Statement by Antonio Pedro, Acting Executive Secretary at High-Level side event on the margins of the 36th ordinary summit of the African Union

Sustainable Development of Air Transport in Africa

A High-Level Side Event on the Margins of the 36th Ordinary Summit of the African Union

Small Conference Room 4

Statement

By

Antonio Pedro

Acting Executive Secretary

United Nations Economic Commission for Africa (ECA)

 

Addis Ababa, 19 February 2023

I am delighted to participate in this event to speak about the sustainability of air transport in Africa.

This meeting could not have come at a more opportune time. A time when multiple crises have exposed the vulnerability of air transport on our continent – including the COVID-19 pandemic that threatened the survival of the aviation industry, and the war in Ukraine that has led to a skyrocketing of the price of jet fuel.

ECA is proud to be associated with the Single African Air Transport Market (SAATM). This is because it is about full implementation of the Yamoussoukro Decision (YD) for the liberalization of air transport markets in Africa – an initiative that has its roots at ECA.

The Yamoussoukro Decision provides the framework for sustainable development of air transport in Africa.

Excellencies, Ladies and Gentlemen,

That said, I wish to highlight two issues that are critical for the sustainability of air transport in Africa. These are key priorities to support SAATAM and measures required for the recovery of African airlines industry to achieve sustainable development of air transport in Africa.

To begin with, ECA has always felt that monitoring and evaluation of the performance of member States and their eligible airlines are critical to the implementation of SAATM. It is only through monitoring and evaluation that we can understand the challenges faced by member States and their eligible airlines in implementing SAATM. That is why we led the process, working closely with the African Union Commission (AUC) and the African Civil Aviation Commission (AFCAC), to develop Key Performance Indicators (KPIs) for YD and implicitly SAATM.

At ECA, we believe that ideas should be translated to actions. And this brings me to the collaboration we had with AUC and AFCAC to use the KPIs to review the performance of Carbo Verde, Cameroon and Rwanda in the implementation of YD. These reviews led to the identification of gaps in YD implementation in these countries and the development of action plans to close these gaps. Going forward, we plan to support additional countries to undertake such gap assessments and develop their YD action plans.

Excellencies, Ladies and Gentlemen,

Implementing the SAATAM has not been without challenges. One major challenge is the existence of Bilateral Air Service Agreements (BASAs) that are non-compliant with the Yamoussoukro Decision. We, therefore, need to make sure all BASAs are compliant with YD. Ideally, BASA’s should be abolished, and we should have a Multilateral Air Service Agreement (MASA). Another challenge is to convince airlines of the profitability of designated routes. We may need to help airlines to decide whether to operate on a given route/market. A possible solution is to provide the airlines with market intelligence on route demand. And ECA is willing to collaborate with partners to undertake market demand studies, which brings me to my second point on how to achieve sustainable development in air transport in Africa.

Excellencies, Ladies and Gentlemen,

As I mentioned earlier, Covid-19 has had a devastating impact on Africa’s aviation industry. The African Airlines Association (AFRAA) estimated the full year revenue loss for African airlines in 2021 at US$8.5 billion, approximately 47.2 per cent of the full year 2019 airlines revenue.

But the good news is that air traffic has rebounded on the continent. In March 2022, African airlines’ capacity reached 67.3 per cent compared to the same month in 2019. Similarly, traffic was estimated at 56 per cent.

Excellencies, Ladies and Gentlemen,

Allow me to highlight three different options, which are vital for achieving sustainability in air transport in Africa.

First, we must harness AfCFTA to sustain Africa’s aviation industry.We strongly believe that AfCFTA will provide the impetus for growth in the industry because a study by ECA indicates that AfCFTA would lead to an increase in intra-African freight demand of around 28 per cent. Further, it shows that Africa would require 250 aircraft if the Free Trade Area is fully implemented.

This is a huge opportunity to harness intra-African trade for the sustainability of Africa’s aviation industry

Second,  access to financeis critical for the recovery and sustainability of the industry. We all remember howgovernments worldwide implemented measures to pull their airlines out of the financial crunch in the aviation industry induced by the COVID-19 pandemic. As of April 2022, airlines in 13 African countries had received state support including direct financial aid.

During the period under consideration, African airlines had received a total of US$ 4.4 billion of state support, considerably less than the amount received by airlines in other regions such as North America (US$ 93.4 billion), Europe (US$ 52.4 billion), Asia-Pacific (US$ 44.9 billion), and Middle East (US$ 8.4 billion) (ishka, 2022)[1].

The disproportionately low financial support to African airlines suggests that their recovery process was more difficult and that they were at a disadvantaged position in terms of competition with airlines from other regions.

Africa airlines therefore need to consider other financing options for their survival and growth. That is why the interest of the African Development Bank, Afreximbank and African Finance Corporation to develop platforms to foster leasing opportunities for African carriers is welcome.

Finally, for the air transport industry to recover and remain sustainable, partnership will be key. This partnership can be in any of the following forms:

• Interlining: which allows a passenger to travel on an itinerary involving multiple airlines using one travel document (i.e. ticket).

• Code sharing: which allows an airline to market under its code the seats flown on aircraft operated by a partner airline.

• Alliance membership: which may include code sharing, shared use of airport facilities and staff, etc.

• Franchise, subsidiary, or joint ventures which involves shared ownership.

ECA is ready to collaborate with partners in the aviation industry to explore all options to enhance the sustainability of the continent’s aviation industry.

I thank you for your attention.