Flights News On Airlines Optimistic And The Call By AASA For Industry To Capitalize On Opportunities
In this November air news there reports that the African airlines made profit this year unlike the loss they made last year and this was due to growth improvement in both passengers and cargo airlifted.
Although the aviation industry would probably end this year well into the black and African airlines could look forward to a net profit of us$ 100-million compared to last years us$ 100-million loss, conflict and discord was threatening the sustainability and growth of the industry.
This was the opinion expressed by Chris Zweigenthal, chief executive of the Airlines Association of Southern Africa (AASA) when he delivered his keynote address to open the association’s annual conference held in Manzini, Swaziland, last month.
Addressing delegates from throughout the region and several from overseas, Zweigenthal said that Africa appeared to have the resilience to ride the troughs and hopefully, with the projection of a profit in 2010, it would be able to capitalize on the peaks and improve on the position.
“There is concern in Europe and the USA that the upturn is not sustainable and predictions are currently for a slower 20111 with a projected net profit worldwide of $ 5, 3-billion as against the $ 8, 9-billion for this year, “he said.
Painting a picture of cautious optimism, he referred to the present average fuel price running at between $ 70 and $ 80 a barrel during the course of the year, but warned that there was still a risk of a potential rise due to the continued political instabilities in the oil hot spots around the world.
“This makes it all the more important for there to be open competition in the industry and that the oil industry and airport authorities keep incremental add—on costs that impact the final jet fuel price to the airline under control and at reasonable levels.”
Asking his audience if the industry had emerged from the economic crisis,he replied to his own question with an unequivocal ‘Yes’ when the growth of the air freight and passenger volumes growth over the past year were taken into account.
Zweigenthal then asked:”But what are we doing with that resurgence?” Again replying to his own question, he said:”I have become increasingly concerned that this region (Southern Africa) we are not as an industry capitalizing on the opportunities presenting themselves. Issues which I believe are hindering us are an inability to take the initiative and work for the common good, largely as a result of tensions between a numbers of stakeholders.
“Disagreement is part of business due to our respective mandates, but sometimes the manner in which we go about our dealing with these issues either by taking no action or working in a non-productive fashion, does not add value and, in many cases, plays into the hands of other parties who benefit at our expense. Hence the theme for this conference: conflict and discord are threatening the sustainability of the aviation industry.
Zweigenthal went on to express his frustrations and impatience with the Yamoussoukro Declaration signed 22 years ago and, 11 years later, the Yamoussoukro Decision (YD).
“The dream of liberalized African skies is still just a dream,” he said, adding:”I am not aware of initiatives to action implementing where it is required at this stage and I do not see a formalized implementation of the YD in the next ten years or maybe longer.
“What I am hopeful for is that the regional economic blocs such as SADC implement the YD at least on a reciprocal basis between fellow states in a consistent fashion.”I believe there is scope for this to overflow from the COMESA and EAC economic blocs and probably from the West Africa blocs with a realization of the benefits that will follow.
“But it will be up to the individual blocs to make a conscious decision to give this vision effect.In the interim, efforts is being made in certain areas with states exchanging rights on a bilateral basis on a route by route basis, but this unfortunately does not derive benefits for all states and all their airlines.”
Zweigenthal continued:”African States and airlines are concerned about the invasion of Africa by international carriers. In responding to customer demand, international carriers will continue to increase services and our African carriers will not be able to derive the differentiated advantage intended for them by the creation of a framework of the YD to create a strong home base. In this case,therefore,we have not risen to the challenge.”
ACSAs Proposed Charge
Referring to the application by the AIRPORTS Company South Africa(ACSA) for a 132,9% increase in its charges, the subsequent court case and its outcome, the establishment of a Task Team by the Minister Of Transport and the latest move for meeting of the Task Team and stakeholders (which was due to have taken place a few days after the AASA conference), Zweigenthal said that although he could understand the right of parties to disagree and to push their agendas, in this case believed it had “crossed the line” and the disconnect and tension between the parties was evident.
“I am still not sure how ACSA could have expected the industry to accept the proposed 132,9% increase. The AASA and industry have as one of their prime mandates to minimize the impact of such determinations on their members and customers and, considering the very complex nature of the Permission, we considered every scenario possible to achieve a minimal increase. Even its final determination is not accepted to the airline industry.
“The ball game has changed with ACSA CAPEX increasing from around R300-million in 1993 for a five-year Permission to around R20-billion currently. We support a review of the legislation and the regulatory process together in the interest of achieving the right results,” Zweigenthal commented.
The Way Ahead
Referring to lab our problems, the AASA CEO said that lab our-related matters within the airline industry continued to be a major issue and a potential threat to sustainability of business during periods of tough negotiations.
“Although healthy in terms of a democratic society, one must question some of the negative rhetoric that took place and which is not constructive in finding solutions, “he added.
“Further challenging period lies ahead of the aviation industry,” Zwaigenthal continued.”I urge all parties to consult and debate issues constructively, to not work in silos or with blinkers on, which I really believe, have been characteristics of the past months in certain areas, and to work in the best interests of all stakeholders, the customers and passengers who use our airlines.”
In conclusion,Zweigenthal said:”What we are looking for are new ideas ,new initiatives ,probably a new way of interacting and doing business together ,one based on understanding and a greater respect for each other and for each others business.”
Anthony Juma is the Editor and Senior Aviation Director at Wings over Africa Aviation.
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