Introduction goes here AfDB Transport Forum Nov 2015, Abidjan, Cote d Ivoire

Transcription

1 Introduction goes here AfDB Transport Forum Nov 2015, Abidjan, Cote d Ivoire

2 Aviation Opening Up the African Sky

3 Why Air Transport is Important for Africa Size: 355 Million Sq. KM Population 1.2 B; To hit 2B by 2050 and Over 50% under 25 yrs. Portugal Spain BE & NL France Germany Switzerland East Europe India 16 out of 54 Countries are Landlocked; Other transport modes are underdeveloped USA Africa Rising: -Regional Integration is accelerating, Italy -Connecting People and Markets is crucial, China -355 Million emerging Middle Class (24% of population) Japan UK

4 Why Air Transport is Important for Africa Economic Benefits If the 12 highlighted countries implemented the Yamoussoukro Declaration between them, then they would; 1. Create 155, 000 new jobs, 2. Add USD 1.3 Billion to Annual GDP, 3. Create Additional 5 Million Air Passengers a year Source: IATA;

5 Why Air Transport is Important for Africa Economic Benefits Worldwide, number of Unique City-Pairs served by air doubled between 1994 and 2014 Unit Transportation Cost has more than halved over the same period Improved Connectivity and Declining Costs have boosted Global Trade and Foreign Direct Investments IATA estimates that Trade worth US$ 7.3 Trillion will be shipped by air in 2015 Source: IATA;

6 What is the Yamoussoukro Declaration? Full liberalization of intra-african air transport services in terms of access, capacity, frequency and tariffs Free exercise of First, Second, Third, Fourth and Fifth Freedom rights for passenger and freight air services by eligible airlines Liberalized tariffs and fair competition Compliance with established ICAO safety standards and recommended practices

7 What Has Liberalization Achieved in Other Regions? USA: Consolidation Only 4 Major US Airlines carry 90% of US Traffic Emergence of Low Cost Carriers e.g. SouthWest Disappearance of some carriers Traffic Increased Europe Consolidation 3 Major Carriers (LH, AF/KL & BA/IB) Death of some Carriers e.g. OA, SR, SN, Balkan Birth of Low Cost Airlines Traffic Increased

8 What Has Liberalization Achieved in Other Regions? Africa???

9 What Can Liberalization Achieve in Africa? Africa: 3 or 4 Major Carriers. Others become Regional Feeders Low Cost Carriers coming up gradually Some Carriers will disappear Additional Traffic of Million / Annum

10 IATA Calls for New Thinking for the Industry Source: IATA; IATA s call for new thinking is based on the outcome of a study carried out by McKinsey on behalf of IATA The study showed that Airlines generate just enough revenues and profits to pay suppliers and service debts. Nothing is left to reward equity investors. Yet other players in the value chain deliver returns for equity investors. A collaborative approach is thus necessary to redistribute this profitability across the chain with Airlines expected to benefit too.

11 Challenges to African Aviation Lack of Profitability / Poor Investment in African Airlines Competition from Non-African Carriers Political turmoil and conflicts in countries such as Burundi, CAR, South Sudan etc. Terrorist activities pose a Security Challenge Shortage of Skilled Manpower Safety Standards High Cost of Operations Driven by Fuel Price, Taxation and Other Charges like Navigation and Handling Government formalities and interference

12 Challenges to African Aviation cont. Uncontrolled / Unsustainable Growth driven by heavy aircraft orders and route expansion Unwillingness of African Airlines to work together Infrastructure limitations Mental Health Pilots and Technicians Closed air corridors results in longer routes and higher costs Problematic Union-Management relations

13 Conclusion All Said and Done, the Opportunity for African Aviation is much greater than the Challenges. God Bless African Aviation