Chris Zweigenthal, Chief Executive Officer, Airlines Association of Southern Africa

ATN: What is the background of AASA and how does it fot into the aviation industry?

CZ: The Airlines Association of Southern Africa (AASA) was established in 1970.  It is a regional Airline Association, with a mandate to look after the mutual interests of Southern African airlines (from the South African Development Community (SADC) including the Indian Ocean Islands).  It has 20 Airline Members and 30 Associate Members, who include aircraft and engine manufacturers, airports, air navigation and industry service providers and partners which add value to the airline industry in the region.  AASA works closely with IATA and AFRAA and support the implementation of global airline initiatives in the region...

ATN: Provide us with some further detail on your mandate from your members

CZ: AASA’s mandate is to work in all areas of the aviation industry representing the collective best interests of its members, thereby ensuring the sustainability of the airline industry in the region.  AASA is directly involved in all areas of common interest to its members.  This includes issues related to industry charges, taxes and levies where these are applied to all airlines.  Our task to be directly involved in consultations with all regulated entities (Airports, Air Navigation Services, Weather Services, Civil Aviation Authorities, etc) and to coordinate the industry input and response to proposed tariff amendments which will impact the airlines and / or passengers.  In addition, we interact and contribute to Government, public and private forums in respect of ICAO SARPS, State Letters, Government Policy and Regulations across the entire airline business spectrum (Policy, Finance, Legal, Operational, Human Resources, Skills Development, Safety and Security).  We become involved wherever we are mandated to act in the region and where our members request specific assistance. We do not become involved in any competitive issues between our members as this would contravene Competition Legislation and Regulations.

ATN: What is your view on the status of the southern African aviation market?

CZ: Within the context of a bullish global outlook presented by IATA at its recent AGM in Miami, Africa continues to face challenges and remains the lowest performing region by way of profitability.

Africa is home to eight of the world’s top 20 growing economies with half of them in Southern Africa.  The current regional performance is however mixed with South Africa currently achieving around a 2% GDP growth.  This is reflected in the growth of aviation, where outside of South Africa, growth is projected at around 6% per annum, whereas within South Africa a moderate 3% growth is forecast for 2015 on the back of a 2.4% growth in 2014.

Notwithstanding, South Africa remains the largest aviation market in Africa and there is great interest to enter the market.  Since the demise of 1time airlines and Velvet Sky, the South African scheduled domestic market has been served primarily by South African Airways, British Airways Comair, Kulula, Mango Airlines, SA Express and SA Airlink.  Since the end of 2014, two additional low cost airlines, FlySafair and Skywise have entered the market and there are talks of further airlines wishing to enter the market.  Africa, including South Africa is a high cost aviation environment, driven largely by the US$ based operating costs, such as jet fuel, maintenance costs, distribution charges, exacerbated by the impact of the high rate of exchange on Africa’s weak currencies. High infrastructure charges and Government taxes contribute to the high cost base as well.   This places pressure on yields and profitability and it is important that additional markets be stimulated to fill the additional capacity being provided in the market. 

The airport network is fairly well developed and whilst there are certainly areas requiring attention, it probably fair to say that infrastructure development of road and rail is more costly and very time consuming.  Hence, aviation can play a role of opening up Africa more extensively and more cost effectively at this time.

ATN: Will liberalization and the implementation of the Yamoussoukro Decision in Africa become a reality?

CZ: The Yamoussoukro Declaration of 1988 followed by the Yamoussoukro Decision (YD) of 1999 provided the framework for the liberalization of air transport services in Africa.  However, it has never been implemented on a continental wide basis.  Since 2002, Competition Regulations, Dispute Resolution Mechanisms and Implementing Provisions have been formulated and can be utilized for the YD implementation. The African Civil Aviation Commission (AFCAC) was appointed by the AU as the Executing Agency in 2007 but resourcing of AFCAC needs to be completed before they are able to assume the full responsibility for YD implementation.  In the interim, the YD has been implemented with limited success in certain regions. 

However, new momentum was ingested into the liberalization process during early 2015 with the announcement by the South African Minister of Transport, Ms Dipuo Peters on behalf of 12 African States, of the intention to establish a Single African Aviation Market by 2017 – this was further ratified in a Ministers of Transport Meeting in Addis Ababa at the end of January 2015.   Whilst States work towards this goal, liberalization of markets between like-minded States will continue.   There is still a journey towards liberalization and the benefits that it will bring to Africa.  Without commitment to liberalization, States will continue to regulate activity through bilateral air service agreement negotiation to try to meet additional market demands.  This is not ideal and not a solution to create an integrated intra-African network but a measure to achieve some development.

ATN: Do governments in the region support aviation and do they understand the benefits brought about through the industry?

CZ: Governments support aviation.  For State owned airlines this translates into political and financial support. But it is important that they empower their Boards and Management to fulfill their mandate.  It is also important that Government policies support free and fair competition and development of airlines both public and private. Several studies have been undertaken to show the benefits of liberalization not only to Governments but to all stakeholders.  The Benefits of Aviation Studies, by Oxford Economics, quantified the economic, social and financial benefits of aviation in several individual States and collectively for Africa.  In addition, a recently completed study by Intervistas, commissioned by IATA, AFCAC and AFRAA, quantified the benefits to twelve African States should liberalization in the form of the Yamoussoukro Decision of 1999 be implemented.  There have been several other private studies, and to my knowledge, not one has indicated a negative benefit to the State or Africa as a whole. 

ATN: What is the state of infrastructure and where is improvement necessary in southern Africa and Africa as a whole?

 
CZ: During the past few years there has been quite significant development of the infrastructure in the region.  Within South Africa, the significant investment made to the Airport infrastructure in preparation for the 2010 Soccer World Cup in particular to the three international airports at OR Tambo, Cape Town and King Shaka International airports, has provided a good base from which further development can be undertaken to meet demand.  New airport infrastructure has been constructed within the past few years in Maputo, Botswana, Namibia, Zambia, Zimbabwe, Mauritius, and Swaziland, with further development planned in other SADC countries.  New developments have either taken place or are in progress in other States within Africa such as Kenya, Egypt, Senegal, Ethiopia and others as States respond to additional demand.  In the provision of Air Traffic Services, ATNS provides services within South Africa and assist in certain SADC States where requested to do so.  The VSAT and Nafisat network within SADC and the East African region is also provided and managed by ATNS and ASECNA provides services to its States primarily in the West African region.

ATN: Has Africa made strides in terms of improved safety oversight in the region?

CZ: Safety oversight in Africa has received significant attention from major role players in the region.  In 2012, an AFI Safety Summit organized under the auspices of ICAO and IATA was held in Johannesburg where commitment was made by Industry Associations to implement initiatives to improve the safety record in Africa.  Specific initiatives were agreed to including the improvement of safety oversight, implementation of safety management systems, runway safety programs etc., with the goal of improving the safety record by 50% in 215 compared to 2012 levels.  Significant progress has been made in this area with the 2014 IATA safety results showing zero IATA airline incidents, notwithstanding that the statistics for non IATA airlines and general aviation can be improved.  The above indicates that progress is being made in the improvement of safety oversight.  In addition, where the EU still has imposed bans on aircraft from African States flying into the EU, these States are working hard together with ICAO and other industry experts to address the areas of alleged non compliance to remove the ban.  Continued focus on improving safety is essential.

ATN: How is the industry dealing with the shortage of skilled personnel?

CZ: The training, development and retention of skilled aviation personnel remains a top priority in the region.  Once trained and having gained some experience, our trained personnel find the lure of overseas positions and hard currency packages very attractive and often a concerted effort is necessary to retain in particular the highly trained personnel in the region.  This includes pilots, technicians, ATC personnel and high performing specialists.  High quality personnel are available.  However, it is important to ensure they are correctly placed and looked after.  In addition, within South Africa, there is a heavy emphasis on transformation particularly in respect of including previously disadvantaged colleagues into the industry.  The South African Government mandates a structured empowerment program which focuses significant attention on ownership transfer, inclusion of newly empowered executives and managers into existing companies, skills development and training, enterprise and entrepreneurial business development in all spheres of aviation business to previously disadvantaged individuals. I believe that in general, African citizens would wish to remain in Africa and be part of its future success, but to do so an enabling environment needs to be created through initiatives from both the Government and Private Sector to make it attractive to be part of the solution. 

ATN: What are the immediate challenges facing airlines in Africa in the future?

CZ: African Aviation has numerous challenges.  Its largest challenge is to find a way to develop and grow its industry to become more competitive with the global airlines operating into Africa.  With fairly liberal exchange of route rights between African and other International States, global airlines have significantly expanded their operations into Africa.  For example, Turkish Airlines operates to 42 destinations and Emirates to 27 destinations in Africa.  The next challenge revolves around increasing costs.  One positive aspect is the relatively low US$ cost of jet fuel to the airlines but this is slightly offset by the deteriorating rate of exchange.   Other challenges involve trying to keep other US$ based costs down and trying to influence the reduction of Government taxes and Industry charges.   The goal to improve safety and strive for the global average remains a priority.  A new challenge for Africa will be to ensure it complies with the requirements for the reduction of greenhouse gas emissions in line with international expectations and the envisaged solution that should result from the 2016 ICAO Assembly, and then to ensure consistency of application within the region.

ATN: Any final thoughts?

CZ: The story of African airlines remains one of challenge, but also massive potential and countless opportunities. Frustratingly, with some exceptions, Africa has failed to reap the benefits from these opportunities.  With strong political will and leadership, good intent and a joint industry plan supported by respective role players, it is still possible for Africa’s airlines to thrive within this highly competitive industry.  At the same time, it is important to ensure alignment of Government strategies for aviation, tourism, trade, immigration and visa regulations to provide the enabling environment to support this growth.