How non-reciprocity, multiple charges fuel low market penetration

Apparently worried by the perennial low market penetration in global traffic, the International Air Transport Association (IATA) has hinged stunted growth of the air transport sector in Nigeria and other African countries on non-reciprocity of flight operations and multiple charges at airports on the continent.

IATA, which is the clearing house for over 280 world airlines, said besides hobbling the prospects of African airlines, the constraints also affect intra-African connectivity and form barriers to market access.

Indeed, the local sector in Nigeria accounts for sundry taxes and charges numbering 35. The multiple charges cost the airlines between 38 and 65 per cent of revenue. An AirInsight report ranked Nigeria as the eighth most expensive aviation country in Africa – only behind Niger, Liberia, Guinea Bissau, Senegal, Bangui, Sierra Leone, and Republic of Congo.

IATA’s Regional Vice President for Africa and the Middle East, Kamil Alawadhi, at the 2022 General Assembly of the African Airlines Association (AFRAA), in Dakar, Senegal, noted that Africa is one of the most populated places on Earth, yet it accounts for just 1.9 per cent of global passenger and cargo traffic.

Alawadhi said the latest open skies agenda and its Pilot Implementation Programme (PIP) are a welcome initiative. And if it enjoys sufficient buy-in and fair-play between its 17 participating countries, then it should be a powerful demonstration to the continent’s other 38 nations of the commercial, economic and social benefits that are waiting.

However, “If we zoom out and consider inter-continental markets, it is distressing to see certain African carriers failing to operate key routes on which they are the sole designated airline for their countries.

“Despite the reciprocal countries’ carriers expanding their operations, they can only do so up to the limits set out in the bilateral agreements. This is leaving many markets underserved. By choking capacity in this way, commercial opportunities are being squandered and slowing the recovery of lucrative long-haul foreign source-markets for tourism and trade.

“In turn, this is delaying the delivery of socio-economic benefits and attainment of many of the UN Sustainable Development Goals in the region. The solution is not necessarily to start or prop-up unviable airlines. It is to reform the current regulatory regime and replace it with one that is fit for purpose,” he said.

Alawadhi added that another threat to Africa’s traffic recovery and future growth is poor or inadequate infrastructure, resulting in sub-standard passenger service.

He noted that some of Africa’s largest airports have recently completed, or are currently undertaking major expansion programmes, many of which are positive.

“However, from the airlines’ perspective, such capital expenditure projects should be concluded collaboratively between airports and airlines. They require demonstrated cost-benefit analysis and a robust interrogation of asset efficiencies, as these infrastructure plans will impact on future user-charges.

“Aviation and tourism are not to be treated as easy targets for collecting taxes and charges without reinvesting in improved infrastructure, training or service delivery. Some of the most expensive airports in Africa are also ones with the lowest service levels and infrastructure. This disparity between cost and quality is unacceptable.

“Connectivity is precious. The pandemic demonstrated that everybody suffers when aviation stops. It also dispelled the myth that flying only benefits the rich. A financially viable air transport sector, in a fit for purpose and enabling regulatory environment supports jobs, promotes transformation and will be a driving force for Africa’s economic recovery and future growth,” he said.