Initiative promotes a unified air transport market in Africa

30th August 2019

The full implementation of the Single African Air Transport Market (SAATM) by all countries in Africa could reap “enormous economic benefits”, says law firm Bryan Cave Leighton Paisner.

SAATM was launched last year with the aim of developing air services and harmonising associated regulations in Africa and stimulating the flow of private capital in the industry.

This initiative is one of the flagship projects of the African Union’s Agenda 2063 to boost Africa’s economic growth and development, to advance the rapid transformation of the continent. Other flagship projects include an outer space strategy for Africa, an African virtual and e-university, the African passport and free movement of people and establishment of the African continental free trade agreement (AfCFTA) among others.

SAATM aims to eliminate the need for separate bilateral air services agreements between individual countries as well as set safety and security standards for African carriers. This is also to harmonise dispute resolution regulations and to establish a board of appeal and an arbitration tribunal to safeguard consumer rights.

Advantages of implementing SAATM include contributing to the general aviation sector’s economic growth providing a boost for those in the service, management and maintenance industries. Increased tourist numbers will also lead to increased spending, which together with increased trade, encourages gross domestic product growth and job creation, the firm notes.

By “liberating air space”, new routes will be created, resulting in greater connectivity in Africa and shorter travel times, greater convenience and fare savings for customers. Currently, poor existing connectivity forces customers to find a more efficient means to reach parts of Africa by travelling through Europe or the Middle East.”

Meanwhile, SAATM together with the AfCFTA will be a “game changer” in stimulating intra-African trade, if fully implemented, the firm adds. “This will inevitably lead to increased diversification of economies which have traditionally relied on abundant natural resources and so create value.”

However, the firm adds that, despite the many advantages of implementing a full open skies regime, only 28 African countries are implementing SAATM currently.

Thus far, key components of SAATM that have not been established yet include an independent dispute oversight function, unified competition rules and consumer rights protections. There is also no harmonised taxation and airport charge regime.

“In the absence of a clear implementation framework, the open skies treaty is facing significant challenges. Alternatives to full liberalisation are being explored as existing carriers seek other routes to gain market access.”

Additionally, there is also a fear that existing large national carriers will strengthen their dominant positions and quickly dwarf any advancements made by smaller carriers in a liberalised market. Non-physical barriers also exist in the form of sometimes onerous visa requirements for fellow African citizens, foreign exchange shortages and controls and often punitive restrictions around its repatriation.

In an effort to liberalise aviation in Africa, airlines such as Ethiopian Airlines (ET) have already started building on a mix of airline acquisitions, partnerships and strategic investments to build capacity in the African air transport market.

The firm highlights that this was achieved by partnering with other governments to launch new national carriers, such as in Chad, or acquiring non-controlling stakes in other State-owned carriers as it has done in Zambia and Mozambique. ET’s considerable expertise is being deployed in other markets.

Meanwhile, another alternative is to focus on “existing regional blocks where there is already a commitment to cooperate”, such as the Northern Corridor Airspace Block.

Kenya, Uganda, Rwanda and South Sudan agreed to facilitate the establishment of the Airspace Management Initiative with the objective of creating seamless airspace operations and developing safe and low cost travel.

Subsequently, similar integration projects could be undertaken in West Africa and other parts of the continent which are already considering other regional infrastructure integration projects, the firm says.

While it would be “advantageous” to achieve open skies across all 54 countries in Africa, small steps across the various regions should be taken first, the firm concludes.