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KQ loss renews calls for more open skies in Africa to save ailing aviation sector

By Frankline Sunday | July 31st 2015

Nairobi: Yesterday's announcement of massive losses by the national carrier Kenya Airways has rekindled calls for African governments to scrap protectionist policies to give a lifeline to the continent's major airlines.

KQ Chief Executive Officer Mbuvi Ngunze yesterday reported an unprecedented pre-tax loss of Sh29 billion. Mr Ngunze sought to downplay the loss, stating that the airline was 'experiencing turbulence' but future earnings look promising.

However, the performance of Kenya's national carrier has renewed debate on the need to review the policies governing Africa's airspace where just about 20 per cent of the 54 countries have a functional national carrier, of which only one - Ethiopian Airlines - is profitable.

In 1999, African nations met in Yamoussoukro, Côte d'Ivoire, to discuss the future of the continent's ailing airline industry and potential for growth amid stiff competition from traditional European and North American airlines and new emerging gulf carriers.

It was at this summit that the Yamoussoukro Decision seeking to deregulate air services as well as promote the establishment of regional air markets was signed by the 44 signatory countries, including Kenya.

The Yamoussoukro Decision is supposed to ensure African carriers can fly to, from or between any combination of cities in any African country that is a signatory of the pact.

More than 15 years later, however, African countries are yet to fully commit to the declaration and the results for this have been telling.

Least traffic

African airlines record the least traffic - both cargo and passenger - compared to their peers from other regions in the world and their tickets are more expensive.

The International Air Transport Association (IATA) recently said if Kenya adopts the Decision, at least 15,900 jobs would be created in the country, with the GDP getting a USD76.9 (Sh7.6 billion) boost.

"The additional services generated by intra-African liberalisation between just 12 key markets will provide an extra 155,000 jobs and $1.3 billion in annual GDP," states a report by IATA in part.

It adds: "A potential five million passengers a year are being denied the chance to travel between these markets because of unnecessary restrictions on establishing air routes."

According to Charles Schlumberger, lead Air Transport Specialist at the World Bank, and author of Open Skies for Africa, failure by the African countries to ratify the pact or implement it was partly to blame for poor performance by airlines on the continent. "A historic opportunity is being missed. Ten countries have not signed on to or completed proper ratification of this decision, and many others have not implemented it," he says.

He continues: "Meantime, most countries in Africa that have abandoned their ailing carriers and opened up to foreign operators now have air services, both passenger and freight, that are more efficient, safer, and with more competitive prices."

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