1. AVIATION IN TRANSITION Nick Fadugba
SEMINAR
AVIATION IN TRANSITION
CHALLENGES & OPPORTUNITIES OF LIBERALISATION
22nd – 23rd March, Montreal, Canada
PRIOR TO THE 5TH ICAO
WORLDWIDE AIR TRANSPORT CONFERENCE
Presentation by
Nick Fadugba
CEO, African Aviation Services Limited
Publisher, AFRICAN AVIATION Magazine
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2. AFRICAN AVIATION SERVICES LTD
Company Profile
1. Aviation Publishing
2. Aviation Conferences
3. Aviation Consultancy
With A Special Emphasis On:
* Aviation Finance
* Aircraft Leasing & Maintenance
* Aviation Safety & Security
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3. AFRICAN AVIATION MAXIM ‘Aviation Can Be A Vital Catalyst For
Africa’s Economic & Social Development’
- Company raison d'etre
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4. Air Transport Liberalisation
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Air Transport Liberalisation
The Underlying Theme of the 5th ICAO Worldwide
Air Transport Conference is Not WHETHER to
Liberalise but HOW to
Liberalisation is said to be Inevitable
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5. Africa’s Share of Global Air Traffic
AFRICAN AVIATION
Africa’s Share of Global Air Traffic
Today, African Airlines have only an approximately
2% Market Share of Global Air Traffic
If International Air Transport is further Liberalised
Will Africa’s Global Market Share be
Increased or be Reduced?
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6. Challenges & Opportunities of Liberalisation
AFRICAN AVIATION
Challenges & Opportunities of Liberalisation
Further Air Transport Liberalisation could provide
several benefits, such as enhanced air travel, economic
trade and tourism
But the Key Challenges are: How Air Transport Liberalisation
can be Structured and Implemented so as to ensure
that African airlines are not disadvantaged and
put out business and their staff put out of work?
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7. Africa: Socio-Economic Environment
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Africa: Socio-Economic Environment
Large & Growing Population
Mainly Small & Weak National Economies
Low Per Capita Income
Little Disposable Income for Air Travel & Tourism, etc.
Political Instability & Conflicts in Several Countries
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8. Key Challenges Facing Regulators in Africa
AFRICAN AVIATION
Key Challenges Facing Regulators in Africa
Implementing & Monitoring the
1999 Yamoussoukro Decision on
Air Transport Liberalisation in Africa
Providing Effective Aviation Safety Oversight
Ensuring Equitable Economic Regulations
Harmonising Civil Aviation Regulations
Enhancing Aviation Security
Funding Modern Aviation Facilities &
Expanding Aviation Training & Education
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9. Air Transport Liberalisation in Africa
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Air Transport Liberalisation in Africa
Is Any Progress Being Made?
Yes, Slowly but Steadily.
Thanks to the Efforts of Organisations Like:
The UN Economic Commission for Africa ( ECA)
The AU, The African Civil Aviation Commission (AFCAC)
ICAO, COMESA, SADC, ECOWAS & AFRAA, etc
Notably, Some African Governments Have Been
More Supportive Than Others
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10. AFRICAN AVIATION Obstacles & Dilemmas
Some African Governments Are Reluctant
to Cede Control to Truly Autonomous
National Civil Aviation Authorities
Who Will Benefit Most From Liberalisation in Africa - African Airlines or Foreign Carriers?
Can A Developing Country Promote ‘Open Skies’ & Still Protect its Own Airline Industry?
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11. African Position on Liberalisation
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African Position on Liberalisation
It Must Be Consistent With the Yamoussoukro
Decision of 1999
Foreign Investment – National Legislation
Should Determine the Level of Such
Investment
Market Access Should Continue to Be Based
on Bilateral and Multilateral Agreements
Must Be F air Competition & Safeguards
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12. African Position on Airline Franchising
AFRICAN AVIATION
African Position on Airline Franchising
African Governments Should Require Prior Authorisation & Verification of Any Franchise Agreement
Franchising Between African Carriers Should Be Authorised Subject To The Airlines Meeting the Designation & Eligibility Criteria of The Yamoussoukro Decision
Third Party Franchising Should Not Be Supported As it Adversely Impacts Competitive Position of African Carriers
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13. High Operating & Capital Costs
AFRICAN AVIATION
High Operating & Capital Costs
Insurance - High Premiums
Aviation Fuel - Up to 50% Higher
Lease Rates - 15%-30% Higher
Air Navigation - Most Expensive
Handling Fees - Very Expensive
Maintenance - Little Co-operation
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Source: The World Bank

14. AFRICAN AVIATION Internal Pressures
Mainly Small Domestic Air Traffic Markets
Low Load F actors
Higher Operating Costs than Other Regions
Government-Regulated Air Fares
Political Interference in Airline Decision-Making
Management Instability & Lack of Continuity
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15. AFRICAN AVIATION External Pressures
Air Transport Liberalisation & Globalisation
Increasing Competition from Larger Foreign Carriers
World Bank/IMF Strictures on Government Subsidies
to National Flag-Carriers
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16. AFRICAN AVIATION External Pressures (2)
African Market is Dominated by European Airlines
- BA, Lufthansa, Air France, KLM, etc
Asian Airlines Are Now Showing Greater Interest in Africa
- Especially South Africa
Threat By European Charter Airlines - Countries at Risk: Egypt,
Namibia, Kenya, South Africa, Mauritius, Tunisia, Morocco, etc
North American Airlines Have Minimal Presence in Africa
- Previous Attempts by USAfrica Airways & World Airways Failed
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17. AFRICAN AVIATION Cape Town Convention
Gives Aircraft Lessors and Lenders the ability to repossess their assets worldwide in the event of default
Provides Aircraft Collateral Assurance
60 Day Repossession / With Support of Governments
Should Expand The Sources of Asset-based Finance
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18. Airline Industry – Key Regulatory Issues
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Airline Industry – Key Regulatory Issues
Airline Ownership & Control – Local or Foreign?
Airline Market Access – Free for All?
Airline Product Distribution
Fair Competition Versus Protectionism
The Provision of Essential Air Transport Services Vital
To National Economic Development
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19. Airline Growth Strategies
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Airline Growth Strategies
Strategic Investment By Foreign Airline Partner –
Kenya Airways / KLM
Airline Franchising –
BA/Comair, South Africa; BA/Regional Air, Kenya
Low-Cost Carriers – Kulula.com, South Africa
Joint Ventures – Royal Air Maroc/Air Senegal International
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20. AFRICAN AVIATION Summary
Africa Has Made Some Headway in Implementing Air
Transport Liberalisation, But Still Has Much To Achieve
Air Transport Liberalisation in Africa Must Directly Benefit The African Aviation Industry
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21. AVIATION IN TRANSITION
SEMINAR
AVIATION IN TRANSITION
CHALLENGES & OPPORTUNITIES OF LIBERALISATION
22nd – 23rd March, Montreal, Canada
PRIOR TO THE 5TH ICAO
WORLDWIDE AIR TRANSPORT CONFERENCE
Presentation by
Nick Fadugba
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