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Opinions of Saturday, 12 October 2013

Columnist: Adjekum, Odadie Kwasi Okatakyie

Exorcising the ‘demons’ Bedevilling Aviation in Ghana

. – The Good, Bad and Ugly

In recent times, there has been a flurry of activities, good, bad and ugly that has created dynamic entropy in Ghana’s aviation sub-sector. Recent occurrences in the sub sector have played out like a Shakespearean drama, where .Machiavellian spirits are at war with divine entities for the very soul of aviation in Ghana. President Mahama on his recent trip to Atlanta, USA met with officials of Delta Airlines and some of the highlights were to implore on them to assist in a partnership to set up a national airline (Again????). Ghana is to host the first-ever global aviation exposition in Africa in Accra, in 2014. The ‘African Air Expo 2014,” which would bring to Ghana all stakeholders in the aviation industry from around the world and to showcase Ghana as the ultimate hub for aviation in West Africa. There has been the running commentary and discourse on the merits of building a new airport at Prampram, to replace the existing Kotoka International Airport. These are the good side. The bad sides have been the showdown between the Chief Executive of the Ghana Airport Company and the Chairman of the Company Board culminating in the subsequent removal of the CEO from office and the dissolution of the board by the President, through the Minister of Transport. Another bad episode is the ever present and continuously deplorable passenger services and infrastructure at Kotoka International Airport and the round robin of closures of the Kumasi Airports due to the runway condition. The ugly side has been the threat of closure of business by some local airlines in Ghana due to the unfavourable business climate prevalent and the seemly apathy of the government to provide the needed enabling environment for a sustainable aviation business operation. The ugliest incident even saw an operator threatening to sue the government in court on proposals to form a new airline. We only pray that the good will come to pass and not become part of the myriad of ‘virgin and unfulfilled political rhetorics’, which Ghanaians are very much accustomed to. These bad and ugly incidents all have their principal ‘demons’ and one would like to analyse and find out if they can be ‘exorcized’.
The ‘demons in thief’ of progress in Ghana’s aviation sub sector, has been gross inefficiency, crass incompetence, no holds barred corruption of management at all levels , cabalistic cronyism,squandermanic manipulation and incessant interference from government. Almost all the transmogrification and permutative processes aimed at reviving the national carrier could not survive the torments of these shadowy ‘demons’. After the demise of the national carrier, the mighty Ghana Airways, private domestic operators have tried to sustain the vacuum created. As at 1997, Ghana’s domestic skies was dominated by private carriers such as City link with others like the defunct Golden ‘Nframa’ Airways ( Is their Antonov aircraft still a historic relic in Kumasi ?) and the Ghana Air force Airlink services of blessed memory also adding up to the numbers. However, the adoption of a liberalized aviation sub sector has provided an opportunity for additional domestic carriers like Fly540, Antrak, Starbow, Africa World Airline (AWA) and most recently Eagle Atlantic to join the fray stimulating an increase of 30% in domestic airline service growth (IATA, 2012). The influx of these domestic carriers could suggest an increase in fare innovations to compete for customers for inter-regional travel. The International Air Transport Association (IATA) suggests that, whilst airlines in Ghana generated$ 17million in profits for the year 1997, airlines in 2012 benefited from an estimated $3.5 billion in profits (IATA, 1997; IATA, 2012) reflecting an increase in profits by almost $3 billion between both years. Ghana's aviation industry, contributed USD 1.87 billion to the GDP in 2012, whiles in 1997 a total of USD 6.9 million was contributed. The aviation sector was valued as 5.2% of Ghana’s gross domestic product (GDP) for the year 2012, and for the year 1997 the sector was valued at 3.9% in contribution to Ghana’s GDP(BOG,2012; GTB). The influx of more domestic airlines from 1997 to 2012 has introduced domestic competition and facilitated the growth of domestic aviations, even though there are still numerous challenges and ‘demons’.
Most of our domestic operators are grappling with high direct operational cost (perpetually high fuel cost, flight and cabin crew expenses, direct maintenance expenditure, landing/navigational charges, gate agents, baggage handlers,inflight catering cost and capital equipment charges) there are also indirect cost ( sales and promotions, station cost, ground expenses, passenger services and administrative overheads). A lot of the operators are also grappling with the issue of aircraft lease, poor contractual and ineffective business plans. They are also faced with regulatory requirements to maintain very stringent and safe operations. There is also the issue of competition from other sub –regional carriers with very modern fleet and the foreign ‘big boy’ carriers who have massive operational capacity and huge economies of scale. Some of the most restrictive leasing schemes that some domestic operators have found themselves in are the wet lease plan of Aircraft, Crew, Maintenance, and Insurance (ACMI). This plan actually saps a lot of their revenue if they even achieve their break even point. In the ACMI plan, these domestic operators have to engage in a leasing arrangement whereby a lessor provides an aircraft, complete crew, maintenance, and insurance (ACMI) to an airline (the lessee), which pays by hours operated. The lessee provides fuel and covers airport fees, and any other duties, taxes, etc. The flight uses the flight number of the lessee. In this challenging aviation industry, our domestic airline operators in Ghana, stands to benefit through the formation of alliances and code-shares in various air transport operations sector. In negotiating the lease, they could rather be in the form of a code share arrangement or a block seat agreement. Alliances and code-shares could potentially improve Ghana’s market reach worldwide by providing an advantage of ‘best travellers’ routes for many journeys. Code-sharing refers to a marketing arrangement between two or more airlines, whereas the airlines contract to market and sell air transportation, under their individual designator codes, on a single aircraft operation. Code-sharing allows the contracting airlines to jointly dominate market(s).The Air transport policy of liberalization as outlined in the Yamoussoukro Declaration (YD), has been generally adopted by Ghana and the Ghana Civil Aviation Authority (GCAA) is the lead regulatory body tasked with implementing the provisions. The objectives of GCAA over the years have been to strengthen institutional and human resource of the aviation sector in compliance to the YD. This “liberalized skies” policy is however based on reciprocity with regards to Ghana‘s external aviation partners and the interest of Ghana as a superseding condition. Ghanaian domestic carriers are still facing challenges to broaden their market and operational base, because of a seemingly lack of good faith and reciprocity from other African countries who are signatories to the YD. Domestic airlines still face challenges to sub regional route access per Bilateral Air Services Agreement (BASA) . By regulation, the granting of the freedoms of the air (from the First Freedom -Fifth Freedom right) is made exclusive again on reciprocity and exclusivity basis to other African states.
The status of Kotoka International Airport (KIA) as the preferred primary hub in West Africa has been over touted with distinct air transport infrastructure and services such as the best emergency response services, very stringent safety oversight, well resourced and qualified human resources at the regulatory outfit, very good navigational and total radar coverage. However the only setbacks holding it back from attaining this full hub status are challenges in expanding the capacity of existing physical facilities and infrastructure that seem to have reached its elastic capacity and perceived political micro-management of aviation sub sector. The much talk about of a new international hub at Prampram has been on the drawing board for a long time and the recent governmental push, seem to be gradually giving it the required kinetic energy to slide it out of the momentous inertia. Is it going to be a Private Partnership Project (PPP) or Build Operate Transfer (BoT) concept??? How much will the government of Ghana have as a stake in the project?? How will the management of the airport fashioned, giving the ‘notorious penchant’ of government for ‘political micro-management’’? What about existing airports like Kumasi which caters for the mid half of the country and has shown potential for tremendous business and leisure travel as well as cargo??? There is also the seasonal Hajj lift, which could be managed efficiently in Tamale due to proximate and capacity reasons. Takoradi offers great business and general aviation opportunities, due to the oil industry and scenic tourist attractions. I bet even Cape Coast could do with a small airstrip, accessible to general aviation aircraft to serve the local tourist market. I know the expansion of the Tamale Airport is also in the pipeline. When will all these pipelines be ever unclogged to get the system running?? Increasingly many countries worldwide are rethinking the appropriate role of government in the operation and ownership structure of aviation infrastructure. Many countries have privatized airports, on the basis that it is deemed that the private sector does a better job of running airports more efficiently, just as they run airlines more efficiently or produce better aircraft than state owned manufacturers ( Vasigh,2008) Proponents of private sector participation in the long term lease of airports are that it ensures greater efficiency of operations, particularly in developing the non-aviation side of the airport, capital infusion, which opens up non-traditional sources of capital and the conversion of a private airport into a tax-paying corporate entity. One of the greatest advantages of the private sector is in their ability to raise needed capital without the political entanglement and brouhaha of securing funds and grants for expansion or renovation. Profit motives may propel private investors to ensure proper maintenance of infrastructure at airports, since passengers are very sensitive to safety concerns in aviation and hints of safety corner cutting may tumble demands and affect profit margins. The government as the regulator should ensure that there is no change in the required regulatory oversight, even with privatization and with the added incentives of stricter oversight, legal liabilities and profit motives. I guess in our part of the world where government due to socio-political considerations of value for money and public safety, will like to always have its hands in the pie. Our best option could be a public- private sector investment in airport operations. A long term lease of our aviation infrastructure like airports would allow the government to legally and politically retain ownership, but transfer investment, operational and managerial responsibilities to private entities. However the lease should be long enough to entice the private investor, manage it as owners and recoup their investment. This could form the basis of the BoT, where the financing and construction of the airports would be done by the private sector, which will then relinquish control at the end of the lease term. I also think it is about time our local businessmen form partnerships with local authorities to invest in projects that will bring economic development to their communities. In the case of a new Kumasi International Airport, would it not be possible for the Asanteman council/KMA and other private sector partnership to consider it as a possible private sector partnership project? There would be a lot of socio-economic benefit to be accrued from the building of a new international airport in Kumasi and Prampram. In the case of Kumasi, a there is a potential high passenger emplanement, since a sizable number of both business and leisure travelers, who transit through Accra, originate from the upper half of the country. There is also potential domestic and international cargo traffic to and from that part of Ghana. The security risk of long commutes for precious minerals from most of our mines in the Ashanti and BrongAhafo to Accra is high and takes a substantial amount in the direct operating cost of most mines. Private and Local government partnership have seen light in Nigeria, where the Akwa Ibom Airport project has really taken shape as a result of a determined people backed by local investment. The transformation or building of a new international airport in Kumasi will make it easier for travelers to access the northern half of the country from abroad, without the hustle of transiting through Accra. All weather and 24 hour capable international airports in Kumasi for example, could boost the local production of goods and services for use at the airport. Some of the challenges in executing these projects would be the zeal, capital sourcing, and technical expertise, commitment to the project and subsequent continuous improvement and management of aviation infrastructure. I guess this is something the Asanteman Council can pull off. Ghana needs to take advantage of the brand status as the preferred gateway to West Africa, by developing the other international airports in the country to deal with the growing international passenger and cargo traffic. The greater the number of airports the greater the competition thus the attracting more trade and investment in the country. The ‘demons’ will continue to haunt us, but with tenacity and integrity on the part of those entrusted with responsibility, surely they can be ‘exorcized’.

Odadie Kwasi Okatakyie Adjekum