Safeguards and Sustainability to the Liberalization of Air Transport - PowerPoint PPT Presentation

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Safeguards and Sustainability to the Liberalization of Air Transport

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Title: Safeguards and Sustainability to the Liberalization of Air Transport


1
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
2
Presentation 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,

3
Location Of Uganda
4
Uganda 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?

9
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?

10
Liberalization 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

11
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

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
14
TRAFFIC THROUGH ENTEBBE INT. AIRPORT
15
TRAFFIC THROUGH ENTEBBE INT. AIRPORT Cont
16
TRAFFIC FORECASTS 2002/2003 TO 2007/2008
17
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.

18
Ugandas Wildlife Endowments
19
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

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.

22
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.

23
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.

24
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.

25
ICAOs 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.

26
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.

27
Civil 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
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THANK YOU.
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