Ethiopian Airlines CEO Tewolde GebreMariam (pictured) said African governments’ collective failure to implement a single air transport market is damaging aviation growth on the continent.
GebreMariam was speaking on a panel discussing emerging markets at the CAPA Aviation Summit in Antwerp. He said indigenous African airlines’ market share of international traffic in and out of the continent was currently 20 per cent – a drastic decline from around 60 per cent during the 1980s.
“We don’t have a single market regulatory system, it’s a big problem,” said Gebremariam. He said an agreement had been ratified but not implemented referring to the so-called Yamoussoukro Decision, which was signed by ministers back in 2000.
The Ethiopian Airlines boss said he hopes that the African Union Summit in January will announce the full implementation of this agreement, to be established by the end of 2015. The biggest beneficiary of this would be Fastjet, he said, and potentially other low cost carriers (LCCs), although there are “other problems for the LCC model in Africa”.
He added that African governments are not investing enough in infrastructure, while treating aviation as a luxury to be heavily taxed. Meanwhile fuel prices remain some 21 per cent higher than world average, he said. “In 28 African countries fuel prices have not changed since oil was $110 a barrel, even though the price is now close to $80,” he said.
Nevertheless he said “we see hope and change,” and cited Ethiopian Airlines’ 20 per cent compound annual growth over the last decade as a reflection of this.
Asked which countries were leading the way in aviation, he cited several including South Africa, Egypt, Kenya, Nigeria and his own Ethiopia. And the worst? “The Democratic Republic of Congo has an estimated $70 trillion of mineral wealth, but it’s not connected by air – and the most accident and safety issues are in this area.”
Meanwhile IATA’s senior vice-president for Latin America, Peter Cerda, talked of some similar challenges on that continent.
He said congestion is a problem for Latin American hubs, with new terminals at full capacity as soon as they open, citing terminals at Quito and Bogota. He added that even Mexico City’s new airport could be close to capacity by the time it opens. This lack of capacity is an impediment to both local and international carriers, he said.
Meanwhile, as in Africa, Latin American governments “see aviation as a cash cow,” said Cerda, “They don’t see it as an enabler of economic growth. Taxation is a heavy burden for the sector.” However, unlike Africa, in Latin America airlines are not all flag carriers and operate transnationally in the region, he said, citing carriers such as LAN and Copa.
Cerda was asked, what is the second market to watch in the region, after Brazil? “Panama,” he replied, saying the country benefited from a pro-aviation government that recognised the importance of air to its booming finance and tourism sectors – and strong airline – Copa – that is able to liaise effectively with the various authorities.
Click here to read further coverage of the 2014 CAPA Summit
Picture source: Addis Fortune