Transcript ICAO 5th Worldwide Air Transport Conference ICAO Headquarters, Montreal Safeguards and Sustainability to the Liberalization of Air Transport By Ambrose Akandonda Managing Director, Civil Aviation Authority, Uganda 23 March.

ICAO 5th Worldwide Air Transport Conference
ICAO Headquarters, Montreal
Safeguards and Sustainability
to the Liberalization of Air
Transport
By
Ambrose Akandonda
Managing Director,
Civil Aviation Authority, Uganda
23 March 2003
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Presentation map
Background,
State participation in
Int. Air Transport,
Liberalization in
Uganda,
National against
Foreign-owned
Airline,
Competition &
Sustainability of
National Airlines,
Foreign investment
in National Airlines,
Sustained
participation of all
in International Air
Transport,
Code of Conduct,
Dispute Resolution,
ICAO’s Role.
Conclusion
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Location Of Uganda
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Uganda Country Profile
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Land locked
Strategically located on the continent
Good all-year climate
Ambient temperature -(18° - 29°c)
Rain Fall
-50-2000mm pa
Population
- 25 million
Size- total area
- 241,038 sq. km
- 197,097 sq. km (Land)
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Background to liberalization
• Reform to industry based on Government,
Regional and International recommendations,
• States now more open to liberalization after
consensus reached at 4th Worldwide Air
Transport Conference,
• Process is being implemented at national and
regional levels:
– African Union, SADC, COMESA, EAC etc;
• Continental level liberalization program based
on Yamoussoukro Decision of 1999,
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COMESA, SADC, EAC Member States
COMESA 20 Countries
SADC
EAC
14 Countries
3 Countries
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Background to liberalization…
• Liberalization process is progressing well and
brought new opportunities and challenges,
• Non-aviation international agencies e.g. WTO
with its GATS, have picked interest in Air
Transport Management;
• Plans are in place to review GATS Annex on
Air Transport Services to extend its coverage.
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State participation in Int. Air Transport
Convening of the 5th ICAO Worldwide is timely. It
should further position ICAO as the legitimate
agency to steer Civil Aviation to new heights.
Vital Questions:
• How can the desired/expected outcomes of
liberalization be assured?
• Is it necessary to have safeguards or is
competition a sufficient safeguard?
• Can National carriers survive without
safeguards in liberalized environment?
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State participation cont..
Questions:
• Can a state allow its national airline(s) to
collapse and expect the foreign-owned
airlines to provide the services needed?
• How can sustainability of carriers and
assurance of services be achieved in a
liberalized environment?
• Does it matter if a state has no national
airline?
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Liberalization in Uganda
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Liberalization of cross-border airline services;
Abolition of royalty payments;
Adoption of multiple designation;
Full liberalization of cargo services;
Removal of capacity restrictions;
Tax exemptions on foreign airlines;
Designation of selected countryside aerodromes
as international entry/exit points to promote
tourism;
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Liberalization in Uganda cont…
• Implementation of COMESA Legal Notice
No.2;
• Adoption of the Yamoussoukro Declaration of
1999.
• Abolition of restrictions on foreign ownership in
national carriers.
• Abolition of requirement for substantial
ownership
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Entebbe International Airport
• Location
• Altitude
• Main runway(17/35)
- 00 º 02’ 26”.93 N
- 32 º 26’ 25”.95 E
- 3782 ft AMSL
- 3658 m
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Aerial View
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TRAFFIC THROUGH ENTEBBE INT. AIRPORT
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TRAFFIC THROUGH ENTEBBE INT. AIRPORT Cont…
400000
350000
300000
250000
DOMESTIC PAX
TRANSIT PAX
200000
INTERNATIONAL PAX
COMMERCIAL MOV'TS X 15
150000
100000
50000
FINANCIAL YEAR
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01
/2
00
2
20
00
/0
1
19
99
/0
0
19
98
/9
9
19
97
/9
8
19
96
/9
7
19
95
/9
6
19
94
/9
5
19
93
/9
4
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92
/9
3
0
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91
/9
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TRAFFIC
OVERFLIGHTS X 10
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TRAFFIC FORECASTS 2002/2003 TO 2007/2008
700
600
TRAFFIC
500
400
300
200
100
0
2002/03
2003/04
2004/05
2005/06
2006/07
2007/08
YEAR
International passengers '000
Cargo '00 Tonnes
Movements '00
Overflights '00
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National against Foreign-Owned Airline
• Presence of National airline means continued state
participation in Air Transport;
• Air Transport bears with it significant economic, social,
political and strategic advantages that should not be
delegated to foreign carriers;
• Foreign carriers only provide commercially viable
services yet air transport often goes beyond
commercial bounds;
• Sustained participation of states will guarantee
availability of services that are in national interest.
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Uganda’s Wildlife Endowments
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Competition and Sustainability
• Healthy and fair competition brings about improved
service provision to the benefit of the industry and
consumers;
• Competition survival strategies such as cost cutting, code
sharing, franchising etc. cannot assure the survival being
sought;
• Regulation prevents competition from causing severe
market distortions to the detriment of consumers;
• Competition without regulation is not a sufficient
safeguard for Air Transport sustainability;
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Competition and Sustainability…
• Safeguards must rationally and realistically address
disparities relating to level of development, size and
location of states including their air carriers to guarantee
sustainability;
• Without tailored safeguards, developing country national
carriers simply can’t survive in a liberalization
environment.
• Recent examples on the African continent serve to
vindicate this fact
Demise of Uganda Airlines
Demise of Zambia Airlines
Recent sale of Air Tanzania to South African Airways
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Foreign Investment in National Airlines
• Provides much needed yet scarce capital financing;
• However, foreign ownership has implications on
designation and authorization of carrier; under the BASA
regime. (Substantial ownership & effective control
clauses)
• Foreign ownership creates opportunities as well as
regulatory challenges:
– Regulatory Challenges:
• Facilitate progress of liberalization process;
• Enable airlines take advantage of cross-border
capital financing opportunities;
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• Avoid creation of flags of convenience.
Sustained participation for all in Int. Air Transport
The ‘Equality of opportunity’ principle should not only be
observed but should also be achieved irrespective of extent of
liberalization and level of competition.
Safeguards-Create a healthy and fair competition
• Airline alliances should be cautiously regulated to avoid
reducing competition;- right of choice by the consumer.
• Market access should be open, provided the capacity offered
by each airline is matched by market potential or size to
avoid capacity dumping or predation;
• Pricing mechanism should remain flexible so that airlines are
free to vary their prices within authorized margins.
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Code of Conduct
• An acceptable code of conduct should be
developed to provide common understanding of
what is acceptable and what is not;
• This type of code will help minimize disputes.
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Dispute Resolution
• There is need to agree on a dispute
resolution mechanism to help settle disputes
between contracting states
• Some form of arbitration will be necessary
for disputes that cannot be amicably
resolved.
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ICAO’s Role
Tribute should be paid to ICAO for its role in ensuring
the orderly development of International Air Transport.
Issues that need to be addressed by ICAO include:
• Conduct a study on the effects of franchising;
• Recommend a code of conduct that will govern healthy
competition among carriers;
• Recommend the nature and form of arbitration and
procedures to be followed in resolving disputes
between members states.
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Conclusion
• Liberalization with Safeguards is beneficial for the
development of Global Air Transport industry.
• The global aviation industry is in transition, with the
Challenges and Opportunities of Liberalization
requiring our concerted effort; which is why the
ICAO 5th Worldwide Air Transport Conference is
very relevant and timely.
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Civil Aviation Authority
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P.O Box 5536 Kampala, Uganda
Tel: 256- 41-320516/9, 321308
Fax: 256-41-321452
E-mail : [email protected]
[email protected]
• Website: www.caa.co.ug
CAA Uganda, Mission Statement
To maintain the Highest Standards of Safety and Service in Civil Aviation
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THANK YOU.
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