Address by Joe Mojapelo on behalf of the Minister of Transport, Ms Dipuo Peters, at the 45th Annual General Assembly of the Airlines Association of Southern Africa (AASA)
Programme Director;
Hon Minister of Tourism, Mr Derek Hanekom, in absentia;
Chairperson of AASA, Mr Erik Venter;
Regional Vice President, Middle East and Africa IATA, Mr Hussein Dabbas;
CEO of AASA, Mr Chris Zweigenthal;
CEOs and representatives of Airline Companies CEOs and representatives of our State Owned Entities;
Chairperson and members of our Independent Regulator;
Members of the media present;
Ladies and gentlemen;
Good morning, Goeie more, Sanibonani, Macheroni, Dumelang.
This gathering came at a very opportune and exciting moment in our country South Africa as we celebrate October as the month dedicated to transport. This month is hectic yet exciting for us, as attention is given to all modes of transport, and the role they play in our economy. I feel very honoured and privileged to be delegated by the Minister of Transport ,Ms Dipuo Peters to deliver the opening remarks at this august occasion, the 45th Annual General 2 Assembly of the Airlines Association of Southern Africa with the theme “Unlocking tourism opportunities through aviation in Africa”
Programme Director, with more than a billion people, 54 countries, a continent bigger than the USA, Europe, China and India combined, it is time that Africa makes its presence felt on the map of world trade, transportation and the logistics industry. It therefore stands to reason that there needs to be very high connectivity between the 54 countries if we are to move towards intra-African Trade and Industrialisation. At present, only 11% of Africa’s trade is with other African trading partners as compared with Asia, where half of its trade is between countries in their Region. Ladies and Gentlemen, with regards to Civil Aviation, the South African government, shall, as part of the broader African Continent ensure that we implement the decision of the AU Heads of State of January 2015 with regard to the establishment of The Single African Air Transport Market by 2017. This will be done by African countries in honour of the Yamoussukro Decision in the liberalisation of skies and the establishment of a Single African Air Transport Market. The current challenge is that, African countries open skies to none-African operators.
To date only 11 /54 member states have signed the solemn commitment. A resolution has been taken that advocacy should be carried out by the eleven (11) States to get more Member States to also subscribe to the Solemn Commitment on the Establishment of a Single African Air Transport Market, with a target of all Member States joining by 2017. Air transportation contributes directly to economic growth through the creation of direct and indirect jobs in the industry. Due to its spillover effects, it also contributes positively to other auxiliary sectors such as tourism and other service sectors. Air transport is key for tourism. The extraordinary growth of international tourism over the last decades is as much due to advances in air transport as to the rise of the middle class, growing prosperity, appearance of new forms of information and communications technology. In 2012, over half of all international tourists arrived at their destination by air. Similarly, the growth of air transport - which is the main component of civil aviation is intrinsically connected to the expansion of tourism.
The vast majority of international air passengers are 3 travelling for tourism purposes, whether leisure or professional, and in many countries aviation is key for domestic tourism development. Aviation plays a huge role in tourism especially from those lucrative long haul markets, like China, India, Brazil and USA. There is indeed a need for the Department of Transport to work closely with the Department of Tourism and entities like SA Tourism and Brand SA. Although it could be argued that tourism acts as a catalyst for air transport rather than vice versa, air transport and tourism have an interdependent relationship. However, despite this interdependency and the important multiplier effect of both, many countries have separate sectorial policies on air transport and tourism. This results in fundamental and often conflicting disconnects and a lost opportunity to maximise the potential of both the economy and society. The expansion in air transportation also creates market opportunities for local entrepreneurs thereby creating regional and global economic centers. Despite the growing awareness of the role that the aviation industry could play in the development of the continent, the industry is still not a priority of most African governments. African countries must first link with its own African neighboring countries before it can forge links with other countries. The fear of competition amongst African countries undercut national airlines’ ability to enhance their commercial viability.
This challenge requires African governments to enhance the regulation of aerospace management, consumer protection, safety and security. The lack of aviation experts and skills, airport taxes and fees, fuel costs, and the weak connectivity to mention but a few, adds to the menu of impediments affecting the development of Africa’s aviation industry. Fostering the African aviation industry may be one of the driving forces of regional integration on the continent. Better connected African countries and regions, through a viable air transport industry could be the catalyst that can boost intra-African business, trade, tourism as well as cultural exchanges. Developing the aviation industry may also represent an opportunity to mitigate chronic transport problems faced by the 16 landlocked African countries.
Whilst we are alive to the reality that Africa is part of the global world, and that we should cooperate and trade with other global role players in the aviation industry, Code Sharing should 4 be encouraged through Intra-Africa aviation markets and should include marketing agreements, coordination of schedules and fares, cross-equity holdings and aircraft-buying consortia, and franchising deals where one airline pays another for the right to carry its name. Airline mega-partnerships are promoted by carriers and are hugely desirable. But for who? The Yamoussoukro Decision (YD) advocates for "open skies" within Africa, this means more competition, more African players in the marketplace, more options for travelers — and lower fares. The airline industry is in the process of organising itself into private cartels. Two or more dominant airlines will control the vast majority of traffic through monopoly airports in fortress regions embedded in national networks that rarely compete with one another. The vast majority of passengers are mostly trapped on routes with far too few alternatives to create an effectively competitive market. As travelers fall more and more under the control of one airline, the ability of new entrants to penetrate the aviation market is reduced. It becomes more challenging to attract passengers to flight segments and the necessary scale of entry gets larger. The inconvenience and, in many cases, the impossibility of inter-airline travel, give the originating airline enhanced market power over the traveler and makes it more difficult for smaller airlines to compete for the traffic. As travelers are locked-in to the national networks with fewer choices, they suffer the typical effects of the abuse of market power, higher prices and lower quality. The International Air Transport Association (IATA) has published a report setting out the considerable social and economic benefits of intra-African air service liberalisation. The report, by independent economic consultants Inter VISTAS, outlines the benefits that would accrue if 12 African nations were to implement the 1999 Yamoussoukro Decision.
This report demonstrates beyond doubt the tremendous potential for African aviation if the shackles are taken off. It shows how this will create opportunities for further significant employment growth and economic development. Ladies and Gentlemen, In conclusion, Africa represents a huge potential market for aviation. The Intra-African aviation market and Africa as a continent could benefit immensely if African countries trade with each other before it considers other international role players. This will also promote the spirit of the Yamoussoukro Decision. 5 The lack of intra-Africa aviation trade will not only delay the development of the African aviation market, but it will also hamper its economic development and prosperity. Therefore, it is essential that African governments use aviation as a critical driver for socio-economic development. The Yamoussoukro process has been on-going for decades and Africa cannot afford to delay its implementation any longer. As we may know that, greater connectivity leads to greater prosperity. African airlines need to speak with one voice so that they can be in a position to lobby for more favourable terms with airports. Africa needs more viable and strong airlines that can compete well with other international airlines. Airlines like Emirates focus strongly in bringing travelers to their hub in Dubai and this has huge impact on their tourism. Airports need to think out of the box or out of the fence as the new saying goes.
They need to work with their host cities to implement concepts like the aerotropolis, as is the case with OR Tambo and King Shaka International Airports. It is said that airlines do not serve airports, but they service tourism markets and those markets are the cities and provinces wherein those airports operate. Yes, without an advanced and efficient transport network, it will be difficult, if not impossible, to either penetrate or compete effectively in international markets. Thus, I venture to say efficient and reliable transport networks buttress globalisation, and by extension growth and development. Indeed, evidence suggests that our regional integration efforts in the continent are often thwarted by a lack of infrastructure to facilitate physical connectivity between different centres. The seamless integration of all modes of transport, Road, Rail, Maritime and Civil Aviation remains critical in ensuring efficiencies and stimulating our economies. As the transport department, we need to prioritise connectivity between airport and other strategic nodes. We have seen how the Gautrain airport connectivity has catalysed nodes like Sandton CBD, Rosebank and Midrand. Ground transportation provides for the first and last mile of air travel. Airports should not just look to airlines for their revenue.
They have to grow non-aeronautical revenue given the fact that airport charges are under huge pressure. It is predicted that in future airports will be paying airlines to land at their runways. Judging by how aggressively some of the big airlines are currently negotiating, this reality will soon hit us. As a department that is responsible for policy and its implementation, we are open to engage and debate these issues but it must be in the interest of growing the broader aviation market, for the benefit of our regional economic integration of the SADC region. 6 Ladies and Gentlemen I would like to take this opportunity on behalf of Minister Dipuo Peters, and the government of South Africa, to wish you all fruitful, productive, and robust discussions, as we collectively endeavour to take the South African aviation market and the African continent forward.
I thank you
