1. Facilitando o Ambiente de Negócios para o Crescimento Económico ( SPEED+
STTA - Study of the impact of closing six international/regional airports in Mozambique Part 2 Detailed analysis of AdM proposal, metrics and impact study
11/8/2018
STTA - Study of the impact of closing six international/regional airports in Mozambique Part 2 Detailed analysis of AdM proposal, metrics and impact study

2. Contents Analysis of AdM proposed benefits of reducing entry points
Specific difficulties with the details and substance of the AdM proposal
Selected Airport and Airline Pax Metrics (Statistics)
The calculated implications of the AdM proposal and Growth Scenario on: Pax Traffic Volumes The economy Investment and Employment
STTA - Study of the impact of closing six international/regional airports in Mozambique Part 2 Detailed analysis of AdM proposal, metrics and impact study

3. Analysis of AdM proposed benefits of reducing entry points
STTA - Study of the impact of closing six international/regional airports in Mozambique Part 2
Detailed analysis of AdM proposal, metrics and impact study
11/8/2018

4. Analysis of AdM proposed benefits of reducing entry points
Analysis and response
1) Improve direct access to economic and tourism potential and maximize revenues for the country
Not correct
Direct access is terminated in favour of journeys via intermediate ‘hub’ airports
Connectivity of Mozambique to other destinations and point of origin will reduce
Consequently, distance of travel will Increase, intermediate stops will increase journey time, exposure to risks and risks of delays and prices will increase. Would include both journeys (an international sector and a domestic sector)
Will damage tourism (Pemba & Vilanculos)
Will hamper staff rotation, and new economic projects?
Less international airline participants
11/8/2018
STTA - Study of the impact of closing six international/regional airports in Mozambique Part 2 Detailed analysis of AdM proposal, metrics and impact study

5. Analysis of AdM proposed benefits of reducing entry points
Analysis and response
2) Create favourable conditions for the introduction of Hub-Hub and Hub-Spoke (H&S) operations
Not correct
Airlines can operate H&S route network in any event, without regulatory intervention in any event, and would if was economically viable.
Airlines are free to develop their own route networks under an economic deregulated environment
Regulatory intervention is required to force through an unviable option with grave risks to the economy
This would reverse the benefits of liberalisation intent
The essential elements for H&S network systems do not exist in Mozambique (centricity & density)
H&S is not necessary the ideal set up for Mozambique. Pax traffic is sparse and not dense enough yet to support H&S operations.
LAM has too few aircraft to operate H&S systems.
Most LCCs operate point-to-point services (a desirable business model to growth air travel)
No other country regulates or require H&S operations by means of regulation (this implies reintroduction of economic control and regulation)
Airlines should decide on their route networks to compete
Analysis of AdM proposed benefits of reducing entry points
STTA - Study of the impact of closing six international/regional airports in Mozambique Part 2 Detailed analysis of AdM proposal, metrics and impact study
11/8/2018

6. Analysis of AdM proposed benefits of reducing entry points
Analysis and response
Maximization of fleet utilization, increased flight frequency, increased seats, competition and increased economies of scale in the air passenger and cargo market;
Not correct
None of these claims have been demonstrated, and are contrary to experience everywhere else and academic research
H&S generally generate lower average fleet use and staff utilisation
H&S increase scope not scale advantages
Point to Pont LCC operations increase scale advantages (more flights)
LCCs have higher aircraft use than FSNCs and efficiencies
Mozambique pax market = sparse (not high density or high enough aircraft or frequency of flights for H&S)
Unnecessary flying and higher emissions will result
Competition increases with more participants not less
No scheduled airlines are based at Nacala (Nampula) and Beira. No spares, maintenance or crews are based there
11/8/2018
STTA - Study of the impact of closing six international/regional airports in Mozambique Part 2 Detailed analysis of AdM proposal, metrics and impact study

7. Analysis of AdM proposed benefits of reducing entry points
Analysis and response
4) Reduction of operating costs, increased efficiency benefits and consequent reduction of airfare costs;
Not correct, the opposite will result
Airlines’ operational cost will collectively increase due to unnecessary flying and journeys will have two landings & take offs)
Airport operating cost will mostly remain as international non-scheduled flight will remain
Airfares will increase (now two flight sectors)
Total travel-time will increase making affected airports more inaccessible
11/8/2018
STTA - Study of the impact of closing six international/regional airports in Mozambique Part 2 Detailed analysis of AdM proposal, metrics and impact study

8. Analysis of AdM proposed benefits of reducing entry points
Analysis and response
5) Attracting new operators to serve the domestic and international market;
Not correct
New entrants to domestic market are planning their own route networks without the proposed decision. LAM has low frequency of flights, high transit pax, small number of aircraft
May increase LAM’s dominance
LAM may through this monopolise regional flights
International charters are much less prevalent these days. Large batch size (seat capacity) of long haul aircraft require high scale of demand on each flight
Would put-off new international carriers (create uncertainty of tenure)
11/8/2018
STTA - Study of the impact of closing six international/regional airports in Mozambique Part 2 Detailed analysis of AdM proposal, metrics and impact study

9. Analysis of AdM proposed benefits of reducing entry points
Analysis and response
6) Improvement of the connection for transport of products, regional and local tourist attractions increase in tourist demand and increase of tourists stay
Not correct
Connectivity will reduce (that is proposal’s objective)
Tourist demand built up on direct access will reduce not increase
Overall airport connectivity will reduce
Tourist want to fly directly to destination & out
Increased pax volumes Affected airports have developed
Tourist stays will reduce because more time is required to travel to destinations
11/8/2018
STTA - Study of the impact of closing six international/regional airports in Mozambique Part 2 Detailed analysis of AdM proposal, metrics and impact study

10. Analysis of AdM proposed benefits of reducing entry points
Analysis and response
7) Adequacy of airports as Hubs (Maputo, Beira and Nacala), international security requirements, optimization of investment costs and adjustment of scheduled operations international arrivals and departures
Not Correct
Nacala is not ready for international operations, technical problems, hospitals & different catchment area to Nampula, different market and industrial and coal image
Nacala has too little domestic flight connectivity
Little real demand for Nacala (require new plan)
Even LAM has reduced flights to Nacala
No connections for Pemba at all
Beira is just too far east from Tete re feed from the North and West
New investments and technical support are based on direct flights to Tete
Economy of Vilanculos is based on direct international access
11/8/2018
STTA - Study of the impact of closing six international/regional airports in Mozambique Part 2 Detailed analysis of AdM proposal, metrics and impact study

11. Specific difficulties with the details and substance of the AdM proposal
STTA - Study of the impact of closing six international/regional airports in Mozambique Part 2 Detailed analysis of AdM proposal, metrics and impact study
11/8/2018

12. Specific difficulties with the details and substance of the AdM proposal
The AdM proposal is incorrect in its claim that South Africa has reduced the number of international airports to 3 South Africa currently has 10 international airports
The AdM proposal listed 14 international airports for neighbouring
Countries. However there are 27 international airports at these countries
There are 40 international airports in countries within the region
STTA - Study of the impact of closing six international/regional airports in Mozambique Part 2 Detailed analysis of AdM proposal, metrics and impact study

13. Details of International Airports in the Region
STTA - Study of the impact of closing six international/regional airports in Mozambique Part 2 Detailed analysis of AdM proposal, metrics and impact study

14. No information was provided to demonstrate any quantum of cost savings for AdM
Very little cost saving would materialize for the AdM if non- scheduled flights will still operate to the affected airports
Greater volumes of pax traffic throughput through Nacala airport is not expected to materialize within a reasonable timeframe (to reduce units= cost)
STTA - Study of the impact of closing six international/regional airports in Mozambique Part 2 Detailed analysis of AdM proposal, metrics and impact study

15. Proposed Routes to motivate AdM's Proposal
Many new routes are expected to be operated immediately, including seven new international routes from Nacala and five new domestic routes from Nacala. Beira would specialize in flights to Nacala only (which differs from the AdM proposal).
Proposed Routes to motivate AdM's Proposal
STTA - Study of the impact of closing six international/regional airports in Mozambique Part 2 Detailed analysis of AdM proposal, metrics and impact study

16. There is a mismatch of projected routes and pax projections and the AdM proposed routes.
E.g. flights to Tete and Quelimane, Chimoio and Nampula are planned to be operated from Maputo, and not from Beria as is contained in the AdM proposal.
STTA - Study of the impact of closing six international/regional airports in Mozambique Part 2 Detailed analysis of AdM proposal, metrics and impact study

17. The AdM proposal reported significantly increased passenger traffic numbers over 5 years to 2015
However according to AdM’s statistics, a decline of 1.7% already set in from 2014 to 2015.
IACM data demonstrated an overall decline of 8% in 2015 which worsened by to decline of 11% in 2016 of all commercial passenger traffic (excluding private passengers), which include domestic, regional and international passenger traffic both of a scheduled and non-scheduled nature.
Domestic scheduled passenger traffic declined in 2015 by 7% and continued to decline in 2016 by 8%, (a reversal of the 17% growth in and 12% growth in 2014).
Regional scheduled passenger traffic, (the focus the AdM proposal and this report) declined by 5% in 2015 and declined by 13% in 2016, (a reversal of earlier increases of 8% in 2015 and 12% in 2014).
STTA - Study of the impact of closing six international/regional airports in Mozambique Part 2 Detailed analysis of AdM proposal, metrics and impact study

18. The proposed projection of Pax traffic numbers are highly speculative and simply unrealistic
The AdM proposal contains no market research, historical substantiation or future assumptions that support its pax traffic projections.
The AdM proposal assumes the pax demand will immediately rise substantially (mostly from a zero base) to match the level of capacity increase and beyond, whilst the reality is that actual overall pax traffic volumes in Mozambique are actually going down at this time.
After the initial projected massive surge in demand, pax traffic is expected to grow consistently at a linear 4% per annum
Some intermediate substantial drop-offs for specific years (maybe errors in decimal numbers)
In most cases, the projected numbers in the first year do not add up to the totals indicated.
Many of the routes contain the same numbers as projections, which is indicative of a supply side (capacity) approach instead of a conventional look at the real demand for air services.
STTA - Study of the impact of closing six international/regional airports in Mozambique Part 2 Detailed analysis of AdM proposal, metrics and impact study

19. The proposed pax traffic numbers are highly speculative and simply unrealistic (examples)
International (over-border flights) from Nacala (currently on a zero base)
AdM projected pax total pax traffic from Nacala airport
AdM detailed projected pax from Nacala airport
STTA - Study of the impact of closing six international/regional airports in Mozambique Part 2 Detailed analysis of AdM proposal, metrics and impact study

20. The proposed pax traffic numbers are highly speculative and simply unrealistic (examples)
Domestic from Nacala (currently on a very low base)
Total AdM projected domestic pax from Nacala
AdM detailed projected domestic pax per route from Nacala
STTA - Study of the impact of closing six international/regional airports in Mozambique Part 2 Detailed analysis of AdM proposal, metrics and impact study

21. The proposed pax traffic numbers are highly speculative and simply unrealistic (examples)
Domestic from Maputo
Total AdM projected domestic pax from Maputo
AdM detailed projected domestic pax per route from Maputo
The routes from to most other domestic destinations have identical numbers as pax projections.
However, no pax traffic is expected on the Beira – Tete route (as is contained in the AdM proposal) as Tete would be served from Maputo, according to the Pax projections.
STTA - Study of the impact of closing six international/regional airports in Mozambique Part 2 Detailed analysis of AdM proposal, metrics and impact study

22. The proposed pax traffic numbers are highly speculative and simply unrealistic (examples)
Over border (International) flights from Beira
Total AdM projected international pax from Beira
AdM detailed projected international pax per route from Beira
Two routes from Beira to Harare and Johannesburg have identical numbers as pax projections.
However, no pax traffic is expected on the Beira – Tete route, as is contained in the AdM proposal.
STTA - Study of the impact of closing six international/regional airports in Mozambique Part 2 Detailed analysis of AdM proposal, metrics and impact study

23. The proposed pax traffic numbers are highly speculative and simply unrealistic (examples)
Domestic flights from Beira
AdM total projected total pax from Beira
AdM detailed projected pax per route from Beira
Four routes from Beira (all to Nacala) have identical numbers as pax projections.
However, no pax traffic is expected on the Beira – Tete route, as is contained in the AdM proposal.
STTA - Study of the impact of closing six international/regional airports in Mozambique Part 2 Detailed analysis of AdM proposal, metrics and impact study

24. The proposed Pax traffic numbers are highly speculative and simply unrealistic (examples)
Overall pax traffic in Mozambique is sparse (not dense) and most of the affected airports are really located far from LAM/MEX' hub in Maputo.
One just cannot expect that demand would suddenly rise to the levels of capacity increases envisaged
The launch of new routes, networks or new types of operations result in start-up losses for airlines, which have to be considered within the context of limited financial resources
STTA - Study of the impact of closing six international/regional airports in Mozambique Part 2 Detailed analysis of AdM proposal, metrics and impact study

25. LAM - Aircraft and Seat Capacity expansion
The AdM proposal assumes an immediate large increase of 71% in LAM's fleet by five 5 regional aircraft - it currently has 7 aircraft) and 48% more seat capacity, effectively developing a new regional airline with turboprop aircraft.
LAM is however under financial pressure and needs to refocus its operations within the context of a competitive market, which would probably require more direct flights (more frequency) with smaller sized equipment as a priority.
The expansion of an unprofitable State-owned airline generally hampers new entry into and competition in an air transport market.
STTA - Study of the impact of closing six international/regional airports in Mozambique Part 2 Detailed analysis of AdM proposal, metrics and impact study

26. Selected Airport and Airline Pax Metrics (Statistics)
STTA - Study of the impact of closing six international/regional airports in Mozambique Part 2 Detailed analysis of AdM proposal, metrics and impact study

27. Annual Total Pax Throughput at all Mozambique airports
STTA - Study of the impact of closing six international/regional airports in Mozambique Part 2 Detailed analysis of AdM proposal, metrics and impact study

28. Relative Importance of Regional Scheduled Pax moved through the five Affected Airports
STTA - Study of the impact of closing six international/regional airports in Mozambique Part 2 Detailed analysis of AdM proposal, metrics and impact study

29. Total pax traffic throughput at the five Affected Airports
STTA - Study of the impact of closing six international/regional airports in Mozambique Part 2 Detailed analysis of AdM proposal, metrics and impact study

30. Origin and Destination Regional Scheduled Pax Traffic carried by each airline at affected airports
STTA - Study of the impact of closing six international/regional airports in Mozambique Part 2 Detailed analysis of AdM proposal, metrics and impact study

31. Percentage of Origin and Destination Pax traffic carried by each airline at affected airports
STTA - Study of the impact of closing six international/regional airports in Mozambique Part 2 Detailed analysis of AdM proposal, metrics and impact study

32. Detailed Routing of Regional Scheduled Pax Traffic at Affected Airports (Part 1)
STTA - Study of the impact of closing six international/regional airports in Mozambique Part 2 Detailed analysis of AdM proposal, metrics and impact study

33. Detailed Routing of Regional Scheduled Pax Traffic at Affected Airports (Part 2)
STTA - Study of the impact of closing six international/regional airports in Mozambique Part 2 Detailed analysis of AdM proposal, metrics and impact study

34. Regional Scheduled Pax carried by Airlink directly to the Affected Airports
STTA - Study of the impact of closing six international/regional airports in Mozambique Part 2 Detailed analysis of AdM proposal, metrics and impact study

35. Percentage of all regional scheduled Pax generated by Airlink at all airports
STTA - Study of the impact of closing six international/regional airports in Mozambique Part 2 Detailed analysis of AdM proposal, metrics and impact study

36. The calculated implications of the AdM proposal and Growth Scenario on: - Pax Traffic Volumes - The economy - Investment and - Employment
STTA - Study of the impact of closing six international/regional airports in Mozambique Part 2 Detailed analysis of AdM proposal, metrics and impact study

37. The base model (assuming current trends will continue)
STTA - Study of the impact of closing six international/regional airports in Mozambique Part 2 Detailed analysis of AdM proposal, metrics and impact study

38. The total outcome of the AdM Proposal and the Growth Scenario
STTA - Study of the impact of closing six international/regional airports in Mozambique Part 2 Detailed analysis of AdM proposal, metrics and impact study

39. The net impact (decrease and increase) of the AdM Proposal and the Growth Scenario to the base model
STTA - Study of the impact of closing six international/regional airports in Mozambique Part 2 Detailed analysis of AdM proposal, metrics and impact study

40. Back-up Slide
11/8/2018
FOOTER GOES HERE

41. Airports Compared JNB CPT MPM
Airline and Destination Connectivity
Airports Compared JNB CPT MPM
11/8/2018
STTA - Study of the impact of closing six international/regional airports in Mozambique Part 2 Detailed analysis of AdM proposal, metrics and impact study

42. Thank you
STTA - Study of the impact of closing six international/regional airports in Mozambique Part 2 Detailed analysis of AdM proposal, metrics and impact study
11/8/2018