The African Union’s January 30 decision to have a Single African Air Transport Market (SAATM) market may not have much impact on reducing the higher cost of travel within the continent, aviation experts say.
Passengers travelling from Nigeria to other African countries pay twice higher fares that what they would have paid going to countries within Europe and United Arab Emirates (UAE), BusinessDay’s findings show.
Experts in the aviation sector blame the higher fares travelling to other African destinations on the lack of competition, connectivity and enabling environment to make airfares affordable for an average African.
SAATM is intended to drive down airfares by allowing the airlines of signatory countries to freely access each other’s’ airports.
The African Union said in a statement after the signing of SAATM that it was “vital to the achievement of the long-term vision of an integrated, prosperous and peaceful Africa under the AU Agenda 2063; that it will bring about the enhanced connectivity across the continent leading to sustainable development of the aviation and tourism industry with immense contribution to economic growth, job creation, prosperity and integration of Africa.”
While some stakeholders in the aviation sector feel this development will increase competition and reduce airfares, others think it has the potential to disrupt the businesses of local carriers currently operating in Nigeria.
Tayo Ojuri, an industry expert/CEO, Aglo Limited, an aviation support service, told BusinessDay that prior to SAATM, the big challenge was the restrictive bilateral agreements between intra-African markets, which restricted the growth and development of Air services in Africa.
“With this single Africa Air market, the aviation can become the engine of growth on the continent.”
However, he warned that there would be issues if the legal technicalities for the operation of SAATM were not well spelt out. He said many African countries still believe in protecting their national interests, which had restricted the growth of the aviation sector but this restriction cannot be compared to the benefits of open skies, he argues.
Adefunke Adeyemi, regional director, Member and External Affairs Africa and Middle East for International Air Transport Association (IATA), also told BusinessDay that the implementation of SAATM would benefit Nigeria and Africa.
She noted that from a 12 country study carried out by IATA, there will be economic benefits of $1.3 billion of incremental GDP and 155,000 additional jobs through the implementation of an open skies agreement in Africa.
He listed some of the benefits for consumers to include; “a 75 percent increase in direct services, fare savings of between 25 to 35 percent or $500m, Time savings, Greater convenience and additional five million passengers.”
“Meanwhile, Nigeria will experience 51 per cent increase in passengers’ movement,” she said.
Adeyemi encouraged other countries to join the drive for a visa free policy to enhance the implementation of SAATM. “Rwanda, Mauritius, Ghana and Seychelles who are in the top 10 most visa-open countries, are leading the way in making the concept of “One Africa” possible.”
However, Nogie Meggison, president of the Airline Operators of Nigeria (AON), questioned the open skies agreement.
“Europe and America are not implementing open skies agreement. Why is Nigeria rushing to implement open skies? We must put Nigeria first. If we open the skies, what advantages does Nigeria stand to gain? The domestic airlines are not comfortable with the policies. Do we have visas to travel around Africa before we open the skies? Are the taxes in Nigeria and that of other countries uniform?” Meggison queried.
Meggison disclosed that when Nigerian airlines land in Dakar, they pay $4,000 for landing fees, while other African carriers operating in Nigeria pay US$200 for landing fees.
He recalled that when AirPeace wanted to fly to Abidjan, the airline was charged $5,000 per landing.
“Is there a level playing ground for an open sky policy? African airlines can easily access foreign exchange while Nigerian airlines struggle. Rwanda Air is government owned. I borrow money at 28 percent interest rate, while other African airlines borrow money at two percent interest rate.”
Similarly, Allen Onyema, Chairman of AirPeace said an open skies agreement currently does not favour Nigeria because other countries use higher charges to discourage Nigerian airlines from operating to their cities, but when they come to Nigeria they pay relatively less charges than what they level against Nigerian carriers.
Onyema remarked that what Nigerian airlines are demanding for is observation of principle of reciprocity by the federal government.
He also noted that Nigeria is a large market for these airlines; that while airlines from other African countries operate multiple flights daily to Nigeria; the country’s carriers can only operate once a day to these countries because they do not have the population and high number of air travellers.
“When we say that this Single African Air Transport Market does not favour us, it is not because we cannot compete. It means that it does not favour us at this stage, except a level playing field is created. This is not only happening in Nigeria, when Emirates was eroding the US market, the airlines in America cried out and their government did something about it and put policies that tried to stunt the spread of the Gulf airlines into America,” he added.
The quest for SAATM by the African Union is aimed at making it cheaper and easier for Africans to travel within the continent. Ticket prices are the most expensive within the continent compared to Europe and other developed country destinations.
An average price for return ticket from Lagos to Kenya on Ethiopian Airline, Kenya Airways and RwandAir ranges from N350,000 to N400,000 and N320,000 to N350,000 from Lagos to Egypt using Kenya Airways, Etihad, Turkish Airline and Ethiopian Airline.
Also, average price of a return ticket from Lagos to South Africa using South African Airways, Kenyan Airways and Rwand Air costs between N450,000 to N500,000 and costs between N300,000 to N350,000 from Lagos to Morocco on Royal Air Maroc and Egypt Air.
On the other hand, an Easy Airline return ticket from Milan to France cost about 50 pounds, which is equivalent to N25,400, using black market exchange rate of N508 to a pound.
Also, an Emirates airline return ticket from Dubai to Bahrain costs 925dihrams, which is equivalent to N90,660.
Average price of a return ticket on from Germany to Poland costs between N85,000 to N110,000. While an average price of a return ticket on from New York to Miami using United Airlines, JetBlue and Spirit Airline cost between N40,000 to N55,000.
But Ayodeji Ebo, managing director, Afri Invest told BusinessDay that part of what is responsible for the high airfares is the cost of operations, as this varies from one country to another.
“Annual charges for licences various countries may vary. The impact on the average Nigeria is that it increases your cost of living and that decreases your purchasing power and your capacity to travel for recreational, business or education purposes.”
“If there are major business opportunities in other Africa countries, the cost of flight alone will discourage such investment and make it not viable by the time you factor in the costs,” Ebo said.
IFEOMA OKEKE
