EAST AFRICA TOURISM PLATFORM AIR LIBERALISATION IN EAST AFRICA
EAST AFRICA AIR TRAVEL STORY: AIR LIBERALISATION IN EAST AFRICA INTRODUCTION In most parts of the world, international air services between two countries operate under bilateral air service agreements (BASAs) negotiated between countries. However, these agreements are restrictive, dictating which carriers to operate, frequencies of flying, airports used and, in some cases, how much to charge. In the 1970s, it was recognised that BASAs were holding back the aviation sector, unresponsive to market demand and even hurting other sectors of the economy. Additionally, they did not serve the interests of passengers, shippers and the wider economy. Recognising these shortcomings and potential benefits of a liberalized aviation sector, many governments moved to deregulate various aspects of aviation. This included the privatisation of airlines and airports, deregulation of domestic markets and liberalisation of BASAs. Governments started pursuing open sky policies. These enabled airlines to operate on agreed routes without restrictions on capacity, frequency and price. These policies even allowed carriers to operate “tag-on” services to third countries. The first major open skies agreement was between the United States of America (USA) and the Netherlands in 1992. As at the end of 2015, the USA had entered into more than 118 open skies agreements. Recently, there has been a movement towards multilateral agreements between groups of countries. The most notable being the European single aviation market within the European Union (EU). Carriers from within the EU are free to operate on any route within the EU without restrictions on price or capacity. Other multilateral agreements include: ASEAN Agreement within Asia, MALIAT Agreement within the Pacific region and Yamoussoukro Decision within Africa (Fund, 2016). It is in line with these developments that East Africa Tourism Platform (EATP) is advocating for an open sky policy that will ensure a competitive airline industry within the EAC. OPPORTUNITIES PRESENTED TO THE EAC BY AIR LIBERALIZATION Air transport plays an important role in fostering economic development. It is a key driver of tourism-dependent East African economies that are popular tourist destinations. Moreover, it has the capacity to unlock untapped tourism potential. Liberalization of the airline sector presents enormous opportunities to the EAC. Air transport, particularly, plays an important role in regional trade. It provides unprecedented connectivity and positively impacts people in all areas in the region. Additionally, aviation supports numerous jobs and
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contributes immensely to the region’s GDP. As businesses further expand their operations regionally, and the tourism industry continues to grow, air transport will become an even more crucial part of regional commerce. In order to ensure that regional air transport system is able to meet the needs of regional trade and tourism, the current regime based on the bilateral exchange of traffic rights within the EAC region must be re-examined. A liberalized “open skies” regime within the EAC will allow its airlines to use their competitive strength and regional air services to realize their full potential. Besides, it will increase competition among air carriers and help lower fares that will help ensure continued expansion of tourism. Additionally, regional liberalization will help improve the financial condition of airlines by allowing them access to new markets and strengthen the industry as a whole by increasing consumption of air services. Ideally, an open sky policy within the EAC, should give regional airlines open entry and expansion into each other’s markets, unrestricted capacity and frequency on all routes and the greatest degree of freedom in setting fares based primarily on commercial considerations in the marketplace. Additionally, it should give each member state the right to designate as many airlines as it wishes to have access to unlimited route rights. Moreover, it should allow each country’s airlines access other countries without limitation. Importantly, it should foster alliances among EAC airlines and provide a provision for airlines’ integration plan that will allow airlines operate as a single regional airline system. Finally, the policy should contain provisions for a dispute settlement mechanism. THE CURRENT STATE OF AIR TRAFFIC IN EAST AFRICA COMMUNITY In spite of benefits arising from East Africa Community integration, there are many barriers hindering harmonized regional airspace. Air transport within the East Africa Community is characterized by protectionism. Besides, it is based on varying Bilateral Air Service Agreements (BASAs) between individual states. This has led to poor connectivity and reduced competitiveness of the EAC airlines. Additionally, consumers are experiencing high transport costs. One challenge, in particular, has been the reluctance of other EAC member states to grant RwandAir, Fastjet and other low cost budgets carriers the fifth freedom of the sky that stipulates that an airline has a right to carry traffic between two countries outside
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its own country of registry as long as the flight originates or terminates in its own country of registry. As a result, air traffic within the region is relatively underdeveloped resulting in insufficient direct flights and uncompetitive air services within the EAC. Therefore, flying in relatively short distances is time consuming, inconvenient and costly. For example, a direct flight from Dar es Salaam to Bujumbura is approximately one hour and forty-five minutes. However, it takes over six hours and costs around USD$514 to make a round trip (Fund, 2016). BENEFITS OF LIBERALIZING EAST AFRICAN AVIATION Liberalization of regional air transport within the EAC, will lead to more competition, a wider range of services, greater efficiency and lower fares. In addition to these direct benefits of liberalization, there are important secondary effects on other sectors of the EAC economy. For example, the continued growth of EAC tourism industry depends upon the availability of affordable and convenient air transportation as well as better connections within EAC. Additionally, liberalization on a multilateral level will help eliminate the problems associated with bilateral regimes. Bilateral systems are time consuming, overly protective of national airlines and detrimental to the interests of consumers, airports and cities. The restrictive and protectionist measures contained in many bilateral aviation agreements restrain the business and operational opportunities of the airlines by acting as non-tariff barriers to free trade in air services. A liberalized air transport plays a crucial role in international, regional and domestic trade and tourism. In addition to the direct benefits to users, the increase in air service and traffic usually stimulates employment and socio-economic growth in a number of ways: a) Aviation Sector: additional economic activity in the aviation sector is generated by the servicing, management and maintenance of the additional air services. b)
Tourism Sector: air service facilitates the arrival and movement of larger numbers of tourists to and within a country. The spending of these tourists supports a wide range of tourism related businesses such as hotels, restaurants, theatres and car rentals.
c) Impacts on Trade, Investment and Productivity: air transportation facilitates increased trade, business activity and greater productivity. EAST AFRICA TOURISM PLATFORM AND OPEN SKIES POLICY East Africa Tourism Platform (EATP) is a tourism private sector body in East Africa, working towards promoting the interest and participation of the private sector in the East African Community (EAC) integration process (UNWTO, 2016). EATP is the first regional tourism apex body in place, able to lobby at the EAC level and at the level of national governments. The vision of creating and promoting a vibrant and diverse single tourism destination is the driving force. EATP promotes intra and inter-regional tourism though advocacy, marketing, skills development, research and information sharing. The main strategic objectives of EATP are to: mediate and reduce obstacles to intra and inter-regional tourism, promote an intra and inter-regional tourism marketing approach, facilitate continuous skills development in the tourism sector, promote harmonized standards and codes of conduct of tourism facilities and services, facilitate access to finance and risk management services and share information and provide networking opportunities (UNWTO, 2016). Providing positive and results oriented policy advocacy is the core objective of the platform. EATP enhances East African’s
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tourism competitiveness through effective dialogue for policy reforms and regulations, improved tourism services, export capabilities and strengthening tourism private sector’s capacity and sustainability (UNWTO, 2016). Since its launch EATP is credited for advocating for the single tourist visa, use of national identification documents as travel documents for citizens between Kenya, Rwanda and Uganda, free movement of tourism services, partial liberalization of EAC air space and joint marketing initiatives which is mainly under the East Africa Northern Corridor. These initiatives have already started having positive effects on regional travel. Other initiatives such joint marketing initiatives, technical support for national associations or harmonization of standards and codes of conduct of tourism facilities and services are ongoing and will enhance the regional destination competitiveness (UNWTO, 2016). The main issues on EATP’s agenda are: »» Liberalization/open skies policy and improved air and road infrastructure »» Single East Africa Visa and other immigration reforms to facilitate ease of movement »» Liberalization/free movement of tour operators’ vehicles »» Harmonized standards and codes of conduct in the tourism industry »» Harmonized policy for the conservation and sustainable utilization of wildlife and other tourism resources Advocacy for Open Sky Policy »» Lobby members of the EAC Legislative Assembly to support Open Sky Policy. »» Create awareness among the different actors on the importance of a liberalized air space within the East Africa Community region. »» Build an “economic case” for domestic and regional tourism to support Open Sky Policy CONCLUSION The present bilateral agreements, within the EAC, for the exchange of air traffic rights are rapidly becoming incapable of accommodating the airline industry’s evolution and the growth of the region. This situation, along with the great expense of time and financial resources required to negotiate numerous bilateral agreements, indicates that there is a need for liberalization in the air transport industry. EAC is critically in need of an open sky policy. This policy should include provisions for unlimited market access, liberal fare setting subject only to anti-trust or competition laws and unrestricted capacity. In addition, the policy should allow for accession by any like- minded state. Implementation of these principles in an agreement between the EAC member states would result in lower fares for consumers and help ensure the continued growth of the tourism industry. In addition, these developments would strengthen the EAC air transport industry by increasing the consumption of air transport services. REFERENCES Mirenge, J. (2015). Managing in the East African Aviation Sector. Africa Journal of Management, 432-436. UNWTO (2016). East Africa Tourism Platform. http://know. unwto.org/content/east-africa-tourism-platform. Accessed on 6/4/2016 Fund, E. A. (2016, March 25). Current State of Air Traffic in East Africa Community EAC. Policy Briefing. East Africa Research Hub.
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EAST AFRICA TOURISM PLATFORM Kenya Tourism Federation – Secretariat| KWS Headquarters – Langata Road, P.O. Box 15013-00509, Nairobi| Tel: +254208001000/3/1| Mobile: +254724624538 Facebook: East Africa Tourism Platform| Twitter: @TourismEA| Skype: tourismea