the decision makers, understand little of the perils of endorsing a negative project that can affect airline operators,’’ he said.
Omale also argued that domestic interest groups must be carried along while international agreements were negotiated, and even agreed upon.
“Unfortunately, the minister is highly motivated with the agreement because, one of his key agenda has been the establishment of a national carrier, which will perfectly fit into the single sky algorithm. The funding for the national carrier should not be the government’s immediate agenda at this crucial time as the nation is bleeding profusely from the hyper-recession scourge”
“A national airline should not be an immediate project of this government, but support for the existing struggling carriers,’’ Omale said.
But foremost aviator and Chairman of IRS Group, operators of IRS Airline, Alhaji Ishaku Rabiu is optimistic with SAATM.
To Ishaku, in as much as airlines have to work harder to embrace the Single African Air Transport Market (SAATM), the government on its own part also needs to give the airline the support they need to operate smoothly.
The airline operator who spoke recently on the initiative pointed out that, although, airline operators of Nigeria has been complaining but SAATM is something that has been done a long time ago since the Yamasoukro agreement.
Alhaji Ishaku said “the only thing I would say is for us to try to work harder, to try to make sure we in-filtrate the market and for government to give us the support we need. Our airlines are very over taxed. They have so many taxes, so many overheads. Surely it has never been consistent and there is VAT, NCAA, NAMA and FAAN. Even though they support themselves but our airlines needs to be supported also, so that we can benefit from the Nigerian passengers that we have been carrying”.
Ishaku commended Medview Airline, Air Peace and Azman on the efforts they have been putting to keep operating just as he urged the government to assist all the domestic airlines in the country.
Assuring that such assistance would help to build capacity and create jobs, Ishaku added “You see how Medview has been struggling; they need to be supported. Air Peace is going international, it is a welcomed development. Azman is trying to do the same thing”.
“So if we get support from government, it is going to be a win-win situation and we will save a lot of foreign exchange that would have gone to the foreign airlines. We will build capacity and provide employment for the Nigerian aviation sector and our economy will thrive and grow more”, he said.
Meanwhile, the International Air Transport Association (IATA) has welcomed the launch of the Single African Air Transport Market (SAATM) initiative by the African Union (AU) to open up Africa’s skies and improve intra-African air connectivity.
IATA said that enhanced connectivity will stimulate demand, improve the competitiveness of the African airline industry, and make air travel more accessible, adding that in turn, this will enable higher volumes of trade, expanded tourism and growing commerce between African nations and with the rest of the world.
Commenting, IATA Vice President for Africa. Rapahel Kuuchi said “the SAATM has the potential for remarkable transformation that will build prosperity while connecting the African continent. Every open air service arrangement has boosted traffic, lifted economies and created jobs. And we expect no less in Africa on the back of the SAATM agreement. An IATA survey suggest that if just 12 key African countries opened their markets and increased connectivity an extra 155,000 jobs and US$1.3 billion in annual GDP would be created in those countries,”
“We commend the 23 States that have signed up to SAATM. It is an important step forward. But the benefits of a connected continent will only be realized through effective implementation of SAATM—firstly by the countries already committed and also by the remaining 32 AU member nations still to come on board,” Kuuchi said.