Here’s how to make Africa’s aviation sector fly and lift economic growth

Friday February 8 2019

Kigali International Airport

The Kigali International Airport. Rwanda is among countries that introduced a "visa on arrival" for all African citizens. PHOTO | CYRIL NDEGEYA | NMG 

HASSAN EL-HOURY
By HASSAN EL-HOURY
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Africa’s aviation sector has the potential to fuel economic growth.

The International Air Transport Association (IATA) projects that the continent will become one of the fastest growing aviation regions in the next 20 years, with an annual expansion of nearly five per cent.

Currently, there are 731 airports and 419 airlines on the continent. The aviation sector supports some 6.9 million jobs and $80 billion in economic activity.

However, amid the opportunities, the sector faces a number of challenges including weak infrastructure, high ticket prices, poor connectivity and lack of liberalisation.

Airport infrastructure in most countries is outdated and cannot effectively serve the growing passengers or cargo volumes. Airlines and airports are often managed by government entities or regulatory bodies while foreign investment is discouraged.

In Malawi, for example, it is illegal for a foreign airline or private investor to own more than 49 percent of the national airline. Ethiopian Airlines has had to limit its stake in the Malawian carrier to 49 percent.

Modernising infrastructure and operations on the other hand, requires investment and expertise, ideally from public-private partnerships.

Côte d’Ivoire and Rwanda are making strategic moves in this direction.

In 1996, the management and operations of the terminal at the Abidjan International Airport were privatised and awarded to the French company Aeria. Aeria is co-owned by private investors (65 percent), a technical partner (25 percent) and Côte d’Ivoire (10 percent). The company has invested in infrastructure and delivered quality service, leading the government to extend its concession.

Private capital and partnerships can build greater efficiency and boost revenue as well as the quality of service offered while demanding financial discipline and eliminating corruption.

Liberalisation

Still, governments have an important role to play in delivering economic and social benefits, by championing intercontinental aviation as well as shaping a dynamic African aviation sector.

Liberalisation will open up new routes, increase frequent flights, improve connections and stimulate lower fares. These improvements will increase the number of passengers, who will in turn boost trade, business travel and tourism.

This will eventually boost economic growth through improved tourism revenues and productivity as well as job creation. Eventually, liberalisation will enhance the GDP of African countries and improve the welfare of ordinary Africans.

According to an IATA survey, if just 12 key African countries opened their markets and increased connectivity, an extra 155,000 jobs and $1.3 billion in annual GDP would be created in those countries.

Conversely, the lack of liberalisation affects connectivity and ticket costs. In Africa, no direct flight exists between Abidjan in West Africa, and Dar es Salaam in East Africa. A traveller is forced to fly to a second or third country in order to reach their destination.

Across the globe, on average, low-cost carriers are about one-quarter of all flights. In Africa, they do not even reach 10 percent, which makes ticket prices prohibitive.

So, what lies ahead for Africa’s skies?

First, the Single African Air Transport Market introduced earlier this year aims to open up the airspace and improve intra-African air connectivity. So far, 26 African countries have signed up. The deal is promising and will be more effective once all African countries come on board.

Second, visas need rethinking. Only 14 out of 54 African countries currently offer visas upon arrival to African nationals. Difficulties in obtaining visas for intra-Africa travel affect travel and tourism. Visa openness underpins the continent’s tourism sector and can create many more skilled jobs.

According to the African Development Bank’s Africa Tourism Monitoring Report, a visa liberalisation scheme could increase tourism by five per cent to 25 percent. Increased tourism will give rise to new business opportunities in transport, hotels, shopping malls and restaurants.

After introducing a "visa on arrival" for all African citizens, Rwanda saw a 24 percent increase in tourism arrivals and a 50 percent increase in intra-African trade. When Kigali abolished work permits for East African citizens, trade with Kenya and Uganda increased by at least 50 percent.

Seychelles too, which has adopted the visa-free policy, experienced an average seven percent increase per year in international tourism between 2009 and 2014.

Ultimately, by 2035, Africa will see an extra 192 million passengers a year to make up a total market of 303 million passengers travelling to and from African destinations.

The top 10 fastest-growing markets in Africa are Sierra Leone, Guinea, Central African Republic, Benin, Mali, Rwanda, Togo, Uganda, Zambia and Madagascar. Each of these markets is expected to grow by more than eight percent each year on average, over the next 20 years, doubling in size each decade.

Thus, while challenges exist, so do the opportunities for Africa’s aviation sector. With public-private partnerships for upgrading infrastructure and operations, open skies, and visa liberalisation, aviation in Africa is sure to soar.

The question is: How soon can we make this happen?

Hassan El-Houry is chief executive of the National Aviation Services

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