Craig Azinge April 11 2018 Liberalising aviation in Africa: overview of single air transport market George Etomi & Partners | Aviation - International Craig Azinge Aviation IntroductionKey objectives and benefits of SAATMCommentIntroductionAt the commemoration of the 50th anniversary of the African Union – held in Addis Ababa, Ethiopia, on September 14 2013 – the union expressed its desire to foster Africa's socio-economic development and integration agenda. Thus, it introduced the African Union Agenda 2063, which highlighted flagship projects that could substantially change the face of the continent, including a single African air transport market (SAATM) and an African passport.In 2015 the African Union Heads of State and Government Assembly adopted the Declaration for the Establishment of a Single African Air Transport Market and issued a commitment to implement it by 2017. At that time, 11 African member states championed the declaration and committed to creating the market. The SAATM was formally launched on January 28 2018, during the African Union Summit in Addis Ababa.Eligible airlines from countries that have committed to the declaration(1) can conduct their business in the corresponding markets and fully operate the traffic rights provided for in the Yamoussoukro Decision – a multilateral agreement between Africa's 54 countries designed to liberalise the continent's aviation market (for further details please see "Liberalising aviation in Africa: the Yamoussoukro Decision"). Other African states have also been encouraged to sign the declaration and help in the realisation of a SAATM that will help to spur the development of the African aviation sector.SAATM's key objectives and benefits Key objectivesThe SAATM will be implemented through the immediate implementation of the Yamoussoukro Decision. The idea to liberalise air transport in Africa emerged in 1988 with the adoption of the Yamoussoukro Declaration, which was followed by the adoption of the Yamoussoukro Decision in 1999. The African Union Heads of State and Government Assembly subsequently endorsed the Yamoussoukro Decision in Lome, Togo, in July 2000. It came into force in August 2002, on the expiry of the two-year transitional period. The SAATM's principal objective stems from the Yamoussoukro Decision, which provided for the full liberalisation of intra-African air transport services in terms of market access. The SAATM seeks to remove all restrictions on ownership and postulates full liberalisation of ease and frequency of movement, tariffs and capacity. It also provides:eligibility criteria for African community carriers;safety and security standards;mechanisms for fair competition and dispute settlement; andconsumer protection.Further, the SAATM will launch the African passport, which will eliminate time wasted filling out bureaucratic visa forms and the hassle of inconvenient travel routes. In a nutshell, job creation, economic growth and integration are the key drivers of the SAATM, which seeks to improve relationships among African member states and beyond.BenefitsIn order to understand the SAATM's benefits, consideration should be given to how smaller-scale air service agreements have worked within the African sub-regions. For example, bilateral service agreements between Nigeria, Ghana and Senegal in West Africa have led to increased passenger traffic within these countries. A liberalised air transport market can:open and connect markets;facilitate trade; andenable African firms and businesses to link into regional supply chains.It will also lead to increased productivity by encouraging investment and innovation.The SAATM is based on a policy of full liberalisation. This is expected to increase air service levels and increase route competition, which in turn will reduce air fares. Lower fares will:stimulate additional traffic volume;create job opportunities;increase tourism;facilitate trade and investment in other sectors of the economy; andenhance productivity and economic growth.One example of a liberalised air market is that which existed between South Africa and Kenya in the early 2000s. The agreement between the two countries led to a 69% increase in passenger traffic. Another example is the operation of a low-cost air carrier between South Africa and Zambia, which resulted in a 38% reduction in discount fares and a 38% increase in passenger traffic, as well as higher travel frequencies. A slightly larger-scale agreement was the Morocco-EU open skies agreement 2006, which led to a 160% increase in traffic. The number of routes operating between the two destinations also increased from 83 in 2005 to 309 in 2013.The SAATM will create new job opportunities at airports, navigation services providers, travel booking agencies and airlines, as well as in the hospitality and tourism industries. African airlines must grow in order to compete with major airlines from other continents. The SAATM will lead the way for greater cooperation between African airlines and provide access to cross-border investments and mergers, thereby driving the required growth of the continent's aviation sector.Bottlenecks in implementing SAATMPresently, only 23 countries have committed to implementing the SAATM. Several African countries continue to criticise the initiative. For example, Uganda has expressed fear that the SAATM will lead to the domination of the African skies by a few major airlines, whereas other countries have argued that African countries should form regional airlines before liberalising their airspace. Further, Nigerian private airline operators have stated that the African Union ministers did not include them before implementing the initiative. Nigerian airlines have argued for a level playing field that enables Nigeria to compete with other African carriers that enjoy lower interest rates on Nigerian loans and waivers on import duty for aircraft and spares. In addition, some African states lack the requisite resources and infrastructure to benefit fully from the initiative. As a result, these states may not commit to the SAATM for another few years, which will limit the initiative's economic impact.CommentThe SAATM is a welcome development which could boost economic development in Africa. African member states have taken stock of other open-air service markets, such as the European Union, and realised the potential benefits from such advancements. The SAATM's successful implementation will undoubtedly foster remarkable change for the signatory countries, as well as airlines and the business and investment climate in general. However, to reap the full potential of the initiative, the African Union and its Heads of State and Government Assembly must do all that is necessary to ensure that the resources, infrastructure and capacity required to grow the aviation sector are available.For further information please contact Craig Azinge at George Etomi & Partners by telephone (+234 1 462 1660) or email ([email protected]). The George Etomi & Partners website can be accessed at www.geplaw.com.Endnotes(1) The countries that have adhered to the commitment to date are Benin, Botswana, Cape Verde, the Republic of Congo, Côte d'Ivoire, Egypt, Ethiopia, Gabon, Ghana, Guinea, Kenya, Liberia, Mali, Mozambique, Nigeria, Rwanda, Sierra Leone, South Africa, Swaziland, Togo and Zimbabwe.