Liberalise airspace to unlock aviation business potential - experts

Lamiot via Wikimedia Commons

Statistics from the International Air Transport Association (IATA) indicate that Airlines on the continent suffered a loss of almost $130 million in 2015. According to Raphael Kuuchi, the IATA vice president for Africa, African airlines could make more losses in 2016 if these constraints are not addressed.

Partnerships and collaboration key

Kuuchi told Business Times that African Airlines operate on a basis of individualism which makes it hard for them to become profitable adding that passenger numbers on the continent are projected to increase by more than 4.7 percent by 2034, presenting a huge business opportunity for the airlines. "All players in the value chain must work together and embrace strong partnerships to become competitive."

Dr. Elijah Chingosho, the African Airlines Association (AFRAA) secretary general, said it is critical for African airlines to form trusted partnership and entities for a safe and viable industry. Chingosho who was speaking during the 5th Africa Aviation stakeholder's convention in Kigali on Sunday added that adopting a win-win strategy will help reduce the cost of transport on the continent.

Held under the theme "Winning together through innovation and collaboration," the conference attracted more than 400 aviation experts and key stakeholders from across the continent to deliberate on ways to make air transport a viable business.

Dr. Chingosho believes streamlining customs procedures while emphasizing the free movement of people and goods will further stimulate the sector that supports more than 6.9 million jobs and contributes $80 billion in GDP in Africa.

The cost of air transport

The cost of air transport in Africa is still high despite a reduction in oil prices. In fact, statistics indicate that travelling within Africa is more expensive when compared to travelling outside the continent.

However, profits are still inadequate in most regions, with Africa registering a net profit of only $0.19 billion and revenues percentage of 1.13% in 2014.

On the other hand, Asian carriers, for instance, registered a net profit of $5.04 billion, while North America recorded $13.2 billion.

This presents African aviation a challenge to become innovative to improve their balance sheets.

Championing Africa's agenda

Meanwhile, given the resources and a conducive business environment, Barry Kashambo, the International Civil Aviation Organization (ICAO) regional director, believes African airlines will play an imperative role in championing Africa's agenda 2063. This is possible when market players and policy-makers embrace smart regulations to help enhance competitiveness and efficiency.

The agenda 2063 approach seeks to push the continent effectively towards building on the already existing progress while strategically exploiting all possible opportunities available in the immediate and medium term to ensure socio-economic transformation within the next 50 years.

However, for this to happen, RwandAir chief executive officer John Mirenge says liberalizing the continent's skies is the only best option Africa needs. "We are only being a hindrance to our development if we don't liberalize our airspace," Mirenge said.

Renewed commitment from government of Rwanda

James Musoni, the Minister for Infrastructure, assured of government's commitment to continue supporting the aviation industry. We will ensure that we continue taking the lead in supporting the industry by encouraging free movement of people and technological innovation to bring down the cost of doing business.

This way, aviation players will be able to make profits and increase their contribution towards the continent's economic development, he added.

According to Musoni, Rwanda is already on the path of becoming an aviation hub in the region. This is evidenced by the investments and resources government has committed toward making Air transport an enabler to the country's economic growth, Pascal Nzaramba, the director in charge of Airports Unit Rwanda Civil Aviation Authority (RCAA) said.