Transcript Slide 1
1
G A D
LOBAL IRPORT EVELOPMENT 2013
GLOBAL AIRPORT DEVELOPMENT 2013
EXPLORING THE CHALLENGES AND NEEDS OF AFRICAN AVIATION AND THE POLITICAL, FINANCIAL AND PHYSICAL INFRASTRUCTURE REQUIRED TO UNLOCK ITS FULL POTENTIAL.
2
G A D
LOBAL IRPORT EVELOPMENT 2013
GLOBAL AIRPORT DEVELOPMENT 2013
CONTENTS
Challenges of African Aviation Industry.
Needs.
Requirements.
Observation/Critique on Financial Appraisal.
CONCLUSION.
CHALLENGES OF AFRICAN AVIATION INDUSTRY 3
GLOBAL AIRPORT DEVELOPMENT 2013
1. High Cost of Doing Business in our region due to following detrimental:
High Cost of Air Transport.
Lack of all weather, 24 hours airport facilities and air services.
Lack of stable supplies and expensive utilities. like electricity. Expensive training of aviation professionals.
CHALLENGES
4
GLOBAL AIRPORT DEVELOPMENT 2013 2. Few African ‘home’ Carriers.
Cont’d
With exception of ET, KQ, SAA, Royal MAROC and EGYPTAIR other countries have no significant global carriers.
Therefore, there are weak (or non-existing) air linkages among African cities/markets which are huge.
CHALLENGES
5
GLOBAL AIRPORT DEVELOPMENT 2013
3. Weak Institutions
3.1 Lack of Political Will to Open Up.
Cont’d
Yamoussoukro Decision (YD): An African Aviation Policy on creation of enabling environment for the development of intra-African air services was adopted in 1988!
3.2 Absence of a pan-African Executing Agency. Implementation of YD continent–wide has not started after 25 years!.
6
EAC SADC
CHALLENGES
Community
COMESA
Cont’d
GLOBAL AIRPORT DEVELOPMENT 2013
General Status of YD implementation No. of States
5 14 22
YD Implementation
Directive issued to amend BASAs. JCA (Joint Competition Authority) established No steps taken though Included in CA policy. JCA established JCA established
Air Service Liberalization
Not yet.
Regulations are pending Not initiated Pending
% of flights under 5th and 7 th Freedoms
16 6 14
CHALLENGES Cont’d
7 Community
Economic & Monetary Community of C/Africa West African Economic and Monetary Union Banjul Accord Group (West Africa) GLOBAL AIRPORT DEVELOPMENT 2013
General Status of YD implementation No. of States
6 8
YD Implementation
Some minor restrictions remains Within WAEMU, YD is fully implemented
Air Service Liberalization
1 st to 5 th freedoms granted. A max of 2 carriers per state may participate All freedoms are granted
% of flights under 5th and 7 th Freedoms
28 6 7 MASA. Multilateral Air Services Agreement 1 st to 5 th granted fifth 44
CHALLENGES
8
GLOBAL AIRPORT DEVELOPMENT 2013
4. Scarcity of Infrastructure Funding.
Cont’d
Financing are through exorbitant loans or inconsistent government budgets No instrument to support borrowing Recently, Africa Trade Insurance (ATI) has been established. But coverage is just 25-30%
CHALLENGES Cont’d
9
GLOBAL AIRPORT DEVELOPMENT 2013 5. Small scale economies of many African countries.
Total African GDP is only USD 3,130 billion (purchasing power parity). Ref: African Economic Outlook 2011 by AfDB, OECD, UNDP & ECA.
Per capita income are still low.
Top countries with earners above USD 5,000 p.a. are few: Equatorial Guinea, Seychelles, Gabon, Libya, Mauritius, RSA , Botswana, Namibia, Algeria, and Angola.
GDP DATA ON TOP 12 AFRICAN ECONOMIES
Ref: World Bank Report 2012
10 AFRICA 1 2 3 4 5 6 7 8 9 10 11 12 WORLD 25 26 30 47 57 65 67 69 69 77 79 80 South Africa Nigeria Egypt Algeria Angola Morocco Sudan Tunisia Ethiopia Ghana
T
Kenya Tanzania 2012 GDP (Nominal) USD Bio 384.313
262.606
257.286
207.955
114.197
96.729
58.769
45.662
43.133
40.710
37,229 28.249
DATA ON TOP 10 AFRICAN COUNTRIES PER CAPITA
Ref: World Bank Report 2012
11 AFRICA WORLD 1 2 3 4 5 6 7 8 9 10 33 59 60 65 72 75 78 92 94 97
GLOBAL AIRPORT DEVELOPMENT 2013
COUNTRY 2012 Per Capita (Nominal) USD Equatorial Guinea 24,036 Seychelles Gabon Libya Mauritius 11,758 11,430 10,456* 8,124 South Africa Botswana Namibia Angola Algeria 7,508 7,191 5,668 5,485 5,404
* Data available for Libya up to year 2009
12 1.
NEEDS OF AFRICAN AVIATION
GLOBAL AIRPORT DEVELOPMENT 2013
Liberalization of Air Transport
Removal of airline eligibility (designation criterion) based on ownership of airline.
Instead: Principle place of business and effective regulatory control.
Open the skies. Fifth freedom traffic rights for sectors where there are no third and fourth freedom operators.
NEEDS
13
GLOBAL AIRPORT DEVELOPMENT 2013
Cont’d 2. Low cost Carriers
Will capture passengers from buses and trains. Example Fastjet in Tanzania.
Moderate air fares in Regional Sectors where monopolies dominate.
Stimulate competition amongst carriers.
NEEDS
14
GLOBAL AIRPORT DEVELOPMENT 2013
3. Better Infrastructure
Cont’d
Pavements and Terminals. Major airlines are deploying Very Large Aircraft which demands new, bigger infrastructure and facilities.
Modern Technology in ANS.
Radar Surveillance Systems are expensive and redundant.
New trend is Automatic Dependent Surveillance system (ADS-B).
NEEDS Cont’d
15
GLOBAL AIRPORT DEVELOPMENT 2013
4. Capital
Airports are capital intensive ventures The funding from Commercial Loans and Government Grants are not sustainable. Contemporary preferred financing models Export Credit Agencies (ECAs) Infrastructure Development Funds
NEEDS Cont’d
16
GLOBAL AIRPORT DEVELOPMENT 2013
5.Increased FDIs
Raise the GDPs and therefore air transport boom.
In 2012/13, Total FDIs in Africa increased by 5% to US$50 billion. Link www.ventures-africa.com
Leading natural resource rich states are RSA, Egypt, Nigeria, Algeria, Libya, Angola, Sudan, Congo, Mocambique, Ghana and Tanzania
6. Soft Skills in Management of Aviation
Attitude, intelligent decisions and performance
REQUIREMENTS FOR AFRICAN AVIATION TO UNLOCK POTENTIALS
17
GLOBAL AIRPORT DEVELOPMENT 2013 In principle, Fundamental requirements for unlocking African potentials are: People Land/Natural Resources Leadership Clean Politics
REQUIREMENTS FOR AFRICAN AVIATION TO UNLOCK POTENTIALS
GLOBAL AIRPORT DEVELOPMENT 2013
1.
People/Human Capital Development
Competitive Human Capital with skills and cheap labor will attract more investment.
Africa population is about 1,000 billion. In 2025 this is projected to reach 1.5 billions.
1% of this pop climbs into middle income class each year i.e. more than 10 million new pax p.a.
African billionaires are growing in numbers.
There are 55 African billionaires with combined worth nearly USD 180 bio.
Ref: East African News
18
19
REQUIREMENTS Cont’d
GLOBAL AIRPORT DEVELOPMENT 2013
Number of Passengers Regional-wise for the year 2010,2011 and 2012 (in millions) – Ref: ACI 2013 Report 1 266 1 685 1 311 1 554 1 458 1 615 1 508 1 528 1 562 152 147 163
Africa
387 416 444 203 219
Asia Pasific Passengers in 2010 Europe Latin America Caribean Passengers in 2011 Middle East Passengers in 2012
254
North America
REQUIREMENTS
20
Cont’d
GLOBAL AIRPORT DEVELOPMENT 2013
Number of Passengers in some African Airports for the year 2010,2011 and 2012(in millions) - Ref: ACI 2013 Report 19
17 19 16
13
15 8
8
9 3
6
8 6
7
7 7
7
7 8
6
7 9
5
7 5
6
6
5
5 2
2
2 Passengers in 2010 Passengers in 2011 Passengers in 2012
REQUIREMENTS Cont’d
21
GLOBAL AIRPORT DEVELOPMENT 2013
2. Land.
African economies are driven by endowment in Natural Resources: Arable lands for agriculture Minerals, oil and gas industries Today African oil prod: 10 mbd. equavalent to Saudia or Russia Tourism from game reserves and pristine beaches Tanzania is land of Kilimanjaro, Serengeti and Zanzibar Forests products and fisheries.
Africa is a continent with the 7 out of 10 world fastest growing economies >6%.
22
TANZANITE FROM TANZANIA
GLOBAL AIRPORT DEVELOPMENT 2013
23
GOLD MINE IN TANZANIA
GLOBAL AIRPORT DEVELOPMENT 2013
24 Tourist Attractions in Tanzania
GLOBAL AIRPORT DEVELOPMENT 2013 Founded in 1964 from two separate nation-states, Tanzania is home to Kilimanjaro, Africa’s highest mountain, and is one of Africa’s most popular safari destinations. The world famous great immigration is in Serengeti National Park – where the Noah’s animals went.
The world largest inhabited crater Ngorongoro crater. Co-existence of wild animals with Maasai pastoralists!
The country also has dozens of beautiful white sandy beaches such as those found in the island of Zanzibar.
Here are some of the most unforgettable tourist attractions in
Tanzania
.
25
Mount Kilimanjaro GLOBAL AIRPORT DEVELOPMENT 2013 Mount Kilimanjaro is an inactive volcano in north-eastern Tanzania, near the border with Kenya. At 5,892 meters (19,331 feet) above sea level, Kilimanjaro is Africa’s highest peak and the world’s highest free-standing mountain. Although positioned close to the equator, Mount Kilimanjaro is famous for its snow-capped peak looming over the plains of the savannah. The mountain has become a major tourist attraction for mountaineers and trekkers from around the world
REQUIREMENTS
26
GLOBAL AIRPORT DEVELOPMENT 2013
Serengeti National Park
Cont’d
Serengeti National Park is among the best-known big game safari destinations in Africa and one of the most popular tourist attractions in Tanzania. It is famous for its annual wildlife migration of wildebeest and zebra. One of the best times to visit the park is in May when the grass becomes dry and exhausted and the wildebeest and zebra start to mass in huge armies offering a spectacular wildlife show.
REQUIREMENTS
27
Cont’d
GLOBAL AIRPORT DEVELOPMENT 2013
NGORONGORO CONSERVATION AREA Ngorongoro is formed form a volcano erupting two to three million years ago which has collapsed and formed a crater. The steep sides of the crater have become a natural enclosure for a wide variety of wild animals. It is also presently one of the most likely areas in Africa to see the endangered Black Rhino. Local Maasai people are permitted to bring cattle to graze in the crater but are required to leave at the end of each day.
REQUIREMENTS
28 ZANZIBAR
GLOBAL AIRPORT DEVELOPMENT 2013 The island of Unguja, part of Zanzibar, makes up the final Spice Island. Once part of the British Empire, today Zanzibar is a semi-autonomous region of Tanzania. The African island has been for centuries an important trading center, a melting pot of African, Indian and Arab influences.
Zanzibar’s major tourist attraction is Stone Town, with its whitewashed coral rag houses
29
Known as the Green Island in Arabic, Pemba Island lies in the Indian Ocean and is part of the “Spice Islands”. As neighboring Zanzibar is becoming more and more popular with tourists, more adventurous travellers are seeking out the less-crowded Pemba. The island is especially popular with divers who come here for the untouched coral and very abundant marine life.
30
Lake Manyara GLOBAL AIRPORT DEVELOPMENT 2013 In the wet season Lake Manyara is home to almost 300 different species of migratory birds, including thousands of flamingos. In the dry season, alkaline mud-flats take the place of the waters. This is the best time to see large mammals such as hippos, elephants, wildebeest and giraffe. A number of safari lodges provide tourists with lodging and day and night safaris to see the wildlife
31
GLOBAL AIRPORT DEVELOPMENT 2013 Tarangire National Park Smaller than Ruaha, this national park is a paradise for bird watchers as more than 550 different species frequent the park. Tarangire is also known for its huge number of elephants, baobab trees and tree climbing lions. Huge termite mounds can be found all around the park
32
Savanna animals can be found in this reserve in greater numbers than in any other African game reserve, thanks to stringent regulation by the Wildlife Division of the Tanzanian Ministry of Natural Resources and Tourism. Most visitors arrive by aircraft, and walking tours or river trips are permitted, though no human habitation or permanent structures are allowed.
REQUIREMENTS Cont’d
33
GLOBAL AIRPORT DEVELOPMENT 2013
3 . Clean Politics
Management of Political Risks through strong constitutions : Vibrant democracy: Oppressive states undermine business innovation and cause civil wars Free and fair elections. Most African countries have credible governments Religious freedoms: A precondition for peace and integrity of the nation. Infringement of freedoms leads to civil strife
REQUIREMENTS
34
GLOBAL AIRPORT DEVELOPMENT 2013
Cont’d
Strong Institutions
AFCAC: Common Civil Aviation Policy Ratification of the Cape Town Convention on Mobile equipment.
Enactment of enabling legislations Estab. of independent regulatory authorities Estab. of Consumer Consultative Councils Estab. of Joint Competition Authority for EAC & SADC regions.
REQUIREMENTS Cont’d
35
4. Leadership GLOBAL AIRPORT DEVELOPMENT 2013 Pragmatic leaders with capacity to usher in economic reforms.
Puppet leaders lack credibility thence coups and revolutions.
Prevalence of good governance and less corruption as indicated by Mo Ibrahim’s Index of African Governance (IIAG 2013).
REQUIREMENTS Cont’d
36
GLOBAL AIRPORT DEVELOPMENT 2013 In addition to the four fundamentals, also required are Financial regimes and Infrastructure.
5. Financing regimes:
Long-term Concessional loans.
Subsidies through government budgets.
Specialized Infrastructure Fund.
ECAs. PPP.
REQUIREMENTS Cont’d
37
GLOBAL AIRPORT DEVELOPMENT 2013
Financing thru Public Private Partnership
Legal framework in some countries is in place Tanzania Kenya South Africa East African Community’s Bill on PPP in Infrastructure is in legislative process.
REQUIREMENTS…… Cont’d
38
GLOBAL AIRPORT DEVELOPMENT 2013
Infrastructure :
Africa still have lots of un -opened opportunities There is a huge oppressed demand of facilities and air services Examples in East Africa: New facilities at JKIA , Kisumu, Entebbe, Gulu, Kigali, JNIA and Songwe Requirements for the next 3-5 years is about USD 2 billion
OBSERVATIONS/CRITIQUE ON FISCAL APPRAISAL 39
GLOBAL AIRPORT DEVELOPMENT 2013 Conventional approach for financial appraisal for infrastructure projects is not always realistic for African environment.
Conduct Feasibility study Make decision based on the results Why this approach is not always right?
In most of African countries, results are –Ve. The reason: there is ‘oppressed demand’ in Africa
40
OBSERVATION/CRITIQUE…..Cont’d
GLOBAL AIRPORT DEVELOPMENT 2013
Examples of Oppressed Demands in Tanzania OPERATOR
MBEYA AIRPORT QATAR TURKISH
2011
Pax p.a: 6,200 Flt/Wk: 7 Flt/Wk: 3
2013
Pax p.a: 50,000 Flt/Wk: 21 Flt/Wk: 14
Source: TAA 2013 Report
41
OBSERVATION/CRITIQUE…..Cont’d
GLOBAL AIRPORT DEVELOPMENT 2013 Only intelligent decisions are needed from experts.
Only flexible and creative investors ( with gut feeling) will succeed.
CONCLUSION
42
GLOBAL AIRPORT DEVELOPMENT 2013 Transformation and growth in aviation require:
Investment in Human Capital Investment in infrastructure Strong institutions thru enabling legislations Africa is the only continent which can do in less time what China did in last 30 years in economic growth.
Africa could be the next surprise in growth
43
THANK YOU
GLOBAL AIRPORT DEVELOPMENT 2013