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Update on the Single Africa Air
Transport Market
Taiwo Peters Sandile Chipunza
Advocacy and Strategic Relations Africa, IATA
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www.iata.org/economics
Aviation Benefits in Africa
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1. Dedicated focus on Africa
2. Strategic team for Africa
3. Support to AFCAC, AFRAA and AU – 12 country study on benefits
of Aviation and liberalization/Value of Aviation campaigns
4. Joint Advocacy from 2014 leading to launch of SAATM
IATA and SAATM
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SAATM
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What is the SAATM?
• The Single African Air Transport Market was established and
launched during the 30th Ordinary Summit of the African
Union Assembly of Heads of States and Government held in
Addis Ababa, Ethiopia from 28th to 29th of January, 2018.
• The SAATM is an initiative that fully promotes the free
exercise of the first, second, third, fourth and fifth Freedoms of
the Air.
• When the SAATM is fully operational, an “eligible” airline or air
carrier from one African country can simply fly into another
African country’s airspace and land on its territory using only a
simple prior notification procedure.
• So far, twenty-seven (27) countries are currently subscribed to
the SAATM solemn commitment.
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Pillar 1: Advocacy for the effective implementation of the SAATM
Pillar 2: Enhancing the SAATM Regulatory Text:
Harmonization and domestication of existing text
Pillar 3: Operationalization of the SAATM
Pillar 4: Planning for future growth: Ground and Air Infrastructure
Pillar 5: Enhancing Safety and Security
Pillar 6: Financing the aviation industry
Prioritized SAATM Action Plan 2018-2019 with six key Pillars
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Pillar 1: Advocacy
Joint Advocacy on benefits of SAATM through studies, campaigns, workshops and focus groups across
States and Airlines
Pillar 3: Operationalization of the SAATM
Joint Airlines workshops/coordination meetings for better cooperation between African airlines, on
opportunities for airlines under SAATM, on input and support for SAATM Regulatory texts and other relevant
issues.
Joint advocacy of ICAO policies on Taxes, Charges and Fees and on ratification of international treaties
Pillar 4: Planning for future growth: Optimized Infrastructure on Ground & Single African Sky
Pillar 5: Enhancing Safety and Security – Technical Assistance for eligible airlines to meet the IOSA
certification
Pillar 6: Financing the aviation industry –Support to AfDB on elaboration of appropriate mechanism on African
Airline Financing, Institutional Architecture and Training & Capacity Building
IATA support for Prioritized SAATM Action Plan 2018-2019
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Source: Visual Capitalist
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Intra-Africa route network Dec. 2014
www.iata.org/economics 11
Intra-Africa route network Dec. 2018
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Intra-SAATM route network 2014
www.iata.org/economics 12
Intra-SAATM route network 2018
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Intra-AFI Routes and frequencies … growing?
www.iata.org/economics 13
9.2
9.4
9.6
9.8
10.0
10.2
10.4
10.6
10.8
1400
1420
1440
1460
1480
1500
1520
1540
1560
1580
1600
1620
YE Dec 2014 YE Dec 2015 YE Dec 2016 YE Dec 2017 YE Dec 2018
Intra-Africa unique airport pairs and frequencies of flights
Routes (unique airport pairs), LHS Frequencies (total, per week and route), RHS
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Within SAATM, the trend is positive as well
www.iata.org/economics 14
12.50
13.00
13.50
14.00
14.50
15.00
540
560
580
600
620
640
660
680
YE Dec 2014 YE Dec 2015 YE Dec 2016 YE Dec 2017 YE Dec 2018
Intra-SAATM unique airport pairs and frequencies of flights
Routes (unique airport pairs), LHS Frequencies (total, per week and route), RHS
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Big picture for SAATM
1. Continuous improvement in Safety and Security
2. Regulatory & policy harmonization
3. Optimized infrastructure – ground and air
4. Ease of intra-African mobility (Visas/customs)
5. Reduce Taxes and Charges - competitiveness
6. Human capacity development
7. Multi-sector collaboration
8. Non physical barriers to SAATM
IATA Economics www.iata.org/economics 15
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Operationalisation of SAATM – Next Steps
1. Mandate from Joint Africa Aviation Group on SAATM Operationalization
2. Continued Advocacy jointly with AFCAC, AFRAA on benefits of SAATM etc.
3. Industry support/input to enhance YD Compliant ASA templates
4. Addressing issues of African Airline Financial Health
5. Promoting African airline cooperation
6. Suggestions for practical implementation of SAATM
7. Training/Capacity Building
IATA Economics www.iata.org/economics 17
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Source: IATA Economics using data from ICAO, The Airline Analyst, IATA forecasts
Regional profitability remains very uneven
-6%
-1%
4%
9%
N America Europe Asia Pacific Middle East L America Africa
Net post-tax profit margins
2015 2016 2017 2018
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Regional (net) profitability – Africa
www.iata.org/economics 19 Source: IATA
-8%
-6%
-4%
-2%
0%
2%
-2.0
-1.5
-1.0
-0.5
0.0
0.5
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018f
Net profit (Left axis)
US$bn
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Airline Cost Drivers in Africa
-6% -4% -2% 0% 2% 4% 6%
Station expenses
Flight crew salaries and expenses
Passenger services
Other expenses (flight operations)
Depreciation and amortization
Flight equipment insurance
Other operating expenses
Flight equipment rentals
Ticketing, sales and promotion
Aircraft fuel and oil
Flight equipment maintenance and overhaul
User charges
Percentage points difference in shares of total regional costs.
Differences in cost sources: Africa vs Industry
The 0% line indicates the industry average.
Lower than industry average
Higher than industry average
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How IATA initiatives impact cost-drivers in Africa
-6% -4% -2% 0% 2% 4% 6%
Station expenses
Flight crew salaries and expenses
Passenger services
Other expenses (flight operations)
Depreciation and amortization
Flight equipment insurance
Other operating expenses
Flight equipment rentals
Ticketing, sales and promotion
Aircraft fuel and oil
Flight equipment maintenance and overhaul
User charges
Percentage points difference in shares of total regional costs.
Differences in cost sources: Africa vs Industry
The 0% line indicates the industry average.
Lower than industry
Higher than industry average
ASA best practice clauses
Airport Privatization Efforts
Standards & initiatives related to distribution issues
Smarter Regulation
Advocacy
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Fragmentation limits economies of scale: Very limited cooperation between African
carriers
Market share of top-4 airlines/JVs
Source: SRS Analyser
81%68%36%
59%
48%
42%
33%51%
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The opportunities for African Airlines
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Demand for air travel to double over the next 20 years
25 www.iata.org/economi
cs Source: IATA/Tourism Economics
6.9bn
3.5bn
2
4
6
8
10
2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037
Global passengers (billion, O-D basis)
Constant policies scenario
A Pick-up in Protectionism
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CORSIA will apply from 1 January 2019
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www.iata.org/CORSIA
For more information on CORSIA
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Thank you