in Air Transport / Business & Finance

IATA sees Namibia reaping benefits of liberalised African air markets

Posted 9 July 2015 · Add Comment

The International Air Transport Association (IATA) says more jobs could be generated and additional economic growth achieved in Namibia if intra-African markets were opened up to permit greater airline transport connectivity.



This was the major finding of a Value of Aviation for Africa econometric report commissioned by IATA. The report, which examines the impact of liberalised air transport for Namibia and 11 other major African economies, will be presented to Namibia’s Minister of Works & Transport, the Hon. Alpheus !Naruseb , this evening.

The report, undertaken for IATA by the experienced independent economic consultants InterVISTAS, Found that Namibia stands to benefit from an additional 10,600 jobs and $94.2 million (approx. N$1,17 billion at current exchange rates) additional GDP per year if just the countries in the study were to implement the 1999 Yamoussoukro Decision to open Africa’s skies to African airlines.

"This report demonstrates beyond doubt the tremendous potential for Namibia if the shackles on aviation are taken off. But for the full benefits to be realised, Namibia should work to encourage all African states to embrace the Yamoussoukro agenda. A potential five million passengers a year are being denied the chance to travel within Africa because of unnecessary restrictions on establishing air routes.

"Employment and economic growth are just the tip of the iceberg in terms of the benefits of connectivity—aviation plays a major role in helping to fulfil the African Union’s mission of an integrated, prosperous and peaceful Africa," said Raphael Kuuchi, IATA’s Vice President for Africa.

The 12 nations studied in the report are: Algeria, Angola, Egypt, Ethiopia, Ghana, Kenya, Namibia, Nigeria, Senegal, South Africa, Tunisia and Uganda. The Yamoussoukro Decision of 1999 committed 44 signatory countries to deregulating air services and to opening regional air markets to transnational competition.

Implementation of this agreement, however, has been slow, and the benefits have not been realised. Africa is well-placed to enjoy sustained economic growth thanks to a young, expanding and urbanising population, combined with abundant natural resources. But because intra-African aviation connectivity and the economic health of its airlines are weaker than they could be, opportunities for job creation, business growth and innovation are being lost.

"African airlines are expected to return a profit of just $100 million in 2015, on a net profit margin of 0.8%, the thinnest of all aviation regions. While other regions are experiencing robust growth this year, demand for air travel within the regulatory-constrained intra-African market is only expected to grow by 3.2% this year. Smarter regulation, giving African carriers greater access to all intra-African markets, would stimulate competition and with it demand for travel as businesses and traders were able to expand into those markets. The net result in much stronger growth not only for the airlines, but for the economies of those countries that embrace the "open skies" framework," Mr Kuuchi added.

The research found that liberalisation would cause airfares to fall by between 25% and 37% in the 12 countries under review, making air travel more affordable to more people. In turn, this will help to stimulate an 81% increase in traffic flows between the 12 countries within two to three years. In terms of passenger trips, this translates to an increase from the present 6.1 million passengers to 11.0 million passenger trips, i.e. an additional 4.9 million passenger trips. For Namibia alone, this would be a 92% increase with passenger movements swelling to 1,107,200 from 577,800 recorded in 2013. The bulk of this growth would be on the air services linking Namibia with Angola and South Africa.

InterVISTAS’s study concludes that the additional jobs and economic activity created directly by the airlines and indirectly by an open skies framework facilitating increased trade, investment, business, tourism and productivity, will drive faster GDP growth - an additional $1,296.5 billion million across the 12 countries, of which $94.2 million, or a 0.56% increase, projected for Namibia. This would be accompanied by wider-spread prosperity for people in the participating countries.

Aviation already supports 6.9 million jobs and more than $80 billion in GDP across Africa. The InterVISTAS research demonstrates the additional services generated by liberalisation between Namibia and the other 11 key markets will provide an extra 155,000 jobs and $1.3 billion in annual GDP. The jobs and GDP impact for the 12 countries in the study are listed in the table below:

Nation

Additional Employment

Additional GDP (USD)

Algeria

11,100

123.6 million

Angola

15,300

137.1 million

Egypt

11,300

114.2 million

Ethiopia

14,800

59.8 million

Ghana

9,500

46.8 million

Kenya

15,900

76.9 million

Namibia

10,600

94.2 million

Nigeria

17,400

128.2 million

Senegal

8,000

40.5 million

South Africa

14,500

283.9 million

Tunisia

8,100

113.7 million

Uganda

18,600

77.6 million

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