Original Research

The role of African airlines in air transport liberalisation

Tabisa N. Tshetu, Rose Luke, Jackie Walters

Received: 08 Mar. 2023; Accepted: 02 Sept. 2023; Published: 30 Oct. 2023

Copyright: © 2023. The Author(s). Licensee: AOSIS.
This is an Open Access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract

Background: The African aviation liberalisation process began in 1988, following the liberalisation processes in Europe and the United States (US). However, by 2023, Intra-Africa air services are still reliant on the Bilateral Air Services Agreement (BASA) by which international traffic rights are exchanged in terms of the 1944 Chicago Convention, a multilateral treaty. These impose restrictions on intra-African connectivity and are obstacles to liberalisation. African multilateral initiatives, such as the Yamoussoukro Declaration, have varying levels of implementation by African states. While liberalisation efforts have major impacts on airlines, thus far these have been led by government structures.

Objective: The main objectives of the study are to determine the involvement of airlines in African liberalisation development and the likely impact of the liberalisation initiatives on airline operations.

Method: Semi-structured interviews were conducted with 12 intra-Africa airline executives from four Regional Economic Communities (REC), which would be impacted by liberalisation.

Results: The study finds that airlines do not fully participate in the development of liberalisation initiatives. Although sometimes consulted, their associations are usually only granted observer status at deliberations and negotiations. The likely impacts of the initiatives to airlines include direct connectivity, and harmonised African air transport access.

Conclusion: The lack of airline participation may be a key reason for the slow progress towards liberalisation and full deregulation in Africa.

Contribution: This study contributes to the body of knowledge, by being the first study to consider the role of airlines in the development of liberalisation initiatives.

Keywords: Africa; airlines; deregulation; liberalisation; air connectivity.

Introduction

As airlines started to develop into commercial businesses following the First World War, government intervention in matters of international aviation was deemed necessary to ensure that airlines were treated equally and fairly. The economic regulation of global aviation emanated from post-World War conventions that guided international aviation regulation. These are the Paris Convention for the Regulation of Aerial Navigation (Paris), Pan American Convention on Commercial Aviation (Havana), the Convention for the Unification of Certain Rules Relating to International Carriage by Air (Warsaw), the Chicago Convention on International Civil Aviation (Chicago) and the Convention for the Unification of Certain Rules Relating to International Carriage by Air of 1999 in Montreal (Montreal). The most significant of these is Chicago, which closed international (foreign) access to entry and overflying State’s territories, which gave rise to the practise of exchanging air traffic rights in terms of Bilateral Air Services Agreements (BASAs) (Carney & Dostaler 2006; Li et al. 2010; Surovitsikikh & Lubbe 2015; Weber & John 2000). The roots, benefits and challenges of commercial air transport regulation and the impact they have had on airlines are critical to understanding liberalisation and the role of airlines in liberalisation. Table 1 summarises the reasons for the conventions, the resolutions, and their impact on airlines.

As a result of the protective nature of some states, airlines would suffer abuse related to commercial rights and slot allocation in a foreign State and government intervention was therefore deemed necessary to ensure fairness (Li et al. 2010). The BASA regime (as developed through various agreements such as Bermuda I and II between the United States and the United Kingdom, and various alternative texts, as recommended by the International Civil Aviation Organization [ICAO] and other RECs) is the customary method of exchanging traffic rights and other aspects that are required for safe and secure air navigation. Measures that have an impact on the liberalisation of air transportation:

• The ownership and control element determines who owns the airline and aircraft and the jurisdiction it is administratively and operationally controlled from (Surovitsikikh & Lubbe, 2015). This element has two other sub-elements that can be defined for purposes of liberalisation; firstly, a community of interest where an airline ownership is based in member states of a particular regional economic community, by multiple states via an interstate agreement or, a joint operating organisation and can be designated by any or all of them, and, secondly, Principal place of business (PPB) is based on the jurisdiction of financial and strategic decision-making powers of the airline. In this instance the effective control clause of the BASA takes precedence over the ownership clause, especially if the air operator’s certificate (AOC), regardless of where designating State is (Secretariat, W.T.O., 2006).
• Granting of rights relates to ‘the right to conduct services between two States’ (Surovitsikikh & Lubbe 2015:161). Tariff approval is a regime that ‘governs the approval of the pricing of services between two States’ (Surovitsikikh & Lubbe 2015:161).
• Capacity and frequency determine the volume of traffic, service occurrence and the aircraft type used in the agreed operations (Surovitsikikh & Lubbe 2015).
• Cooperative arrangement is the ‘right of the designated airline to enter into cooperative marketing agreements’ (Surovitsikikh & Lubbe 2015:161).
• Designation is ‘the right to designate one (single designation) or more than one (multiple designations) airline to operate a service between two States’ (Surovitsikikh & Lubbe 2015:161).

These have been used globally to facilitate and regulate commercial air transport operations on routes between states, with African states also applying these principles to their cross-border airline operations. Following the waves of decolonisation in the 1950s, African states established ‘flag carriers’, as they saw airlines as conduits to transform the economy, politics and transport (Muehlenbeck 2015). The air service operations, relationships and commercial agreements were largely between African states and the former colonial powers, and typically followed the European model of state ownership and protectionism (Rhoades 2004; Schlumberger 2010). The most significant of the Pan African Airlines created post-colonisation is Air Afrique, in 1961, which was an alliance with Air France and 13 former French colonies in Central and West Africa that had recently become independent; it operated until 2002 (Amankwah-Amoah & Yaw 2011). Furthermore, there is a co-dependency between BASAs, sovereign aviation legislation and the African Union (AU) liberalisation initiatives. This ultimately led to extremely limited intra-Africa services to such an extent that a person travelling between two African states might have to connect through Europe, the Middle East or several other African countries – trips, which do not constitute efficient passage (Muehlenbeck 2015).

The BASA framework has subsequently been used to restrict new entrants and arbitrarily demarcate market share for stated-owned airlines, at the preference of the regulator, thus leading to protectionism and limited services (Abeyratne 2014; Ismaila, Warnock-Smith & Hubbard 2014; The Travel Insider 2010). Africa has therefore always lacked genuine interconnectivity, and the development of domestic and regional aviation has been very limited (Button, Martini & Scotti 2015a; Rhoades 2004; Schlumberger 2010). To date, airlines’ service offerings are limited because of the lack of competition and consequent high travel costs, government intervention, limited demand, poor infrastructure in a continent with mostly landlocked states, limited connectivity and insufficient scale to negotiate reasonable fuel costs (Heinz & O’Connell 2013; Naudé 2009); therefore, air travel in Africa is still considered to be a luxury.

To counter the negative impact of over-restrictive regulation and BASA framework described earlier, the full effect of the African liberalisation of airline operations is likely to result in the following:

• access to more intra-Africa markets and routes
• increased frequencies and capacity
• more destinations
• enhanced trading
• increased demand and traffic
• lower fares because of enhanced competition
• more passengers due to network optimisation and better pricing strategies
• development of airport hubs for enhanced intra-Africa connectivity
• new entrants to market (as well as market failures from inefficient airlines) (AFRAA 2020; ICAO 2016; InterVISTAS 2021).

There is, however, a broad recognition of the need to liberalise African aviation and there have consequently been several watershed moments regarding the regulation and liberalisation of civil aviation on the African continent, in attempts to realise the benefits associated with a liberalised market. To date, the Declaration of Yamoussoukro in a new African Air Transport Policy (YD) of 1988 has been the most important of the African aviation liberalisation initiatives and describes the requirements for improving air transport services and liberalising the air transport market in Africa. The latest liberalisation initiative, known as the Single African Air Transport Market (SAATM), follows the same principles. To achieve this, the continent has always relied on governments or government structures to set the liberalisation agenda, as evidenced by the dominance of governments in SAATM negotiations (Samunderu 2023). However, as the affected parties, it is suggested that it would be not difficult to achieve air transport liberalisation without airline participation. African airlines have attributed delays in liberalisation to a lack of clear leadership, strategic intent, discipline, technical skill and resources, protectionism, cost of operations, governance disharmony, fear of demise by smaller airlines and limited airline readiness (AIN Online 2019; Logistics Update Africa 2019; This Day 2019; The Guardian 2019). Furthermore, the coronavirus disease 2019 (COVID-19) pandemic had unprecedented adverse economic consequences, especially on the aviation industry, because of the reduction in air passenger traffic and revenue and has further delayed efforts towards liberalisation (African Competition Forum 2021). These delays and limited airline involvement in liberalisation initiatives have negatively impacted airline operations. Airlines have not been able to enter new markets or implement restriction-free efficiencies because of some states still imposing restrictive BASAs, thus losing potential profits (Alves & Forte 2015).

By virtue of the African aviation industry and the YD being initiated by the heads of states in 1988, studies on the impact of the YD have generally been focused on the impact on the continent or on individual states and their economies. The most relevant of these studies include the Open Skies for Africa: implementing the Yamoussoukro decision by Charles Schlumberger and the World Bank, the two IATA InterVistas studies and the case of Nigeria article by Ismaila et al. (2014) among others. Limited studies have been performed on aspects of liberalisation and their effects on airlines in Africa (Amankwah-Amoah & Yaw 2011; Steyn & Mhlanga 2016). However, Scopus and Google Scholar searches reveal that very little research has been carried out on the impact of liberalisation on African airlines or whether they are able to participate in or influence these initiatives. Therefore, the purpose of this study is to establish African airline involvement on African aviation liberalisation and the likely impact of the various liberalisation elements on airline operations.

The rest of this article is organised as follows: section ‘Literature review’ provides an overview of the literature that describes the development of liberalisation efforts in Africa up to SAATM; section ‘Research methods and design’ relates to the study research design and methodology, the results and discussion are highlighted in section ‘Results’; section ‘Discussion of results’ concludes the study, highlights the limitations of study, and recommends future studies and policy amendments.

Literature review

African liberalisation initiatives

At its core, liberalisation focuses on opening up economic industries, which are protected from competition through regulation, thus creating a deregulated environment (Lykotrafiti 2015). The process to liberalise the African air transport industry began in 1988 after the United States and states in Europe had started their economic deregulation, air transport integration and aviation policy liberalisation processes (Rhoades 2004; UNECA 1988). To align liberalisation efforts with those of Western states, the AU has placed considerable focus on African aviation liberalisation development by coordinating meetings, treaties, conventions, resolutions and declarations, which ultimately led to several legal initiatives towards opening up the African skies (Muehlenbeck 2015). Table 2 lists each of the major initiatives, the number of African states which participated, the year and the host state and describes the conclusion or plan of the initiative. These initiatives contextualise the government-driven African aviation liberalisation initiatives to date.

Geopolitical Africa and YD implementation

Africa has 54 sovereign states, 16 of which are land-locked, with limited rail and road infrastructure (El-Houry 2018). To expedite economic integration between neighbouring states, the AU is grouped into RECs, eight of which are recognised as the building blocks of the continent (African Union 2002). Each REC has at least five member states, some of which belong to other RECs or sub-groups, thus creating an overlap (African Union 2002; Mshomba 2017; Schlumberger 2010). The building block of RECs member states are:

• The Arab Maghreb Union (AMU also known as UMA) in the north
• The Economic Community of West African states (ECOWAS) in the west
• The East African Community (EAC) in the east
• The Intergovernmental Authority on Development (IGAD) in the east
• The Southern African Development Community (SADC) in the south
• The Common Market for Eastern and Southern Africa (COMESA) in the southeast
• The Economic Community of Central African states (ECCAS) in the centre;
• The Community of Sahel-Saharan States (CENSAD) in the north (UNECA 2016).

For air transport regimes to fully develop, political and economic institutions need to interact and consider demographic, political, territorial, social and economic conditions (Wang & Heinonen 2015). The RECs have, to date, assisted in establishing alliances with some airlines on the continent (Ssamula & Venter 2005). The RECs thus govern politics, trade, travel and in turn air liberalisation initiatives on the African continent.

The YD decision establishes a monitoring body by integrating the various civil aviation bodies created by the AU. The body is supported by YD implementation institutions to ensure the implementation of the YD (UNECA 1988). These institutions are responsible for formulating policies, legislation and regulations for consumer protection, air safety and fair competition (African Union 2018). The institutions are known as:

• Economic Commission for Africa (ECA), which aims at stimulating economic and social development by integrating trade within the different states (GBN 2016; Rhoades 2004; Steyn & Mhlanga 2016; UNECA 1984, 1999).
• African Civil Aviation Commission (AFCAC), which is responsible for the coordination of African air transport system development with Civil Aviation Authorities (CAAs) of member states in cooperation with the International Civil Aviation Organisation (ICAO) on civil aviation matters (Poggiolini 2004; Sosina 2015; Ssamula & Venter 2005).
• AFRAA which is a paid voluntary membership operator organisation with the purpose of harmonising, protecting and promoting the interests of African airlines supplies (Chingosho 2017; Ssamula & Venter 2005).
• Sovereign states Civil Aviation Authorities which ensure adherence to worldwide safety regulations set by ICAO (African Union 2018).

The YD institutions are also supported by other aviation structures such as the African Civil Aviation Policy (AFCAP) and ICAO (Ssamula & Venter 2005). Although AFRAA, as an airline association, is listed as part of the YD implementation bodies, it only has observer status, as an airline representative to the YD institutions can only make recommendations, which may or may not be used by the AU (African Union 2018). These institutions are responsible for facilitating and establishing the mechanisms required for YD implementation and air transport liberalisation in Africa. They focus primarily on government structures and the legislation and regulations required per State to contribute to the liberalisation of the African skies. In the first instance, airlines should be consulted by their CAAs for their views, if that is the standard practice. If airlines are members of AFRAA, their opinions will be gathered in that forum; however, AFRAA is not a compulsory forum for airlines. The next section discusses the manner in which the BASA elements have been used by some RECs for liberalisation purposes.

Elements and levels of YD implementation

Africa is fragmented with different social, economic and political needs, such that air transport liberalisation is evolving at different stages per region and per state. Tolcha et al. (2021) argue that some aviation liberalised African states have economies, which are repressed. Abate (2013) confirmed that Africa lacks the expertise to grasp and benefit from all the likely positive effects of air transport liberalisation. Surovitsikikh and Lubbe (2015) suggested that states that were ready should start implementation on possible routes. However, this is not always possible operationally, as some of the states that are ready only have thin, unprofitable routes. Therefore, some authors assert that a mutually timed interest from other contracting states is required for open skies to be implemented (Button 2009; Ismaila et al. 2014). Besides, the BASAs contracting states negotiate additional terms, which are not included in the BASA via a confidential memorandum of understanding (MOU). The MOU does not have to be filed with ICAO, while it is compulsory for a BASA to be filed. It is in this MOU that operations are outlined as either more restrictive or liberal than the BASA (Secretariat, W.T.O. 2006; Zhang & Findlay 2014).

The most critical BASA elements defined and outlined in section ‘Introduction’ can be relaxed, thus allowing for a more liberal environment. This can be achieved as follows:

• Granting of rights: The third and fourth freedoms of the air are required for an airline to build a route based on a flight leg, and pair up cities from one international hub to the other, allowing for a service to passengers (Li et al. 2010). The third freedom is the privilege to operate passenger, mail and cargo commercial air services in the territory of the state whose nationality the aircraft possesses to a foreign destination and fourth freedoms can be considered as a return trip (Piermartini & Rousova 2008). These are granted as per the BASA or in the MOU and can be expanded to include the fifth freedom, which allows airlines to build a hub-spoke network outside of their home base and spread its market beyond their state (Weber & John 2000). Fifth freedoms are not easily granted during BASA negotiations, as they ‘allow the freedom to carry freight and/or passengers between two countries by an airline of a third country enroute with origin and/or destination in its home country’ (Piermartini & Rousova 2008:21). Tariffs – free pricing, where there is no intervention from either government on ticket fares – are considered more liberal as the market dictates the cost of air travel (Mykhalchenko 2014; Williams 2008).
• Cooperative arrangements: For as long as the BASA allows and the sovereign laws allow, airlines can enter into cooperative agreements; these are wildly used when the ownership and control, as well as the designation clauses are more restrictive, thus allowing for an airline to have a presence in a route where they do not necessarily have physical operations boundaries (Gheorghe et al. 2017; Lykotrafiti 2015; Ustaömera, Durmaz & Lei 2015). The most common of these are interline, code share agreements and alliance membership.
• Ownership and control: Ownership and control stems from the principles of national sovereignty and dictates the percentage citizens of the state should own on an airline before the airline can be designated by its state of registration, thus restricting multinational ownership and foreign investment (Chang, Williams & Hsua 2004; InterVISTAS 2014).
• Capacity and frequency: A higher capacity and frequency on a busy route can result in lower fares, because of high load factors for the airline in a free determination regime, as the airline will be allowed to fully utilise its capacity (Abate & Christidis 2017). A liberalised environment ensures that the capacity and frequency are not restricted through BASA negotiations.
• Designation: In a liberalised environment, multiple designation is common, as the BASA allows for each contracting state to designate more than two airlines and these are then known as eligible airlines and can be owned by multiple states for YD purposes (Secretariat, W.T.O. 2006; Zhang & Findlay 2014). A fully liberalised environment considers where the airline has its PPB and effectively controls the financial and strategic operations of the business from the designating State, more than considering its ownership (Secretariat, W.T.O. 2006).

In 2011, using the most critical BASA elements to determine liberalisation, the EU-Africa infrastructure partnership conducted a study evaluating the implementation of the YD Decision in Africa (EU-Africa Infrastructure Partnership 2011). The study focused on five RECs; the results outlining the state of implementation are depicted in Table 3.

Furthermore, using 12 states, three countries per four African regions, IATA conducted a study in 2014 and a follow-up study in 2021 on the potential impact of full implementation of the YD. The study found the following likely outcomes for the selected states:

• an increase in passenger movements
• an increase in passenger volumes
• decrease in air fares
• direct flights
• an increase in city pairs.
• a direct link between an increase in capacity and an increase in frequency of SAATM (IATA 2021; InterVISTAS 2014, 2021).

The passenger benefits as a result of the aforesaid included more direct flights, new routes, less travel time, better connections, frequent flights, lower fares, reliable service, which would ultimately contribute to economic growth and foreign direct investments via trade, tourism and employment (Button 2009; Ismaila et al. 2014; Tolcha et al. 2021). The 2014 IATA study found that Nigeria had deregulated domestic aviation, but not international aviation as they required a contracting State to do the same and had not found one that was willing (Ismaila et al. 2014). However, their efforts were considered to be successful, in comparison to other states, because that led to an increase in airline privatisation, foreign carrier participation, investments and connectivity (Ismaila et al. 2014). These studies show that the presence of air transport agreements in SADC and ECOWAS has yielded positive results for those RECs that have adopted some level of liberalisation.

Research methods and design

The main objectives of the study were to determine the involvement of airlines in African liberalisation development and the likely impact of the various liberalisation elements on airline operations. To this end, it was necessary to obtain information and opinions from African airlines to establish their involvement in the air transport liberalisation negotiations and initiatives, as the legislation impacts them as operators and service providers to passengers. By virtue of the YD being focused on Africa, the focus was on airlines, which operated intra-Africa services. The study was conducted during the COVID-19 pandemic.

Qualitative methods were selected because of their ability to describe a social phenomenon in a natural setting (Johansson 2019; Meadows 2003). To triangulate available literature, industry opinions and the results, an objective approach was applied (Guba & Lincoln 1994). While IATA has conducted some studies on aspects of YD and SAATM (IATA 2021; InterVISTAS 2014, 2021), there is very limited research on the impact of liberalisation legislation in Africa on African airlines, and this study therefore lends itself to an exploratory-descriptive study method. This allowed for the identification of different themes, which were used to understand the developments in legislation as it related to airlines and describe the impact it would have on airlines.

To ensure flexibility and spontaneous responses while guaranteeing explicit reflections of experiences, interview guidelines were prepared to collect primary data through semi-structured qualitative interviews (Hox & Boeije 2005). This method allowed for development of an interview guide based on the results of the literature review, while permitting subordinate questions in a face-to-face interview setting or through virtual conferencing tools (Moser & Korstjens 2018; Wahyuni 2012). In line with the research objective, the interview guide and questionnaire were based on the airline’s understanding of liberalisation legislation development, their involvement in it and the impact experienced thus far.

The general population for this study was African airlines from the various RECs. The target population included African-owned and registered scheduled intra-Africa air passenger service airlines with their PPB in an African State, as recognised and defined by the AU. This was to ensure there was a view from most African regions, considering that the study aimed at achieving a broad perspective of liberalisation initiatives and their impact on the continent’s airlines. As a result of the symbolic continental representation and theory development required for the study, non-probability sampling was used (Ritchie, Lewis & Elam 2003). To ensure that there were relevant responses to the research question, purposive sampling was used (Saunders, Lewis & Thornhill 2012). Table 4 lists the sample selected and also the characteristics used for selection; these include participants’ position in company, ownership status, number of destinations in the rest of the world, the continent and domestically (home), years in service, number of aircraft registered and annual passenger movement. The participants were from four RECs are described as A, B, C and D.

This study used constant comparison and content analysis due to its ability to identify common themes based on language used (Lune & Berg 2016). Equally critical to the analysis process is to revisit the literature review and link the emerging thematic patterns to the various theories and legislative developments, to determine lessons learnt for Africa and the potential impact for the African airlines (Broom 2005).

Ethical considerations

Ethical clearance to conduct this study was obtained from the University of Johannesburg Transport and Logistics Ethics Committee (No. 2020TSCM-0007).

Results

The World Trade Organization highlighted the manner in which the seven key elements of a BASA have been used to indicate a liberalised environment, as described in Table 3 (Tolcha et al. 2021). Bilateral Air Services Agreements are negotiated between states, and airlines are not generally part of the negotiation; however, they need the BASA in order to conduct their intra-Africa air operations. Therefore, airlines are needed to operate in liberalised environments, while governed by continental and sovereign legislation (Tolcha et al. 2021). Airline participants were asked to provide their opinions on the various BASA elements, the results of which are described in the following sections. Table has assigned relevant codes to maintain anonymity of participants.

Legislation development

Most respondents stated they were not fully involved in the development of the aviation legislation in their respective states, but rather provided an oversight function (in some cases), even though the ultimate decision lay with government authorities. This was however viewed as a historical matter because the YD was instigated by heads of government, with no possibility of current intervention. Nonetheless, the airlines found the YD and their respective sovereign state’s legislations outdated and irrelevant to the current liberalisation debate:

‘Firstly, the observation is that the regulations are old, and they are extremely poorly constructed.’ (REC_A, AAA, C-group)

‘If you look at the YD or decision itself, it was the heads of states that decided on it and then it was the ministers responsible for aviation in 1990. I think that’s why you then find a huge issue when it needs to be or is in a democratic […] most African states gained independence and following shortly after that, was each state started having a flag carrier. So, in 1988 when the Heads of State met, that was the tone. Now airlines’ involvement is more to protect their interest … our involvement is more oversight to make sure our interests are taken care of.’ (REC_A, AAB, Middle management)

‘In most cases airlines are side-lined, and governments just impose regulations and policies on them which are infringing to operations and expansion. The crafting out of regulations and policies that pertain to air transport. Airlines have to actually be involved in this process, as they are the operators and they see what is happening, they are exposed to operations.’ (REC_C, BCF, C-group)

‘There wasn’t any official meeting or official facilitation to involve airlines, it was rather dealt with the government … airlines are not truly, truly, truly involved.’ (REC_B, BDG, C-group)

‘The YD at the time it was being introduced, it actually emphasised an environment where we didn’t have strong African carriers and whose network within the continent was very poor.’ (REC_C, CFI, Middle management)

A view from privately owned airline in an environment where they were the sole carrier differed from the rest was as follows:

‘Generally, air transport legislations are made by states; and African airlines are involved in the process being requested by their states to make inputs to proposed legislations through for stakeholder workshops. Airlines, therefore, encourage their states to reject, implement or delay implementation of these legislations. For instance, it is often alleged that airlines encourage their states to delay on ratification and implementation of the YD or SAATM or liberalisation air transport market in Africa, largely because such airlines believe liberalisation will open them up to competition from perceived stronger carriers, who they purport, will take over their markets.’ (REC_B, BEH, C-group)

Legislation development is thus generally considered to be the domain of government, with little, if any, involvement from the airlines, albeit they are the parties most affected by the legislative decisions.

Designation

The majority of participants stated that multiple designation was allowed in their country, regardless of whether the airlines were state-owned or not. A minority stated that their regulator would accept a single designation (single airline), multiple designations (multiple airlines) or conditional designation of a foreign airline or airlines from the same country, based on the possibility of a similar exchange, if allowed in the BASA from their counterpart in the requesting airline’s home base country. The rest advised that their regulator based their decision on the number of contracting countries interested airlines, given that they only had one international carrier, which was state-owned:

‘What we do is restrict designation but not on a country -to-country basis but rather a city-pair to city-pair … The designation is restricted to a maximum of three airlines per country per city-pair. The reason is to avoid overbearing the other side.’ (REC_A, AAE, C-group)

Ownership

The majority stated their country of origin had state-owned airlines. At least a quarter stated that they were the sole carriers for their respective countries, and another felt national carriers received preferential treatment from their regulators and also had an influence on regulation:

‘They do have influence over the regulators … it is purely out of the regulators not understanding the commercials of the airlines.’ (REC_A, AAB, Middle management)

Regarding ownership, designation and operations, a set of the participants believed their regulators would endorse PPB. Another set stated their country had not advanced to that level and believed in the ownership and effective control clause would take precedence. A group relied on the YD signatory status of the contracting states and the rest used a combination of PPB and effective control, therefore it was on a case-by-case basis:

‘With states who are party to the YD, the principal place of business is followed, while with those states, not party to YD, ownership and effective control is followed.’ (REC_A, AAC, Middle management)

State-owned airlines that were also called national carriers were deemed to be protected, as they received government financial support, which privately owned airlines did not receive, and were therefore regarded as unduly receiving designation at the expense of other airlines. Furthermore, it was said that they had a large influence on the aviation national strategy, thus influencing legislation and regulation. It was generally asserted that the state-owned airlines would not survive liberalisation, should be scrapped and their existence was one of the reasons for a delay in implementation:

‘There is only one African airline that is a national carrier that is self-sufficient or sustainable or viable … I don’t think that to take a flawed regime and give it more liberalisation is going to make any difference because the competition between state-owned carriers is more about vanity than practicality or economic viability or strategic necessity. So, liberalisation is not going to make any difference, what has to happen is the concept of having national carriers has to go.’ (REC_A, AAA, C-group)

‘Let the people compete. Let’s move away from this context of protectionism of thinking the full implementation of YD will be on the airlines owned by government and so they want to protect them. Imagine if all countries in Africa had their own carriers and each country decided to protect their own carrier, who would want to fly there? If a country decides to establish a national airline, they must be ready to compete. The airline industry is a fast-moving industry, it is very competitive and so they have to be ready to compete.’ (REC_B, BCF, C-group)

‘When we had a national carrier, it enjoyed monopoly on several routes, although they were weak. Now we have a lot of private airlines.’ (REC_B, BEH, C-group)

Fifth freedoms (Granting of Rights)

A distinction on whether third and fourth freedom rights existed was critical to the decision-making process of the participants. The majority were of the view that the YD or SAATM signatory status of a contracting state should determine the granting of these rights, while a minority believed that these rights should not be granted standardly through the signatory process. Most participants were of the view that fifth freedom requests were open to abuse and were usually not used efficiently for connectivity and access, but rather to block smaller airlines:

‘As long as the fifth freedoms are automatic and readily available, there is a natural imbalance. In my opinion there should be accessibility to freedom traffic rights but on the premise only that there isn’t a third and fourth freedom traffic right operator. Otherwise, you create unfair competition, and the unfair contest goes about certain airlines, state-owned airlines in particular, are subsidised; this creates unfair competition.’ (REC_A, AAA, C-group)

‘With states who are party to the YD, intra-Africa fifth freedom traffic rights are exchanged. With states who are not party to the YD, 5th freedom traffic rights are only permitted where no third or fourth freedom operations are in place.’ (REC_A, AAC, Middle management)

Capacity and frequency

Only a minority stated that this element was restricted, while the rest stated that this depended on the BASA and was mostly unlimited, or they considered the YD or SAATM signatory status of a contracting state. However, the BASA usually took precedence over any other agreement:

‘Although we are not part of SAATM yet, we do practice YD principles. We normally give a comfortable number of frequencies. Today our CAA is very open in terms of a number of frequencies with a minimum of seven frequencies given to African airlines.’ (REC_D, DHK, C-group)

Commercial agreements

All the airlines advised that cooperative arrangements were permissible. However, some peer airlines did not meet the required safety standards, did not have a long track record of operations, or provided unreliable service and, as such, could not offer meaningful partnerships:

‘Where it may make sense for us to forge an interline commercial relationship with that carrier, in order to protect the interests of our customers collectively, because very often we share customers. If one looks at the principle behind the IOSA audited standard, the idea is that when airlines wish to interline or share code with each other, they would accept the IOSA audit as a reference of that company’s operational safety standards and its compliance with civil aviation regulations and standards.’ (REC_A, AAA, C-group)

‘We have had a lot of experience with previous partnerships that we did in the field. You really supposed to get something out from a partnership… Partnerships are supposed to make sense at some point, be present in the geographical area that you are not. We look for partnerships that are more serious, more strategic, and more conscious, of course, one that is not present in several regions in Africa and are not present in domestic points that we are in. Those are the perfect candidates to partner with.’ (REC_D, DHK, C-group)

‘No airline can be self-fulfilled, self-independent and that is why most carriers collapse. You need to cooperate to operate or else you will be chased off the runway.’ (REC_B, BDG, C-group)

Pricing (Tariffs)

The airline experience was that pricing was deregulated; however, there was indirect tactical regulation, especially for foreign operators entering a contracting state. This implies that expensive processes which are excluded from BASA negotiations are imposed on foreign carriers who have been designated to operate intra-Africa services by their country to another country. The regulators of the receiving foreign country do not impose this process on their own domestic carriers; however, they use the MOU and domestic regulations as the legal backbone to increase the cost of service for the foreign operator. The foreign operator then has higher prices than the domestic airline as a result of the input cost and they can charge customers less, thus creating a non-competitive environment, hence it is referred to as tactical regulation:

‘The problem with Africa and one of the biggest impediments to the true implementation of SAATM, is that every CAA seems to require to perform an operational safety oversight audit on every foreign airline, wishing to get access to a destination within that state. That for me is an impediment, because it’s bureaucracy, it is not cost effective from an airline point of view, and it takes time.’ (REC_A, AAA, C-group)

‘Our experience is that there is a division under the civil aviation authority, they call them economic regulation and control. Where we have to submit periodically, we have to submit costs, outflow and things like that … I must inform the price regulatory control unit that I have to increase my fare and I have to justify it. So as much as they tell you, it is free pricing, we find that the CAA, tactfully regulates it.’ (REC_B, BEH, C-group)

‘Even if the bilateral air service agreement allows you to do so, they will put in another new dimension that has come up of national laws, in their national law that things happen and issue another aspect, called economic authority.’ (REC_C, CFI, C-group)

Other

The airlines were given an opportunity to reflect on other elements of the YD on which they could comment. Many participants were of the view that decisions made at AU level are not always ratified such that as operators, they can experience the benefit. They further added that beyond neighbourliness and being in the same REC, social, religious, continental ties, language, cultural and diplomatic relations determined the level of liberalisation an aeronautical authority is willing to give. Lastly, the continent was deemed to be fragmented and not in a position to harmonise because of a lack of political will:

‘One of the challenges with the implementation of YD is that there are 54 states which are members of the African Union and each one of them has its own CAA.’ (REC_A, AAA, C-group)

‘Also a country relations, so traditionally when countries have had very strong ties and have had very good relations, trade relations and the like, you will tend to have some more liberal BASAs while when it is a new relationship you are building with a country, maybe it is an issue of trust or something like that but then they would normally start off with these restrictions and then as the years go by and you are reviewing the BASAs then you end up getting a bit more additions, so it’s also highly driven by the relations within the countries beyond just what the airlines in those countries want to achieve.’ (REC_C, CGJ, Senior management)

Discussion

Using some of the most important BASA elements, the preceding section provided the airlines’ perspectives on their role in the liberalisation of aviation legislation in their respective states. The participants could not find justification for the reliance on the BASA regime, which they found to be restrictive and outdated especially given the stated policy direction of air service liberalisation on the continent. At its core and by virtue of the majority of airlines being state-owned during the 1988 YD discussions, the liberalisation debate had never really considered the existence of privately owned airlines (Guttery 1998). This has created a disconnect between regulators and private operators. The airlines expressed that regulators have a limited understanding of the operational environment and low levels of expertise of the processes, operations and protocols relating to operating an air service and should therefore not be the only parties involved in charting the liberalisation agenda. This is aligned with Button (2020) who found that the delays to liberalisation and the lack of aviation commercial expertise are blamed for the challenges of air transport (Button 2020).

In addition, it was found that airlines, especially privately owned airlines, held little to no influence in liberalisation negotiations or initiatives. State-owned airlines, usually with the state as single or majority shareholder, could however be considered as part of the national and broader continental strategy and therefore their views were always represented by the state. The literature review established that the aeronautical authority has a mandate to protect the interests of the state and negotiate on behalf of the airlines owned by the state or its citizens (Li et al. 2010). It was further believed that the existence of state-owned airlines negated the liberalisation efforts because of the financial assistance and preferential treatment they are granted at times. The preference could also be in the form of unduly granted designation and other stated-owned enterprises providing lower service costs or access to lower cost forms of financing. This would invariably create a monopolistic pricing environment at the expense of privately owned airlines and a less competitive market for passengers. The literature review found that in some states, airports and airlines are usually government-owned, resulting in monopolies and higher costs for the passengers (Heinz & O’Connell 2013).

The ownership element was ultimately considered to be a major obstacle for airlines to experience liberalisation, because it influenced designation, which in turn would influence the other elements described by the BASA (Surovitsikikh & Lubbe 2015). Most of the airlines advised that they were part of a multiple designation regime, which is considered liberal by YD and SAATM standards, as opposed to traditional or regulated BASAs. Principal place of business, which would allow for the creation of multinational airlines as per the now unoperational Air Afrique, is considered to be the best liberalised regime under the ownership element (Amankwah-Amoaha & Yaw 2014). The fifth freedoms, if used correctly, were deemed to be a great contribution to connectivity, thus making use of unrestricted capacity and frequencies, which is generally considered to be a proliberalisation stance (Surovitsikikh & Lubbe 2015).

Airlines that were based in states of the same REC agreed that there were less restrictions on their BASA negotiations than with states from other RECs. This may be credited to the YD strategy on Pan-African integration and cooperation, which focuses on RECs as the main mechanisms for facilitating economic integration between neighbouring states (African Union [AU] 2002). Further cooperative agreements assisted airlines to ensure that they had a larger footprint and presence on the continent, even though they were usually only by airlines based in a single REC. The airlines also considered diplomatic relations and market-driven pricing strategies to be contributing factors to liberalisation.

Conclusion and recommendations

This study sought to involvement of airlines in African liberalisation development and the potential impact of the various liberalisation elements on airline operations. Although there have been numerous air transport liberalisation initiatives in Africa and several studies that have investigated aspects such as the potential impact on African economies, the literature available on these developments, in terms of their effects on airlines, has been thin. Therefore, the first limitation of the study was a dearth of literature on aviation in Africa and the liberalisation of air services operations. This was mitigated as far as possible by considering the existing related studies on air transport liberalisation in Africa, as well the effects and successes of liberalisation in various environments internationally, including the EU and US liberalisation successes.

As a result of delays in full realisation of the YD, the second limitation is that literature on air transport liberalisation in Africa focuses on the potential impact rather than the actual impact of liberalisation efforts. This study sought to overcome that by being one of the few to consider the alternative perspective from the airlines, therefore adding to the literature on potential liberalisation effects.

The third limitation was the low population of 41 airlines, where only 20 airlines met the qualifying criteria and, from that, 12 airlines agreed to participate. The fourth limitation was the COVID-19 pandemic, as the study was conducted during its peak and not all airlines were operating at the time. Finally, there was no participation of airlines from North Africa and/or the AMU or UMA REC, which are usually included in Middle Eastern and Western Asia academic and political studies. The data however started to converge after seven interviews, whereafter no new themes emerged and data saturation was considered to have been achieved. While representativity cannot be claimed, the level of participants provided a clear overview of the intra-African airlines’ perspectives on the impact of liberalisation on their operations.

The African air transport liberalisation process started in the late 1980s, and although considerable agreements have been signed and policies adopted, the continent’s air transport services have not yet been fully liberalised. Several studies, such as the IATA InterVISTAS studies, have sought to describe the impact that such liberalisation might have on Africa’s economies; however, there has been little to consider the impact on the continent’s airlines, which are likely to be most affected by any liberalisation efforts. This study therefore sought to determine the African airline’s perspective on their ability to participate in the liberalisation processes and the potential effects that these might have on their organisations.

Based on the opinions of the participants from the airlines, it was asserted that the archaic nature of the Chicago Convention and the BASAs has led to their irrelevance in relation to air transport liberalisation. Furthermore, there is a disconnect between regulators that tend to protect state-owned airlines and private airlines that seek a less regulated environment, in their efforts to ensure full liberalisation is achieved. It is therefore recommended that the delays to full liberalisation implementation, as envisaged by YD and SAATM, which are the result of protecting state-owned airlines, should be investigated together with the independence or separation of duties, regarding the dual role by the state as a shareholder and a regulator in States where there are multiple designated airlines and one of them is state-owned.

A comparative analysis be conducted on airline participation and influence on the development of liberalisation legislation per State on the continent, which is based on airline operational needs. This will, firstly, provide an overview of the need for interventions per State. Secondly, it will provide a framework to the RECs to identify issues that need to be addressed to enable liberalisation within the REC, as envisaged by the AU. Thirdly, the comparison enables airlines and regulators to determine with which states negotiations can be conducted and agreements reached regarding liberalisation. Finally, this would provide a broad perspective on the continental liberalisation status quo and enable a road map for future liberalisation efforts.

Participants indicated, although pricing was deregulated, that liberalisation efforts were often hampered by the indirect tactical pricing imposed by the various CAAs, by means of requiring that operational safety oversight audits be conducted on foreign operators. This imposes additional and costly processes that were not originally agreed to in the BASA on operators that have been designated to operate intra-African services from one state to another, thereby creating a non-competitive environment. It is therefore recommended that:

The potential harmonisation of safety regulation, especially for intra-Africa connectivity, should also be investigated by the YD implementation bodies, especially with regard to the extent to which this constrains liberalisation efforts and the impact this has on airline connectivity. Together with the given studies, this would assist in providing policy direction to individual states, as well as the AU, to facilitate full air transport liberalisation in Africa.

Government entities have an obligation to protect the interests of the state by ensuring that legislation and regulations of the State are adhered to. Therefore, they need to ensure that the full spectrum of aviation and liberalisation legislation and national strategies are developed for the benefit of citizens and socioeconomic development, rather than for the protection of state-owned airlines exclusively. The results revealed that this concept is fully understood by airlines; however, the participants believed that this is open to abuse by state-owned airlines, as the regulator is also considered as their shareholder, which therefore represents a conflict of interest. Furthermore, the state officials do not necessarily have the skillset required to inform permanent legal changes to intra-Africa air operations, which will ultimately influence the African aviation liberalisation path. It is therefore recommended that the study, as envisaged here, regarding the separation of the regulator and the shareholder, be conducted. That a skills audit be conducted per State to identify areas of skills requirements and enable policies and strategies to acquire or develop the requisite skills.

Considering the impact that legislation has on them, airlines expressed their need to be more involved and for their representation to hold sway at all decision-making levels, especially with regard to their operations. It is therefore recommended that at AU level, AFRAA, as YD implementation body and airline association, play a much larger role on behalf of airlines as a member of the YD implementation and monitoring body and be able to influence the passing of YD-related resolutions at AU level, especially given that airlines are not in a position to present themselves individually.

Nationally, the government structures responsible for aviation should include airlines in their strategic decision-making processes, whether or not they are state-owned. This is to ensure that resolutions passed at AU level have considered the interests of the operators and that the operators are adequately prepared for the outcomes and impacts of the decisions. The specific inclusion of airlines in law-making is to ensure that the national strategy, service providers and passengers benefit from the laws being passed and, as such, their involvement should not be limited to consultation levels only, but should acknowledge that the airlines will have to ensure compliance with the laws and are responsible for provision of the services that enable the African policy of full liberalisation and, as such, should be an integral part of the process.

This study aims to be one of the first to actively focus on airline perspective on their inclusion in air transport liberalisation regulation initiatives. Well-researched studies to date on the topic focus on RECs, specific countries, the economic value and passengers, more than they do on airlines. Policymakers should recognise that airlines are the first line of defence for all commercial aviation-related matters and should therefore consider airline opinion beyond that of AFRAA observer status at AU.

Acknowledgements

The authors would like to acknowledge the following: Aaron Munetsi for providing the airline executives contact list. Airline participants for participating in study. Paul Steele and the IATA Africa team for IATA database. Thabile Migogo, Zandile Ngobe, and Hlalanathi November for interviews transcribing. T.N.T would like to thank W.N.K for getting them started on the journey.

The authors declare that they have no financial or personal relationship(s) that may have inappropriately influenced them in writing this article.

T.N.T. performed the literature study and the primary research and wrote the article from the findings of her Doctor of Philosophy thesis at the University of Johannesburg. R.L. acted as the supervisor and academically reviewed the work throughout the research process and provided direction to the study, J.W. acted as the co-supervisor of the thesis and reviewed the article and made suggestions and revisions.

This research received no specific grant from any funding agency in the public, commercial or not-for-profit sectors.

Data sharing is not applicable to this article as no new data were created or analysed in this study.

The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of any affiliated agency of the authors.

References