Although the oil deposits identified in Côte d'Ivoire promise new resources for the state, negotiations with the many partners involved are ... still ongoing. To facilitate this, oil company Petroci is being transformed into a 100% state-owned company.
Analysts doubt that two negatives will make a positive, and say implementing the Single African Air Transport Market (SAATM) would do more to advance Africa’s aviation industry.
SAATM was launched by the African Union (AU) in 2018 to seek to liberalise the continent’s aviation. The AU says that full liberalisation would cut the average intra-Africa fare by 26%, meaning an annual saving of $1.46b for passengers. As of November, 35 AU member states out of 55 have committed to the project.
Implementation of SAATM would be “a more fundamental step forward” than the strategic partnership, says Marcel Langeslag, director of aviation for Africa at Netherlands Airport Consultants in Johannesburg. The result would be more competitive, faster-growing airlines, lower prices and greater connectivity, he says. “That’s the path to the growth of African aviation.”
The protection of state-owned airlines is holding SAATM back, Langeslag says. Both South Africa and Kenya have large numbers of bilateral air-service agreements (BASAs) in place, but liberalisation of air space is lagging behind, he adds.
- The AU says that the growth of aviation in Africa has been hampered by restrictive government policies, especially BASAs.
- BASAs can either help or hinder open skies. The countries with the highest number of BASAs which are compliant with 1999 Yamoussoukro Decision are South Africa (31 out of 54 BASAs), Cameroon (26), Ethiopia (24), Rwanda (23), Mali (22), Ghana (21) and Nigeria (20).
SAA, which ran up losses of $1.8b from 2007 to 2019, came out of a 17-month period in administration in April. The airline is slated to be privatised with the sale of a 51% stake to the Takatso consortium in early 2022. Kenya, meanwhile, is planning to nationalise its airline and combine it in a single holding company with the country’s airports authority. The airline has been continually losing money for the last decade.
Plans for a pan-African airline are “an ambition rather than a thought-through plan,” and privatisation is more important than partnership for SAA, Langeslag says. Ethiopian Airlines is much further advanced in terms of network and partnerships, he notes.
- Still, collaboration could be advanced in areas such as planning route networks, training and procurement, Langeslag says. There is “space for more than one multinational airline in Africa.”
Putting two loss-making airlines together will be a “Herculean task” considering that both are in a negative equity position and SAA has emerged from administration, says Churchill Oduor, an economist at IC Asset Managers in Mauritius. “So much will be needed to restore confidence in the individual brands.”
- The plans to privatise SAA and nationalise Kenya Airways mean that “execution risks will be dominant,” Oduor says.
- Asian and Middle East airlines which have come into Africa offering low prices mean that a major issue is to find synergies between the two airlines, says Reginald Kadzutu, CEO at Amana Capital in Nairobi.
- Two airlines coming together in itself won’t alter the dynamics of the freedom of African airspace, he says. “The obstacles are more on the political side and protectionism.”
SAA and Kenya Airways can never be more than the sum of the parts until Africa’s skies are fully liberalised.
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