AfCFTA begins trading this July. Where will SAATM be?

African nations are protecting their airlines from stiff competition, making uncertain whether the dream of the SAATM open skies policy will be achieved.

The Single African Air Transport Market (SAATM) was adopted in January 2018 to liberalize civil aviation on the continent and drive economic integration. It is one of the flagship projects of the African Union Agenda 2063 and will complement the African Continental Free Trade Area (AfCFTA), another flagship project.

SAATM aim to create single airspace, however, is proving a bit complicated. The East African Community exemplifies reasons for some of the complications.

First, it is telling that the bid to liberalise air transport in the region in implementing the Yamoussoukro Decision is yet to be realised since 2006. 24 years have passed.

In the meantime, only Kenya and Rwanda are part of the SAATM treaty. Tanzania, Uganda, Burundi and South Sudan are yet to sign up.

At the meet in Kigali in July last year appraising implementation status of the treaty, Rwanda was the only country in the region among others on the continent that had attained 100 per cent implementation.

The 28 countries that have so far signed the treaty can begin to operate single airspace, but only 10 of them have fully implemented concrete measures. There is no indication whether two of the major markets – Egypt and Kenya – have started implementation, according to the appraisal.

If the SAATM is to succeed, it will have to hurry up the already signed members and especially heighten the pitch to increase membership with the ongoing advocacy efforts.

It will also have to find ways to accommodate issues airlines are grappling with that threaten their very existence.

Take Tanzania, for example. It is nurturing its national airline, Air Tanzania, which it has just revived and is determined it grows. The country has denied the low budget carrier Fastjet permit to re-introduce flights to the country. This may have to do with reducing competition for the revived national airline.

It’s the same thing with Kenya. Its airline, Kenya Airways, or KQ, as it is also known, has been grappling with sustainability issues. There’s even a proposal to nationalise it. Stiff competition from the likes of Rwandair and Ethiopian Airlines has been mentioned as one of the causes for its struggles of survival.

Lest it appears it is an East African thing, struggling or scrapped airlines is common on the continent. That majority of state-owned airlines do not make enough revenue to cover their costs. South African Airlines, for example, is in life support in the form of bankruptcy protection.

Ethiopian Airlines gets mentioned a lot as the most profitable among the few who break even.

The airline is also dreaded as a competitor, which brings us back to Kenya. A gazette notice last month by the country’s Civil Aviation Authority (KCAA) denied the Ethiopian Airlines and the Saudi Arabian Airlines the permission they had sought to vary their licences.

Ethiopian Airlines wanted variation of its existing air service licence to include aircraft type B737F. Saudi Airlines wanted variation of its existing licence to include the routes Jeddah/Nairobi/Maastricht and Jeddah/Nairobi/Liege.

One can guess why, but no reasons were offered why the carriers were denied permission.

But, here is a question that many help suggest an answer, again to use KQ example. Which is important: to have measures that may allow the likes of KQ survive its turbulences, or allow competition to kill the airline despite SAATM good intentions?

This is a practical, not a rhetorical question because the continent will need its airlines in the single African air transport market. Take this along with the concern for protection of indigenous airlines.

If not checked, non-African investors could abuse the open skies deal by setting up airlines in some African countries and taking full advantage of the policy as there is no way to ascertain the shareholder structure.

There is also the other concern that some African countries subsidize their local operators and when they fly into foreign states and charge full fares.

It is all for the prize. Africa has an estimated 76.6 million annual air travellers. By 2035, it will see an extra 192 million passengers a year for a total market of 303 million passengers.

The top ten fastest-growing markets in percentage terms will be in Africa. Rwanda will be among them and each of these markets is expected to grow by more than 8 per cent each year on average over the next 20 years, doubling in size each decade.

For now, the commencement of trading within the African Continental Free Trade Area is slated for July this year. Along with the much delayed African Union passport, where will SAATM be?

Source: The New Times

Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of TradeMark East Africa.

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