EATP - Open Skies East Africa

EAST AFRICA TOURISM PLATFORM OPEN SKIES WITHIN THE EAST AFRICAN COMMUNITY (EAC)

CAN COMMUNITY

OPEN SKIES - AN ANTIDOTE TO CONNECTIVITY WITHIN THE EAST AFRICAN COMMUNITY (EAC)

Within the EAC region, air transport services are low and costly. Moreover, connectivity within the region does not serve the interests of trade and tourism. Air transport is generally inadequate and provides limited connectivity to many parts of the region. The preceding sections highlight the key issues facing air connectivity in specific EAC partner states and recommendations on how to drive to the open skies agenda in the region.

BURUNDI »» The current level of air services is extremely limited. »» International routes are served by carriers from other countries, no national carrier »» There are no direct flight connections between Burundi and Tanzania. To fly between these two countries, a connection must be made in Kenya or Rwanda. These connections add several hours to the journey; which is unattractive for business travellers and tourists. »» Flights between Bujumbura and Nairobi are very costly compared to any route in East Africa. »» Lack of connectivity is hampering tourism and trade. With better air connectivity, Burundi could form part of regional tourism itineraries. »» The country generally lacks the correct governance structure and associated leadership. Trade and tourism stakeholders must work more closely with the transportation industry to ensure that travel needs are met.

KENYA »» Regional air travel within the country is limited with only few options available for smaller towns. »» There are minimal charter flights serving Kenya and the EAC as a whole due to the prevalence of restrictive travel laws. »» Accessing many of the popular tourism destinations is not only cumbersome due limited connectivity but also extremely costly.

RWANDA »» Domestic air services and number of passengers is growing due to an expanding national carrier. »» Regional air travel is limited and costly. The cost of some airlines operating between Nairobi, Kigali and Entebbe are similar to a direct flight to Europe or Middle East. »» Air fares are very high partly due to taxation, traffic rights limitations and lack of competition. »» The country also faces poor connectivity. For example, flying between Kigali and Arusha takes about 7 to EAST AFRICAN TOURISM PLATFORM | www. ea-tourism-platform.org

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9 hours as direct flights are not always available. Delays, cancellations and overbookings also contribute to poor connectivity.

TANZANIA »» Air service is costly, lacks competition, and is perceived by many to be unsafe. The limited number of air carriers currently in operation lack the regional network needed by travellers, which results in an underutilization of the country’s airports. »» The removal of restrictions on fifth freedom flights would form an important step in addressing these issues.

Most international flights into Dar es Salaam are connecting through Nairobi without a negotiated fifth freedom. »» Wide-bodied planes (e.g., Swiss Air) are flying into Nairobi with a 60 % load factor, offloading majority of passengers, and then flying empty into Dar es Salaam. Deregulating air services will likely eliminate inefficient routings. »» Many regional points in Tanzania are not served due to restrictive regulations and lack of basic services such as immigration and ground handling. »» Current regulation is also restrictive due to the limited BASAs, low levels of liberalisation and the inability to designate foreign owned carriers. »» Should open skies be implemented, it is critical that border access is addressed. There is a desire to operate direct services between Serengeti and Maasai Mara, but currently connections must be made through Nairobi and Kilimanjaro. This adds unnecessary travel time, cost and defeat the vision of promoting, selling and position East Africa as One Destination.

UGANDA »» Domestic and international air travel is limited and costly. »» The country does not have a national carrier, but several Ugandan (e.g., Eagle Air) and foreign airlines do service the region but charge high prices due to the absence of competition and a high cost operating environment. Furthermore, the frequency of many services is low – less than daily – which limits their usefulness to business and tourism. »» The choice of direct regional and international routes is inadequate, with stopovers often required in neighbouring countries. These routes are underserviced forcing travellers to adjust their schedules to match flight times. »» Uganda’s poor air transport connectivity is limiting trade, tourism and inward investment.

RECOMMENDATIONS »» Within EAC, Yamoussoukro Decision is partially implemented and stunted by protectionism as EAC partner states protect their national airlines from competition. »» Liberalisation is a step in the right direction. It will lead to lower air fares and further stimulate passenger numbers such that revenues will be increased, instead of relying on capital injections from governments to stay operational. »» Liberalisation would bring about structural change, consolidation/mergers; similar to the U.S.A. Liberalisation would allow greater cooperation, joint ventures, equity sharing and mergers. This would improve the long term viability of the airline industry in East Africa. »» Liberalisation would improve trade between countries, increase tourism traffic, stimulate employment, boost the quality of service provided by carriers and increase the general economic competitiveness of the EAC region. There has already been tangible evidence of lowered fares. For example, as part of the northern

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corridor initiative, the presidents of Kenya, Rwanda, South Sudan and Uganda asked Kenya to relinquish 40% of the route capacity to Rwandair between Entebbe and Nairobi. The result was a reduction in fares of approximately 60%. For land-locked countries, air service is critical to connecting them with the global economy. Liberalisation will lead to great regional and international air service, boosting tourism, trade and business development. »» EAC attracts visitors from around the world due to its tourism offerings, however, the industry would most certainly do better; should air access improve and in turn subject international travellers to lower fares. »» The licencing of carriers is also an issue – Kenya is fairly liberal but other EAC countries are very restrictive.

There is a need to achieve a “buy in” to the idea of air space liberalisation by Kenya Airways in particular.

Under liberalisation, with lower air fares, increased number of passengers will ensure survival rather than relying on government bail outs. »» Taxes and airport charges are high and non-uniform within the region. For example, taxes in Rwanda are US$ 20; in Kenya US$ 40 and Uganda US$ 15 per passenger. These are costs imposed on a traveller even before the airline adds its operational cost, leaving very little room for profits. Without profitable airlines, there is no sustainability and as such these taxes are harming airline viability. »» Uganda, South Sudan, Burundi and Tanzania do not have active national carriers. »» RwandAir provides access to each of the EAC partner states, and it is expected to add flights to both Asia and Europe soon. However, its connectivity in Africa is limited, and fifth freedom rights should be awarded.

Fifth freedom rights were granted between Nairobi and Entebbe, which reduced fares from $800 to $400. »» Progress towards liberalisation has been made incrementally via the Northern Corridor initiative (NCIP).

Travel without the need for a passport in Uganda, Kenya, Rwanda and South Sudan has been recognized as an important step, but work must continue for additional liberalization.

SUMMARY »» Quality of air travel, within EAC is affected by high costs, low frequency and routing of airlines; thus reducing the competitiveness of tourist destinations in the region. EATP acknowledges the critical role of air transport in EAC’s economy and the need to liberalize air space policies. »» EATP strongly supports the idea that the only way to bring the cost of air travel down and affordable, is by liberalising air transport services. This will bring in innovative products and allow many more people to travel by air, increasing access to new locations/markets, increasing frequencies on existing routes and enabling airlines to make more money through economies of scale. »» EATP will continue lobbying for an “Open Sky Policy” to support easier movement of people and cargo within the EAC for improved tourism, trade and socio-cultural exchange. In this regard, EATP will constantly lobby members of the EAC Legislative Assembly to support an open sky policy. »» EATP believes that there is need for improved air transport services and liberalization so as boost EAC’s competitiveness. »» There is need for a shift from bilateral air transport agreements to a comprehensive multilateral agreement within the EAC region, under the umbrella of One Air Space in EAC. The current bilateral agreements “Ignore The New Realities” of the Single EAC Aviation Market. »» EATP advocates for the creation of a liberal aviation trading regime and in so doing, send a clear and strong signal to non-EAC member states and air carriers that EAC external aviation policy will be consistent and will encourage reciprocal growth and expansion of services.

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