Why flying within East Africa is cumbersome

Tuesday February 6 2018

Airlines at an airport.

Planes at Kigali International airport. Opening up of African skies would boost the continent’s air travel sector. PHOTO | CYRIL DEGEYA | NMG 

By ALLAN OLINGO
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If you are a frequent flyer in East Africa, connecting from one flight to another, which is time-consuming and tiresome, plus the eventual cost of travel are likely to be your top concerns, making this travel option unattractive.

For example, a traveller from Uganda or Burundi cannot fly directly to Dar es Salaam, despite the two countries sharing a border with Tanzania. To fly to Dar es Salaam, one is forced to make a connection through Nairobi’s Jomo Kenyatta International Airport (JKIA) or Rwanda’s capital Kigali.

A longer route via Addis Ababa, which has the lowest airfare of $390, will add six hours to the journey to Dar es Salaam.

Similarly, flying from Kigali to Arusha can take longer than anticipated, because direct flights are not always available, forcing the travellers on this route to either go through Nairobi or Dar es Salaam to catch a connecting flight.

This is the sad reality of the aviation market in the region that has over the years been dogged by stringent bilateral air transport agreements which have constricted it, adding to the loss of time and costs in travel.

So sad has the situation been that in many cases, travellers opt for the road or rail to reach cities, adding unnecessary time and inconvenience to their journey.

“Air transport services are hard on traders in Rwanda,” said a Rwandan government source. “It is difficult to keep business appointments within East Africa, because of connectivity issues. This affects investment.”

Single African Air Transport Market

Last weekend, 23 African countries, including Kenya, Rwanda and Ethiopia, adopted the long-awaited Single African Air Transport Market (SAATM), guaranteeing a 25 per cent decrease in airfares, with the benefits set to trickle in mid this year.

Tanzania, Uganda and Burundi did not sign the agreement, meaning that more than 1.7 million travellers who fly from the region to these countries will wait longer to enjoy these benefits.

Only two of 10 bilateral air service agreements (Basas) between countries in the region — Kenya-Uganda and Kenya-Burundi — are fully liberalised, leaving the airfares at an all-time high, and constricting intra-regional travel.

According to a report by the East African Business Council (EABC) and the global management consulting firm InterVISTAS, the vast majority of Basas signed between the EAC countries and other African countries are restrictive, with partial or full restrictions on aspects of the Basa. Thanks to these restrictions coupled with higher taxes, only one in 10 passengers flies within the region.

“From our research, only nine per cent of the travellers go to destinations within the region, while 16 per cent travel to other African destinations. More than 46 per cent are always flying to/from international destinations outside of Africa while 29 per cent fly domestically,” the report notes.

Liberalised markets

That the Kenya-Uganda and Kenya-Burundi routes boast a fully liberalised market means that Kenya’s national carrier, Kenya Airways, enjoys no restrictions on capacity/frequency, pricing or fifth freedoms (the right to carry traffic between two foreign countries with services starting or ending in the airline’s own country).

“These restrictive Basas have implications for the level of service, fare and overall traffic between the countries. When you compare the average annual growth rate of the two liberalised country pairs (Kenya-Burundi and Kenya-Uganda), it is double that of the other country pairs that are yet to be liberalised,” the report says.

Tanzania and Rwanda are the region’s most restrictive markets, while Ethiopia tops in liberalising its market.

Uganda has only liberalised its aviation market for Kenya, while Rwanda and Tanzania have done the same for Ethiopia.

For Dar es Salaam, the Ethiopian liberalisation was done specifically to boost its tourist numbers, with Ethiopian Airlines being the only continental carrier to have international flights from its Arusha hub.

The open skies treaty signed in Addis last weekend would have offered a glimmer of hope for the region, but it failed to do so, as two of the region’s biggest aviation destinations — Tanzania and Uganda — failed to assent to the SAATM.

“They raised issues to do with competition within their markets and how this would curtail their dreams of a national airline.

“The two countries have in recent times been propping up their national airlines and changing policies to allow for the entry of bigger players to support their national airlines. They are still discussing these issues, which is why they haven’t signed up,” The EastAfrican was told.

Open skies treaty

The open skies treaty will see the continent’s big four carriers —Ethiopian Airlines, Kenya Airways, RwandAir and South African Airlines — enjoy unrestricted access and multiple destinations to any city of countries under the arrangement, as part of African Union’s move to improve connectivity and integrate African countries.

This initiative, it is expected, will fully liberalise air transport markets in Africa by offering lower fares, better connectivity and increase demand.

The head of the AU’s transport division David Kajange, who is among the single market architects, said that it was important for the continent’s aviation market to open up so as to reduce the cost of transport and spur investment.

“We want the fares to come down so that it becomes more affordable and easier to travel. We hope to register more than 25 per cent fall in fares as airlines increase frequencies and expand into new territories.

“This market liberalisation will also create a conducive environment for more airlines to come in,” said Mr Kajange.

Routes

According to the EABC-InterVISTAS report, there are only 22 routes between the countries in East Africa. Kenya and Tanzania have services at multiple cities; Burundi, Rwanda and Uganda have services to their capital cities.

Burundi has services to only three points in the region, while Rwanda has seven. Uganda has four, Kenya nine and Tanzania nine.

Uganda, South Sudan and Burundi do not have active national carriers. Until they have been established, the cost of flying from these countries will remain prohibitive

“Just over half the routes (12 out of 22) are operated at less than daily frequency and just over a third (eight out of 22) are operated twice daily or higher. This low frequency makes short-duration trips (departing and returning the same day), which are particularly important for business, difficult.

The situation varies by country — while nearly half the routes from Kenya operate twice daily or higher, no routes from Burundi operate at that frequency, and few do in the other EAC countries,” the report notes.

For Uganda and Tanzania, the fear of opening up their markets to foreign carriers has been the biggest impediment to liberalisation.

Concerns

Tanzania is propping up Air Tanzania, which it revived in 2016 and hopes will take to the regional skies, while Uganda is still mulling reviving Air Uganda and feels this is not the best time to enter into such an agreement.

“Most governments have expressed concern that liberalisation could lead to larger, better-capitalised foreign carriers squeezing out smaller, and less-well-funded local carriers,” the report says.

There have also been concerns that liberalising fifth freedom rights would allow larger, foreign carriers to dominate major routes at the detriment of smaller local carriers and the development of regional air services.
“There is a likelihood that they will lose some market share to international carriers, should the proposed open skies policies be implemented.

“The increased competition has the potential of weakening the viability and profitability of home carriers in some routes but, overall, it will restructure the market by expanding into new markets,” said Ian Kincaid, InterVISTAS senior vice-president for aviation forecasting.

Unfair practices

Some governments in the region have been accused of being more liberal with their Basas with foreign airlines compared with African carriers, thereby creating discriminatory and unfair practices.

For example, 17 foreign airlines currently benefit from fifth freedom rights between African cities, compared with 11 African carriers.

“For us to register any success on the single market front, we need to see more countries join this initiative. We should also see more investments into the aviation infrastructure, including airports and auxiliary services. We should have harmonisation of standards too,” said Nico Bezuidenhout, chief executive of Fastjet, an airline operating in Tanzania to destinations in southern Africa.

EABC chief executive officer Lilian Awinja attributed the slow intra-regional trade growth to restrictive markets and sluggish implementation of open skies.

“As a region, it is important that we adopt the open sky policy as soon as possible. It will be a boost for the region, especially when it comes to the ease of doing business,” said Ms Awinja.

High taxation

Outside of liberalisation, the region’s aviation industry continues to suffer from high costs and high taxation on tickets, which can amount to upwards of 40 per cent of the ticket price, making it least attractive to travellers, who would prefer longer hours on the road instead.

The region has some of the highest taxes in the world, which are not uniform.

For example, departure taxes in Rwanda are $37, $50 in Kenya and $20 in Burundi per passenger. In Tanzania, the domestic and international flights share the same tax rate, which is likely to hamper the growth of regional EAC traffic.

“The taxes/charges mentioned in particular included the 16 per cent VAT on air tickets and on spare parts in Kenya, taxes on jet fuel, high airport departure tax and generally high airport landing fees,” the report says.

The regional countries have over the past 18 years been trying to create a seamless common airspace, with no success due to restrictive bilateral air agreements and protectionism by member countries.

In the proposal for one aviation bloc, the East African Community was to negotiate air service agreements with foreign countries as a bloc, which would have seen the classification of flights between the countries as domestic airlines, thus lowering the costs of airfare.

To date, domestic air transport within the region remains un-harmonised, since the regulations on liberalisation of air transport in the EAC has not been adopted.

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