Title: Safeguards and Sustainability to the Liberalization of Air Transport
1ICAO 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
2Presentation map
- Foreign investment in National Airlines,
- Sustained participation of all in International
Air Transport, - Code of Conduct,
- Dispute Resolution,
- ICAOs Role.
- Conclusion
- Background,
- State participation in Int. Air Transport,
- Liberalization in Uganda,
- National against Foreign-owned Airline,
- Competition Sustainability of National Airlines,
3Location Of Uganda
4Uganda Country Profile
- Land locked
- Strategically located on the continent
- Good all-year climate
- Ambient temperature -(18 - 29c)
- Rain Fall -50-2000mm pa
- Population - 25 million
- Size- total area - 241,038 sq. km -
197,097 sq. km (Land)
5 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,
6 COMESA, SADC, EAC Member States
COMESA 20 Countries SADC 14
Countries EAC 3 Countries
7 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.
8 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?
9State 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?
10Liberalization in Uganda
- 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
11Liberalization 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
12 Entebbe International Airport
- Location - 00 º 02 26.93 N
- - 32 º 26 25.95 E
- Altitude - 3782 ft AMSL
- Main runway(17/35) - 3658 m
13 Aerial View
14TRAFFIC THROUGH ENTEBBE INT. AIRPORT
15TRAFFIC THROUGH ENTEBBE INT. AIRPORT Cont
16TRAFFIC FORECASTS 2002/2003 TO 2007/2008
17National 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.
18Ugandas Wildlife Endowments
19Competition 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
20 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 cant 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
21 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 - Avoid creation of flags of convenience.
22Sustained 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.
23Code 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.
24Dispute 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.
25ICAOs 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.
26Conclusion
- 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.
27Civil Aviation Authority
- P.O Box 5536 Kampala, Uganda
- Tel 256- 41-320516/9, 321308
- Fax 256-41-321452
- E-mail aakandonda_at_caa.co.ug
- aviation_at_caa.co.ug
- Website www.caa.co.ug
CAA Uganda, Mission Statement
To maintain the Highest Standards of Safety and
Service in Civil Aviation
28 THANK YOU.