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NIGERIA, 22 AFRICAN NATIONS ACTIVATE NEW AIR TREATY

 

Nigeria’s aviation industry is expected to embrace anopen skies policy  following the formal establishment and inauguration of the Single African Air Transport Market in Addis Ababa, Ethiopia – a treaty based measured aimed at benefitting African-connected passengers, Airlines, Airports, Air Traffic Control Services, Tourism Industry, Shippers, Users and Passengers 23 African countries, namely: Benin, Burkina Faso, Botswana, Cabo Verde, Republic of Congo, Côte d’Ivoire, Egypt, Ethiopia, Gabon, Ghana, Guinea, Kenya, Liberia, Mali, Mozambique, Niger, Nigeria, Rwanda, Sierra Leone, South Africa, Swaziland, Togo and Zimbabwe. Each country signed a solemn commitment expected to open a total population well over 600 million, total GDP of over 1450 Billion US Dollars, a potential passenger traffic greater than 200 million per year representing about 75% of the entire intra-African Air Transport.

 

Those Member States have been requested to implement a number of key steps towards ensuring the full implementation of the Yamoussoukro Decision, the initial condition for the establishment of the Single Market. Key elements expected to be enhanced by the single market include air Service connectivity; Fares (expected to be lowered by as much as 25%), Jobs creations in the air transport industry, continent-wide Integration, intra-African Trade, growth, and the operationally survival of challenged African Airlines operators.

 

The Single African Air Transport Market was planned to be launched in 2017 as per the Assembly Decision (Assembly/AU/Decl.1 (XXIV) but was postponed to the January Summit of 2018. This concept note describes activities to mark the launching of the Single African Air Transport Market, as a side event of the 30th Ordinary Session of the African Union (AU) Assembly, scheduled from 25- – 28 January 2018 at the Africa Union Commission Headquarters in Addis Ababa. With the formal establishment and inauguration of the Single African Air Transport Market in Addis Ababa, Ethiopia, on Sunday during the African Union Summit, there are projections that many more Nigerians and Africans in general will take to air travel. Specifically, Statistics obtained from the International Air Transport Association indicate that the implementation of the SAATM could boost passenger movement in Nigeria from a monthly average of 774,000 to 1,171,400, an increase of about 51 per cent.

 

SAATM, as an open sky treaty that encourages the liberalisation of the rules and regulations of international commercial aviation to create a free market environment for airlines, is expected to pave the way for eligible airlines of each of the 23 countries to conduct their business into one another’s markets and fully operate the traffic rights provided for in the Yamoussoukro Decision.

 

According to the Nigerian Civil Aviation Authority, 11,221,617 passengers passed through the nation’s airports in 2017, a 26.3 per cent drop from the 15,232,597 fliers in 2016. Together, 38 international and domestic airlines operated 61,822 flights in all the airports across the country in 2017 but domestic traffic represented just 53.2 per cent of the total volume of passengers ferried within the period in contrast with the 72 per cent recorded in 2016. NCAA attributed the significant reduction in local passenger traffic to the takeover of a leading airline, Arik Air by the Asset Management Corporation of Nigeria, AMCON, which led to Arik suspending its international flights while reducing domestic operations by 50 per cent. SAATM is therefore seen by industry watchers as an opportunity for the Nigerian air-traffic segment to aim for a leadership role in the continent by addressing its local challenges.

 

The International Air Transport Association, IATA, which alongside other international stakeholders encourages the open air policy, hailed the inauguration saying said it would address most of the challenges associated with passenger movement in Africa. The Regional Director, Member and External Affairs, Africa and Middle East, IATA, Adefunke Adeyemi, projects that Nigeria would be a major beneficiary of the implementation of the SAATM. According to her, insights from from a 12-country study carried out by IATA reveals that there could be as much as $1.3bn worth of economic benefits in terms of incremental Gross Domestic Product and 155,000 additional jobs through the liberalisation of the African skies. Additionally, there could be up to a 75 per cent increase in direct services, savings on fares of 25 to 35 per cent, time savings and greater convenience for passengers. “Aviation is projected to grow by six per cent year-on-year in the next 20 years, which means so much opportunity to tap into. For Nigeria, aviation plays an important role in the economy, over 80 per cent of visitors to the country come in for business and there is still room for us to develop our tourism sector…The status quo is not working for Nigerian or African aviation, but the next 20 years are set to be exciting times for African and Nigerian aviation. The industry is forecast to show strong growth but these outcomes are not guaranteed so we must remain vigilant to those factors, which could derail this progress. Partnerships remain key to unlocking the potential in Africa and Nigeria to ensure these benefits can be realised,” she said.

 

On his part, the Nigerian Minister of State in charge of Aviation, Senator Hadi Sirika, ahead of the inauguration of the treaty, urged stakeholders to commit to its full implementation and operationalisation, asserting that the country needed to leap forward to become an effective global competitor in aviation. He stated that aside from being a pioneer signatory to the foundational Yamoussoukro Decision and one of the 23 states that have made solemn commitment to the implementation of the SAATM, Nigeria has also constituted a national implementation committee to review all the subsisting Bilateral Air Services Agreements to be in consonance with the Yamoussoukro Decision, adding that the process of domesticating it was currently at an advance stage. “Nigeria recognised the need to provide for enhanced traffic growth that will be an offshoot of the full operationalisation of the 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 reposition them for better service delivery,” the minister added.

 

The treaty is however not without opposition as some airline operators are pushing back against its operations citing the harsh environment under which they operate. Specifically, the indigenous carriers, represented by the Airline Operators of Nigeria, AON, asked the Federal Government not to go ahead with the implementation of the treaty, warning that doing otherwise would have grave consequences for the nation’s economy and the aviation industry in particular. “We 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,” the Chairman, AON, Capt. Nogie Meggison, said.

 

Aviation consultant and the Chief Executive Officer, Belujane Konzult, Mr. Chris Aligbe, however, said the global aviation industry was growing fast and Nigeria must grow with it. He stated that policymakers, airline operators and other relevant stakeholders in aviation should look at the challenges in the industry and think of a way forward. According to him, signing onto the SAATM was ultimately about survival as other “African airlines will kill Nigerian airlines completely if we do not do this”,

 

“AON considers it as unfair and a complete disconnect that Nigerian airlines which are the fulcrum of the implementation of SAATM in the country were not carried along in the decision process leading up to the signing of a treaty and firm commitment to the process, which will, ultimately, affect the future aviation of Nigeria in many years to come and the survival of our airlines…Nigeria is simply not ready to handle the level of unfair competition that the full implementation of SAATM will bring upon the country. A full implementation at this time will lead to disaster”, he stressed.

 

AON specifically asked the government to consider that 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,” a determination that may already be set against Nigerian airline operators and Nigerians. as “Nigerians require over 34 visas to travel within Africa alone” In addition, unlike their heavily subsidized soon-to-be-rivals over the Nigerian air-transport scene, AON decried other issues like unclear and constantly-changing policies; high bank interest rate of 28 per cent  compared to access to cheap funds provided and guaranteed by the government of most African carriers at a maximum of two per cent; obligation to Value Added Tax (VAT) which most African carriers do not pay in their various countries as well as in Nigeria; lack of access to foreign exchange except only as allocation per percentage of their bids, which takes an average of six months to come through; multiple charges, taxes, levies and fees that Nigerian airlines carry including about 37 different charges that come under the guise of statutory levies and taxes to sustain a staff strength of about 18,000 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.

 

AON also called on government to be mindful that the operational charges around Africa are not uniform across board and it was therefore imperative for survival of Nigerian carriers that the government ensure all the taxes are uniform before the implementation of the open skies. “For instance, when we fly to some African countries, they charge us heavy landing fees in excess of $5,000 – $6,000. The same countries subsidise their local operators who pay $200 for the same service. But when they fly into Nigeria they pay a mere $500, the same as our local carriers…Airlines in Nigeria pay high prices for JetA1 due to high taxes compared to some  countries where VAT and taxes in JetA1 have been abolished to their local carriers and some of them have local production of subsidised fuel,” Meggison said.

 

Industry think tank group – Aviation RoundTable Safety Initiative (ART) – led by its President, Mr Gbenga Olowo –  while agreed with AON as to the immediate implementation of the policy due to what it termed the absence of strong Nigerian carriers who can compete effectively. While calling on government to rethink the policy, ART also noted 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 evolution of strong carriers.

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Aside from that, other stakeholders stress the wide-ranging implication such an open air scheme will portend for Nigeria’s security and socio-economic issues like terrorism, human and drug trafficking, public health emergency management costs (in the wake of the ebola crisis occasioned by a traveller from Liberia), money laundering and smuggling. These experts are concerned that Nigeria’s security and law enforcement architecture may not be sophisticated enough to handle the non-phased implementation of the scheme. Or at least, without a deliberate recalibrations of measures associated with them so as to be able to minimize the externalities that are bound to come with the new air traffic initiative.

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