De Junaic: Political Control Hinders Open Sky in Africa

The Director General and CEO of the International Air Transport Association (IATA), Alexnadre de Junaic, in this interview  said liberalisation of African airspace is hindered by sovereign and government control. He also said cost control is a major key to successful airline operation. De Juniac spoke to journalists  at the just concluded IATA AGM held in Seoul, South Korea. Chinedu Eze brings the excerpts.

East Africa has been expanding and building new airports and in your speech you raised the issue of

the cost of infrastructure, how can the region recoup funds expended on such infrastructure? You also said airlines operate in high cost environment in Africa, how can this unfavourable situation be reversed?

On the cost control of big investment either on traffic management and even more on airports, the solution we always propose is to have a very early collaboration with users mainly airlines. To define a project which is at the right level in terms of size, in terms of level of service at the right level for the airlines that are serving the airport. So those managing the airports should have broad and early stage consultation with the airlines. This is very important in order to avoid building facility that will be very expensive or will have inappropriate design. So you will have highly expensive infrastructure and with a wrong design that will not fit in with airlines’ expectations.

I was surprised when IATA talked about congestion in the European airspace and calculated that the manpower loss would be huge, but in Africa it is a different thing, we don’t have that problem, we are struggling with Single African Air Transport Market (SAATM), and it is neither here nor there for now. What are the impediments to achieving SAATM?

I think they are similar to those of the Yamoussoukro Declaration. First is the political reason because you are touching a subject that has to with sovereignty. You have economic reasons, start up airlines are not comfortable with the incumbent airlines, sometimes; but also governments want to protect their airspace and their operators against what they perceive as threatening competition from more established carriers. And thirdly, for those countries that don’t have operators (their own airlines), they are sometimes hesitant to open their borders because they think that it will kill any initiative to build a national or flag carrier. So the reasons why SAATM is yet to be fully embraced include protection, political control and sovereignty issues.

That has affected airlines in Africa and they are yet to grow and are very weak, and we believe that IATA will push further on collaboration, so how are you engaging governments in Africa?

We think that any initiative that is favourable to opening the sky is generally favourable for airlines. It generates traffic and usually it allows the creation of new airlines and the expansion of existing airlines, then it brings prosperity, GDP, jobs, and so many other things.

Is there a cooporation between Africa Civil Aviation Commission (AFCAC) and IATA?

Of course, all the time; we were in Rabat (Morocco) not too long ago and we held specific meetings on the subject (SAATM) with all the regional associations along with the African Development Bank, the Head of AFRAA (African Airlines Association) and AFCAC. That effort actually led to the release of funds from the World Bank to the African Union to support the conducting of the 55 countries study to show the value of aviation across all of Africa.  That study will be conducted before the end of this year, which will be used to convince all the governments in Africa of the economic values of opening up their skies and opening up their borders to increase interconnectivity. So we continue to work in partnership with all the regional bodies and the specific governments within Africa.

Why are there divergent views about SAATM, since it is an opportunity to advance air transport in the continent?

It is politically motivated and the political situation of each country is different. We have seen that in Europe.

How many African countries are still with airlines’ blocked funds? Are there other countries apart from Angola?

We have solved the problem, both in Nigeria and Egypt as well and prior to that in Sudan as well. There are problems now in Zimbabwe with $73 million. We have started discussions with the government of Zimbabwe. We immediately start discussion anywhere there is a problem of blocked funds on different levels until we reach the highest level of authority in that country and in this case the Director General of IATA will be traveling to Zimbabwe in July to meet the President and address this particular issue.

If I was to appoint you the CEO of my airline, Kenya Airways or Ethiopian Airlines in Africa, what will you do to make sure that you operate profitably?

When you run an airline, wherever it is, it is not particular to Kenya or to France or to America; the cost control is permanent and a key obsession. We are a cost-driven industry and the competitiveness of the organisations in the sector is linked to cost control. You have to have a good product adapted to the market segment you are addressing. It is useless for you to propose a first class where nobody is able to afford it. And as I remember in Africa not having a business class is also a mistake because you have a lot of people asking for that as well. And thirdly I would also invest on distribution system and digitisation of distribution to improve the efficiency, the market access and reduce the cost of distribution. The digitisation has heavily impacted on this part of the business, probably the main impact of the distribution and saving cost. Distribution method is key; the next is customer relation management systems.

What will you do about fuel in the continent because your report said Africa pays 35 per cent more than other regions on aviation fuel?

We are lobbying each state in Africa to reduce taxes on fuel by all means. What makes the fuel price expensive can be attributed to physical restriction on supply; it can be taxes or the supply chain. Lifting up monopolism in certain airports where there is only a single fuel supplier thereby giving other suppliers the free hand to operate and compete. Africa is not the only place where the cost of fuel is high, India is the same for various reasons, the cost is also high in Brazil, which is a big oil producing country. IATA has been lobbying everywhere to see that the prices of aviation fuel are reduced. It is such an important cost factor for us.

According to IATA projection, in 2035, passenger traffic in Africa will double and there is this desire to have expanded infrastructure that will meet the passenger surge. But most African countries or the governments cannot build airport facilities and IATA is not inclined to privatisation. How best do you think this can be achieved?

We tell government that you have to manage your infrastructure. You have several ways of doing it and please be cautious before rushing to privatise. You have management contract, you have concession contract before selling the asset, so we urge government to consider all possibilities. Whatever system they choose whether it is privatisation, concession or selling of the airports, we have a kind of guidelines to tell them how to proceed. Based on experience, we have seen so many bad arrangements and a few good ones but we have been able to establish a kind of guide of best practices. And we understand that many governments might go for privatisation to attract private funds because they don’t have enough budget or public funds to finance the airports. But we advise that they be careful because privatization is not the magic solution.

On SAATM, we have 28 member-countries that have joined the market. I think the major challenge is the arbitrary charges. A Nigerian airline going to Ghana or Senegal may face outrageous charges to discourage it from coming. So is IATA looking at having uniform charges?

Yes, not uniform but at least there is ICAO (International Civil Aviation Organisation) principle will be applied and we try to make this principle applied in each country in terms of airport charges. So ICAO has prepared standards and we ask them to implement them as world standard. And we also follow that with the framework that we developed which is called the IATA smart regulations framework. That really helps authorities when they issue regulations that will impact this bilateral agreement between countries that they will really take into consideration all aspects when they have done things properly. So regulations will be friendlier to the aviation industry rather than hurting it. So, the ICAO standard and our own smart regulation framework that we are actually advocating will solve that problem.

You said safety in sub-Sahara Africa has improved substantially, but would you say there is a bias or subconscious bias when events happen in Africa? It is like the initial thing that hit the West is, oh, it is in Africa; they always get it wrong?

If you are referring to the Ethiopian case, frankly it was not the first reaction. I heard the blame is on the plane system.

Even with the improvement in safety, over 25 per cent of airlines in Africa are yet to meet with ICAO standard and recommended practices? What are you doing about that?

It is not only airlines that have not met the ICAO safety standards. It is actually the regulators and authorities and both ICAO and IATA are working in partnership in organizing workshops, trainings, issuing documents and initiatives to help the authorities, airport operators and the airlines to lift up the safety standards. We have the ones that relate only to airlines, which is IATA Operational Safety Audit (IOSA) and ISAGO (IATA Safety Audit for Ground Operation), by implementing the standards of IOSA and ISAGO, it automatically you would uplifted in your compliance of ICAO recommended standards. So they go hand in hand, and ICAO has accepted IOSA as means to uplift countries standards to what it should be.

At what stage are you bringing Africa in on the turbulence awareness system?

It is a product we are developing and when the product is available, that is after the trials and after the systems acceptance; the airlines will subscribe for it.

We learnt that the fee for the turbulence tool will be $10,000, is it going to be one off or annual fee?

I am not sure that the pricing model has actually been established, and again it is still in development.

For many Africa youths who aspire to work in the industry, many of them want to first do some IATA training but for those developing countries it looks as if it is still a very big challenge to them financially? Is IATA thinking of making them more affordable?

There are two things you said, one, for people who are trying to enter the industry who are not yet employed by an airline or airport. This is one aspect that we have looked at when we redesigned our training strategy. And we have an ongoing programme to really look into the entire way of how IATA offers training worldwide and then regionalise it and the priorities in each region. The cost could be managed by introducing technology, so it could be online training rather than instructive training. The traditional instructive training is normally expensive; it is not because IATA makes it expensive, it is because of the cost of the instructors and the logistics. So digitizing the training channels will help in reducing the cost and make the training material much more affordable and available for youths around the world not only in Africa.

I want to know the level of collaboration you have with regulatory bodies like the US Federal Aviation Administration (FAA) and others in ensuring air safety?

Usually we have quite a good level of corporation with the FAA but we are not doing the job at that place. For instance, in the Boeing 737 Max, we are not in the certification process. We just express our need to have harmonised, aligned, collaborative certification process.

If you look at what FAA did on the issue concerning the Boeing Max, are you optimistic that when the aircraft is recertified people won’t be apprehensive to fly and buy the equipment?

People will probably be apprehensive that is for sure and that is the reason why we are urgently pushing the regulators to have this transparent, aligned and collaborative process of recertification to restore confidence into the system. This is because the confidence has been damaged and it needs to be restored and properly too. Otherwise it will blow not only on Boeing or FAA, it will blow on all the aviation system.

Middle east carriers have adopted a number of procedures to adjust to situations and slow down with growth to confront the current flight challenges. Are those procedures efficient to help Middle East carriers to overcome those problems?

For me it is difficult to comment on individual airlines or group of airlines. The measures that are being taken by the Middle East carriers are classical measures of usually capacity control or programme reshuffling. The only difference is that for the Gulf carriers it is something pretty new, compared to the other carriers that have not had to do it for decades. So it depends on each carrier, so it is difficult to give you a precise and uniform response.

What is your evaluation of the airlines in the Middle East in the last three to six months?

We have published regional figures; Middle East in terms of profitability is suffering more than US, of course, and Europe and even Asia and Africa. So their situation is probably worse.

One of the problems that you mentioned was about constricted airspace in the Middle East, what kind of dialogue is IATA having in trying to encourage the opening of the airspace?

Usually we ask the civil aviation to do two things: to invest in better technology and also to corporate more. In the Gulf before what happened with the blockade, there was already a problem of closed corporation to optimise the design of the sky. After the blockade it has become even worse, so we are pushing governments to cooperate when the political situation allows it. We do work jointly with all the civil aviation authorities and we also leverage our relationship with the Arabs civil aviation organisation. That is the association for all the civil aviation of the Arab countries, to leverage their ability to bring all to the same table and do the two things mentioned here which is investment and technology and investment in integrated redesigning the airspace of this very congested area. And it is an ongoing process.