• Friday, June 14, 2024
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BusinessDay

Explainer: Implications of U.S.-Nigeria ‘open skies’ agreement

Open skies agreement
The U.S.-Nigeria ‘Open Skies’ Air Transport Agreement, which has been provisionally applied since 2000, entered into force on May 13, 2024.
This bilateral agreement establishes a modern civil aviation relationship with Nigeria consistent with U.S. Open Skies international aviation policy and with commitments to high standards of aviation safety and security.
The agreement is said to include provisions that allow for unrestricted capacity and frequency of services, open route rights, a liberal charter regime, and open code-sharing opportunities.
The Department of State, in consultation with the Departments of Transportation and Commerce, negotiates agreements with foreign governments that provide the framework for commercial air service.
Since 1992, United States policy has been to seek, to the fullest extent possible, “Open Skies” air transport agreements, which eliminate government interference in commercial airline decisions about routes, capacity, and pricing, so that airlines can provide more affordable, convenient, and efficient air service to consumers, promoting increased travel and trade, and spurring high-quality job creation and economic growth.
Open Skies agreements expand cooperative marketing opportunities between airlines, liberalize charter regulations, improve flexibility for airline operations, and commit both governments to high standards of safety and security.
They are pro-consumer, pro-competition, and pro-growth, and facilitate countless new cultural links worldwide. According to U.S. Airlines for Open Skies, an advocacy group, the U.S. Open Skies policy has brought millions of new international visitors to the United States, supporting more than 15 million U.S. tourism and hospitality jobs.
However, while the agreement with Nigeria is expected to liberalise the international civil aviation sector in Africa and further expand strong economic and commercial partnerships, promote people-to-people ties, and create new opportunities for airlines, travel companies, and customers; stakeholders think the agreement would in the long run would benefit the U.S not Nigeria.
Nigeria has always had an open skies agreement with the US, while it has a Bilateral Air Service Agreement (BASA) with other countries, however, the open skies allowed US carriers to have unrestricted entrance into Nigerian cities and airports.
While in BASA, the country with higher capacity or extra seats will pay a royalty to the country with low capacity but there are no such provisions in open skies.
Today no Nigerian airline operates flights to the United States of America, already making the country lose out from the benefits the agreement presents.
Olumide Ohunayo industry analyst and Director of research, Zenith Travels told BusinessDay that the local airlines are not ready for open skies because they lack capacity.
Ohunayo said when Nigeria signed the agreement in the year 2000, it was not ready.
“We were hasty in taking that decision and some of us then spoke up and told the government that it wasn’t right to sign that agreement.
“The neighbouring countries of the U.S. such as Mexico, and Brazil, amongst others delayed in signing that agreement. Everyone always has an interest. Unfortunately for us, the politicians at that time under the leadership of Kema Chikwe, the minister of Air transport, did not protect or consult with the industry before rushing into that agreement.
“In that agreement, we were given 10 years head start advantage that Nigerian airlines can go to the USA for 10 years before the American airlines start coming. That was blown away because we didn’t even have an airline that was ready to go to the U.S. By the time Virgin Nigeria was ready, their ownership structure and the problem they were having with the U.S. and British Bilateral Air Service Agreement stalled Virgin Nigeria from operating and till today we are still stuck with no Nigerian airlines going to the U.S. Arik tried at a time but stopped,” he explained.
He however hinted that while American Airlines have started coming into Nigeria and may increase flights and frequencies into Nigeria because of agreement, this would mean more choices for passengers but more pressure on foreign reserves as it means there would be more foreign currencies to repatriate.
John Ojikutu, industry expert and the CEO of Centurion Aviation Security and Safety Consult, told BusinessDay that “there is something in the agreement that gives the US more advantage than Nigeria otherwise what is it in the Agreements that make it possible for the US Airlines to have been operating into Nigeria for nearly 20 years and we are just being considered or waking up from our slumber?
“It started with Delta Airlines and followed later by United Airlines. These two American Airlines operate to Lagos and Abuja daily. Why have we failed to reciprocate or what is delaying us from designating flag carriers if is impossible to set up a National Carrier?
“There must be something inherent in our political office holders in the administration of our government that is to their advantage or benefits in these arrangements,” Ojikutu said.
He said the US Federal Aviation Administration (FAA) 2221/TSA have since 2010 bestowed us with Category One classification a safety and security classification much higher than the International Civil Aviation Organisation (ICAO) classification but it has been only for the US adventure and not Nigeria.
 “Those in the administration of our aviation sector should come out clean and tell us what is happening as the advantage to Nigeria is just in earnings from Passenger Service Charge, landings and parking charges from about 7,000 flights annually.
“While I have repeatedly stressed that we should discard the whole issue of establishing a national carrier, we must seriously consider the establishment of two or three flag carriers, one for Regional and Continental and the other Intercontinental that will effectively compete particularly with the likes of the British Airways, Virgin Atlantic, Delta/United, Emirates/Ethiopian and possibly, SA/Kenyan/Rwandan, etc.
He said Nigeria Airlines’ absence or late coming on the BASA routes has strengthened foreign airlines and will take a single national carrier to dislodge them.
The United States has reciprocal Open Skies air transport agreements in place with over 130 partners.
Over 70 per cent of international departures from the United States now fly to Open Skies partners. According to the U.S. Travel Association, 75 million international visitors spend nearly $250 billion in the United States annually, benefiting American jobs across the aviation, travel, and tourism sectors, including hotels, restaurants, attractions, retailers, and domestic air carriers.
The United States continues to seek new Open Skies partners, which it believes will continue to drive down costs for travellers and promote people-to-people interactions, information sharing, and international business opportunities.
According to the U.S. Travel Association, average fares are 32 per cent lower on routes subject to the Open Skies policy, making travel more affordable for Americans exploring new destinations or connecting with loved ones abroad.
Around-the-world cargo operations, made possible by Open Skies, deliver essential medical supplies to families and critical parts to U.S. manufacturing businesses.