What ails African carriers, making air transport expensive on the continent?

Passengers boarding a Kenya Airways plane at Entebbe International Airport in Uganda. Photo/Morgan Mbabazi 

By Lee Crawfurd 

In Summary

• Challenges facing the African aviation industry range from state protectionism and lack of an enabling environment for new investors to high taxes and charges (above comparative world averages) and a poor safety record due to ageing fleet and insufficient regulatory supervision.
• Likewise, a lot of air transport infrastructure across the continent is in need of upgrading.

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When thinking about regional integration in Africa, we often think first of trade policy, telecommunications, ICT, and road infrastructure. But on a continent larger than China, India, the US, and Europe combined, air transport is inevitably going to play a key role in facilitating integration.

For Africans to interact and do business with each other, they need to get there. Moreover, as incomes rise, patience with long and arduous road journeys is bound to diminish.

However, Africa accounts for less than two per cent of global airline passenger traffic and about one per cent of global airlines’ cargo.

The challenges facing the African aviation industry range from state protectionism and lack of an enabling environment for new investors to high taxes and charges (above comparative world averages) and a poor safety record due to ageing fleet and insufficient regulatory supervision. Likewise, a lot of air transport infrastructure across the continent is in need of upgrading.

So how do we get safer, more efficient and cheaper airlines?

One of the key problems is a lack of competition, which contributes to high fares. Although in some cases low passenger volumes may create natural monopolies, in many countries competition is artificially restricted by making it difficult for foreign airlines to access certain routes, in order for governments to support their own national carriers.

This is despite an agreement more than 13 years ago to “open the skies.” The Yamoussoukro Decision (1999) was signed by 44 countries, who agreed to liberalise intra-African air transport, including allowing non-national airlines to land and take passengers to a third country — so-called “fifth freedoms” of the air. Implementing this decision could do much to reduce fares and increase air traffic across the continent.

All of this sounds fine in theory, but what about in practice? A comprehensive 2010 World Bank study led by Charles Schlumberger looked at a number of specific examples of what has happened when routes have been liberalised in Africa.

When the Nairobi-Johannesburg route was fully opened up in 2003, passenger volumes increased 69-fold. When the domestic South African market was liberalised, passenger volumes increased by 80 per cent. On average in the Southern African Development Community (SADC), routes that were liberalised saw fares drop by 18 per cent.

The study estimates that full liberalisation in the SADC region would increase passenger volumes by around 20 per cent.

A more recent study was presented at the AfDB’s African Economic Conference by Megersa Abate, an Ethiopian transport economist, looking at air transport routes to and from Addis Ababa. While Mr Abate did not find any impact of liberalisation on prices, he did find large increases in the number of flights — up to a 40 per cent increase.

He concluded that in the long run, competition is likely to reduce prices. Even without price drops, more flights and more routes are clearly needed.

Despite these potential gains, at present over a quarter of air routes in Africa are served by only one carrier. In total, up to 70 per cent of air transport is served by a monopoly carrier.

So why are countries slow to “open the skies”?

Too often it comes down to simple protectionism, driven by fear that the national carrier won’t be able to compete with the continent’s big players from Kenya, Ethiopia and South Africa as well as other competitors from the Gulf and beyond.