Raphael Kuuchi is the International Air Transport Association (IATA)’s Vice-President for Africa. He joined IATA from the African Airlines Association (AFRAA) where he was the Director of Commercial. The consummate administrator discusses a myriad of issues bedeviling the continent’s aviation industry, among others, with WOLE SHADARE, at the IATA AGM in Dublin. Excerpts
Accident rate in Africa is said to be the highest. Does this not sound alarming and what is the role of IATA in developing the continent’s aviation?
The region’s aviation industry has many priorities, which we are focusing on now and chief among them is safety. I am sure you are aware that safety in Africa has been improving steadily in recent years. But the level is still not up to the global average where we want it to be.
Today, we have about 7.88 accidents per million sectors, which is above average. We would want to see this come down. Now, what are we doing to assist in this initiative? As IATA, we are providing training support for many of the airlines in line with the Abuja Declaration to ensure airlines get unto the IATA Operational Safety Audit (IOSA) register.
We have been successful in providing training capacity building to about 20 airlines. We have now move airlines from the IOSA registry from 18 in 2013 to 32 now in IOSA registry. We still have many of them who have finished with their audits and closing their gaps.
This year, we are going to have some of them join the IOSA registry. We already got Allied Air from Nigeria and Air Burkina as well as Cameco in Cameroon who are the newest members that have joined IOSA registry of late.
We believe that with IOSA coupled with the implementation of the ICAO Universal Safety Oversight Audit Programme (USOAP) audit findings, we will be able to significantly improve African aviation.
The second area of concern for African aviation is the connectivity. We are urging African governments to open up their markets, so as to allow free movement of people and goods and to enhance competition among operators in the region.
Fortunately, African Union Commission Heads of State summit last year agreed amongst themselves to have a sort of understanding amongst states that are willing and ready to open up their markets to do so bilaterally through the signing of what was call the solemn declaration.
To date, we have 21 countries in Africa that have signed the solemn declaration to open their markets. We are working with the African Civil Aviation Commission (AFCAC) to see how best we can assist them to see how they can come up with some steps if an airline wants to exercise the right to fly to another country, what should it do if the country is part of these 21 that have signed up the solemn declaration? Those steps and clarity is yet to be agreed. That is what we are pushing on now.
We do hope that sometime this year, we will have clarity on that, which will be communicated to the states and it would now mean any African airlines that wants to fly can within Africa do so many number of times without restrictions.
What about bilateral agreements?
No bilateral. That will actually do away with bilateral completely for African airlines within Africa. Bilateral Air Services Agreements (BASAs) are agreements that are signed by governments that allow air services between two countries.
If two countries have an agreement between them for air services, it might specify the number of airlines that can fly from each country to the other and the number of frequencies (times) it can fly in a week between those two countries. That is what is called BASAs.
The major challenge we have in Africa is that we have small airlines with an average of five aircraft. The foreign carriers have eroded the market. How do we empower the local airlines with low interest rate?
Unfortunately, IATA does not work in the area of financing. However, we are currently in discussion with African Development Bank as IATA to sign a Memorandum of Understanding (MOU), because over the years, what we have noticed is that ADB has focused much of its resources in developing airports infrastructure and not in supporting African airlines.
So, we want through this MoU to be able to have a framework where we can advise the bank on why it is important to not just support infrastructure but also to some extent support the airlines themselves.
How many African countries are signatories to the Cape Town Convention?
I don’t have the number off hand, but I know that there are many African countries that are signatories to the Cape Town Convention.
Can you elaborate on the cooperation with African Development Bank?
Memorandum of Understanding is what we are preparing to sign. Lawyer of IATA and the bank have concluded the review and we are just waiting for one more step before it can be ready for signing.
Once we have that memo signed, it is to give IATA a framework for collaboration and working with the bank on various projects, not just on financing the different projects; we could advice the banks on matters on aviation.
How many African countries signed the declaration on wildlife trade?
I know Seychelles and Mauritius signed. Before that, Kenya was part of the Buckingham Palace signing.
The African Civil Aviation Commission (AFCAC) is to monitor the liberalisation of air transport in Africa to have the framework for that. What input is IATA giving to AFCAC and all the airlines that have agreed to liberalise their airspace?
AFCAC is the body or agency of Africa Union Commission and this agency has been designated as the executing agency of the Yamoussoukro Decision, that is the continental liberalisation programme and with the 21 countries that have so far signed the solemn declaration to open up their markets unconditionally, the responsibility now falls back on AFCAC to ensure that the framework within which airlines would be able to exercise this freedom is actually in place.
The support we are giving to AFCAC is to ensure that they come up with a framework that is not only applicable within the continent.
According to the Abuja Declaration, every upcoming airline will need to be given Air Operator Certificate (AOC) and must meet IOSA conditions. Have you entrenched this policy on individual countries?
Let me clarify this first. You cannot have an IOSA before you start operations. The audit is on your safety system and processes and procedure. You must be in operation before. As far as IATA is concerned, IOSA is a voluntary programme.
We put this programme out there to help our member airlines improve their safety. However, it is not compulsory for airlines unless you want to become an IATA member. For membership, it is a pre-condition; you must be IOSA before you become an IATA member. However, if you don’t want to become an IATA member and your state does not mandate that you become IOSA, then you might choose not to be.
In some countries, we are seeing a trend towards ensuring that all airlines become IOSA member. Nigeria is a good example, even though there are no clear cut timeline; all airlines are encouraged to take up IOSA to improve their safety.
One of the issues that dominated discourse at this AGM was the disclosure by the Director- General of IATA about 230 taxes imposed on tickets. Some African countries see taxes as another form of revenue rather than developing infrastructure. What is IATA’s plan in talking with governments to ensure that aviation is not seen as a luxury but a mode of transportation? Is there a synergy between African governments and IATA?
Let me start this way. It is actually to let governments realise that aviation is not a preserve of the rich or famous or those who can afford, it is for that reason that two years ago in 2014, we did the study on the benefits of aviation.
We did a study on the benefit of aviation in Africa and we selected 12 countries, three from Southern African region. The outcome of that study, which indicated 155,000 jobs would be created and $1.3 billion will be added to the Gross Domestic Products of the 12 countries’ economies.
Five million passengers who currently are not able to travel by air will be able to because of increased competition, as it would bring down fares by up to 35 per cent. This was a significant diversion from the previous mentality that air travel is for those who can afford it.
Governments will see the benefits in terms of employment generation, in terms of GDP contribution and in terms of business facilitation. We use this as a tool to engage with governments by asking them ‘why are you over taxing aviation instead of making it more competitive and have people moving around, you can use that to leverage on creating better economies of scale for other sectors of the economy.’
On the taxes and charges, we have been engaging with governments, especially in countries where taxes are higher. Today, fuel prices globally average per 1.3 dollar. In Africa, it ranges between $2 and $3.77. In some places, more than twice what it is globally.
On the average, we notice that fuel price is 21 per cent more expensive in Africa than the world average. In addition to that, we brought these taxes together. Africa is not a rich continent and we ask, why must we be paying the most? If you look at the high fuel taxes in Africa, the victims are actually oil producers.
In most of the oil producing countries, aviation fuel is mostly expensive. That is what we cannot understand. Governments try to raise revenues. In other countries, governments try to build new airports and make a choice to raise the tax on existing passengers to raise revenue to pay airport and our question has always been, ‘why should a passenger flying today pay for an airport tomorrow, which he might never use?’
The principle is if you want to build an airport, an airport is a business, go look for a loan, put up the infrastructure and once the airport starts running, the users will pay for it. Why are you pre-taxing people to pay?
We are asking governments to review these taxes. During the time of President Chirac of France, he introduced this tax to fight HIV, AIDS, malaria, and tuberculosis in Africa.
Immediately he did that, 12 African countries, the Francophone countries, also introduced that. It is called solidarity tax. Today, they still collect that money. Nobody knows where that goes. You never heard that they use the money to initiate programme to fight these things.
Just like you know, if any revenue gets into government’s financial systems, to get it out, they need an alternative unless you can tell them this is how to get this money. We are using the economic argument that if you focus on these small monies, you are denying the economy bigger gains.
That brings me to what Tony Tyler said that what accrues to Britain is £18 billion annually from aviation taxes. He said if they reduce their taxes, they are capable of making more money. How feasible is that?
If you reduce, one, you tend to attract a lot more traffic. Many more airlines would find it more competitive to come. In the case of Africa, I always tell the airport operators. One thing we do is that we forget airports next door are competing against each order.
If Johannesburg airport becomes too expensive, I would rather operate to another airport. We need to be careful to make our airports attractive. If they are attractive, many airlines would come in.
If the cost of flying there is cheaper, many airlines will come; if the taxes are less and there is more attractive destination, if you make visa acquisition much easier, many more passengers would want to come to that destination. We need to facilitate the process.
If you facilitate the cargo process, many more people would come. Today, you see in the West African region, many traders prefer to carry their cargo as baggage instead of cargo. Even though it is more expensive than to go through cargo, for them, the clearing process is easier.
You just arrive, you pick you baggage, you go to the Customs, declare and go out. If it goes through the cargo site, it can take you weeks to clear that same cargo. Why can’t we facilitate this process so that we can collect more revenue?
It is projected that African airlines would make a loss of $400 million this year, $200 million less than last year. How long do you think it will take African airlines to be profitable?
I don’t know how long it is going to take. Our projection was that from 2017, we estimate that African airlines will be back to profitability. If you look at last year, for instance, Ethiopian Airlines on its own made $200 million profit, but if you take their profit, plus the losses of other airlines, you get a bigger loss.
How many airlines in Africa are profitable?
I don’t have the figure and, in many cases, many of these airlines are government owned. They don’t publish their results. So, it is actually difficult to tell whether they are making money or not, but overall, a few of them are making money and the majority are actually struggling. I will be surprised that more than 10 are really making money.
What trend are you seeing in low cost airlines in Africa like South Africa?
What do you think will be the ultimate role these low-cost airlines can play on the continent? Low cost airlines, wherever they exist, play a very critical role contrary to thinking by some legacy carriers that low cost carriers have come to take over their market.
Low cost carriers have a tendency to stimulate additional demand and come up with a new market segment that in most cases has not been seen before. Unfortunately, in Africa, you are seeing a concentration of low cost carrier still in a few markets.
This is because the low cost business is based on low price and high volumes and, in many markets in Africa, we don’t have the volumes. There are volumes in South Africa domestic market.
To some extent, Nigeria might eventually come up with low cost model in the future. You see that in North Africa, we have low cost model in Egyptian market, in Morocco because of the volumes there. Within Africa, it is a huge challenge because the volumes are not there.
The second limitation in the growth of the low cost carriers is the existing limited Bilateral Air Services Agreement (BASA). I am sure; some of you have been reading the issue of Fastjet and its efforts to get into neighbouring countries and the challenges it is having.
Those limitations are crippling and we are not likely to see a lot of them coming up any time soon. However, in the future, if the market is liberalised, if these 22 countries that signed a declaration open up their markets, we could see many more. Let’s look at insurance.
I don’t know if IATA plays any role in insurance. In Africa, many airlines don’t do proper insurance. We don’t oversee the implementation or validity of insurance programme.
What we do and encourage airlines to do is that we know that in Africa, the insurance scheme is much higher than elsewhere, so insurance premiums are much higher for African operators. Once you become IOSA airline, you are given certain consideration because your risk exposure is lesser.
(culled from newtelegraphonline.com)
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