1 / 40

Trade and Investment Project

Trade and Investment Project. Liberalization in Aviation Policy Presented to the Confederation of Mozambican Business Associations (CTA). Andy Ricover December 15,2005. Current effective policy. Formal policy. Institutional framework. Effective policy. Function of two factors.

ophira
Download Presentation

Trade and Investment Project

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Trade and Investment Project Liberalization in Aviation PolicyPresented to the Confederation of Mozambican Business Associations (CTA) Andy Ricover December 15,2005

  2. Current effective policy Formal policy Institutional framework Effective policy Function of two factors

  3. Current effective policy (continued) • Function of two factors • There is written policy • But the institutional arrangement can condition the real applicable policy

  4. Current formal policy—Legal framework • Resolution 40/2002, May 14th - replacing 5/96 April 2nd • Does not deal with access to market (5/96 did) • Domestic market: to “adjust number of operators to demand” • Regulamento 39/98, August 26th • Defines access to market: • Regular international (intercontinental and regional) • Regular domestic • Nonregular • Route allocation to new operator after “listen” to incumbent

  5. Current formal policy—Regular-Int’l operations • Access to market • Designated in the BASA (bilateral air services agreement) • Selected by tender • Regime • Exclusive rights for 10 years (renewable by tender) • Intercontinental: single designation • Regional: one operator per route • Provision for multiple designation, subject to public interest

  6. Current formal policy—Regular-domestic operations • Access to market • Concession • Regime • By route • By tender • 5 year periods (renewable) • Subject to public interest: exclusive rights

  7. Current formal policy—Nonregular operations • Access to market • By obtaining a licence compatible with service • Regime • By tender • In addition to regular services

  8. Current institutional framework—Bodies and functions Policymaking Regulation Operation Accidents investigation ATC Airports Airlines Ministry of Transport & Communic. IACM IACM ADM ADM LAM et al IACM

  9. Institutional framework—Competences of IACM • According to Decree 41/2001 • Concentration of functions • Regulate procedures of policy application and legal framework (Art. 6: 1.a & n) • Technical regulation (Art. 6) • Accidents investigation (Art. 6, g) • Creates conflict of interest • Allows policymaking through regulation

  10. Proposed institutional framework—Bodies and functions Policymaking Regulation Operation Accidents investigation ATC Airports Airlines Ministry of Transport & Communic. Parliament autonomous bodies(arm’s length from the government) Civil Aviation Board IACM ADM ADM Airlines Accidents Investigation Board

  11. Current effective policy • Consequence of formal policy and institutional framework • Formally protective of LAM, considered of “national interest” • Restrictive access to international markets • Semi-restrictive for domestic markets • Informal protection • Difficulties in obtaining nonregular/special permits • Price control • Scheduling regulations (SAA should depart 90’ away from LAM)

  12. Current situation—Operators Intl Reg Dom • LAM • Air Corridor • MEX • STA • SAA • TAP • Pelikan Air Seven operators

  13. Current situation—Airport infrastructure • 3 international airports • Maputo, Beira, Nampula • 6 main airports • Inhambane, Quilimane, Tete, Lichinga, Pemba & Vilanculus (by traffic) • 10 secondary airports • 6 military • Plus almost 300 landing strips

  14. Current situation—Airport infrastructure (continued) • Operated by ADM • No prospects of private sector participation (PSP) • Failed ACSA deal for MPM • Doubtful financial feasibility for whole group • However • No capacity/operational constraints • Market is NOT a function of infrastructure

  15. Policy background—Freedoms of the air • 1st—The right to fly over another country without landing • 2nd—The right to make a landing for technical reasons in another country without picking up/setting down revenue traffic • 3rd—The right to carry revenue traffic from your own country A to the country B of your treaty partner

  16. Policy background—Freedoms of the air (continued) • 4th—The right to carry traffic from country B back to your own country A • 5th—The right of an airline from country A to carry revenue traffic between country B and other countries, such as C or D. • 6th—The use by an airline of country A of two sets of 3rd and 4th rights to carry traffic between two other countries but using its base A as a transit point

  17. Current situation—Int’l carriers • LAM • LIS: code share with TAP • TAP • LIS: x 2 via JNB – without traffic rights (no 5th freedom) • Poor offer • Little competition

  18. Current situation—France • BASA from 1991: 2x PAR-MPM • No interest • Presence of AF in TNR and Reunion • AF/KLM through Kenya Airways • 7 freqs a JNB • Camores

  19. Current situation—Portugal • BASA from 1977 with modifications • Single designation: designed for TAP • TAP: largest European presence • 3 freqs a LIS (2 via JNB on one way only) • Interest in 5th freedoms in the region (not allowed today)

  20. Current situation—South Africa • BASA from 2003 • Single designation: for LAM & SAA • Price control • Points in MOZ to CT, Durban, JNB, Nelspruit and Lanseria • Points in RSA to Beira, MPM, Nampula, Pemba, Vilanculos • Effective • 11 frequencies MPM-JNB (now requesting to 14) • 3 freqs to JNB-Nampula • MPM - Vilanculos

  21. Current situation—Tour operators/special • Policy • Limited entry points • Technical • Delays in issuing permits • No reliability in response time • Often not granted without explanation

  22. Current situation—Poor int’l connectivity LIS NBO DAR LLW / BLZ POL HRE BEW VNX JNB MPM

  23. Liberalized situation—Improved int’l connectivity LHR LIS NBO DAR LLW / BLZ POL LAD HRE BEW VNX JNB MPM

  24. Liberalized situation—Int’l carriers • LAM • LIS with JNB and LAD (Luanda) by use of 5th freedoms • HRE (Harare), DAR (Dar es Salaam) and NRO (Nairobi) with 5th freedoms • And same with LHR (Heathrow) and LIS, 5th freedoms • TAP • LIS with JNB by use of 5th freedoms • LAD with 5th freedoms granted

  25. Liberalized situation—Int’l carriers (continued) • BA • LHR/LGW – MPM – JNB (with Comair) • and LUN (Lusaka) • Virgin • LHR – MPM – JNB (with SAA) • and LUN

  26. Current situation—Regional carriers • LAM: JNB • MEX: DAR • SAA: JNB • KIA: HRE NBO • Pelikan: VNX • Air Corridor: BLW? • Poor offer • Little competition

  27. Liberalized situation—Regional carriers • LAM: JNB & others, HRE, DAR & NRE with 5th freedoms • SAA: JNB • Pelikan: VNX • Air Corridor: BLW? • Kulula: JNB & others • 1Time: JNB & others • Air Corridor: JNB & others • Comair: JNB & others

  28. Liberalized situation—Improved connectivity LHR LIS NBO DAR LLW / BLZ POL LAD HRE BEW VNX JNB MPM

  29. Liberalized situation—Improved int’l connectivity • Will open alternatives entry points/routes • Increasing competition • Improving quality of service • Facilitating entry for new services (LCC) • Reducing prices

  30. Air fares from Johannesburg Cents of US$ / mile (excursion return fares), by city pair distance

  31. Air fares from Maputo Cents of US$ / mile (excursion return fares), by city pair distance

  32. Lowest available domestic fares in two markets Excursion and LCC return fares, cents of US$ / mile

  33. Lowest available domestic fares in two markets (continued) Excursion and LCC return fares, cents of US$ / mile

  34. Traffic drivers—Domestic market • Foreign traffic • Reliability • Offer • Tourism infrastructure • price • Local traffic • Price • Price • Price

  35. Traffic drivers—Int’l market • Foreign traffic • Offer • Development of the domestic market • Price • Local traffic • Price as a fx(offer)

  36. A vicious cycle Domestic market is not self sustained: local population can hardly support the system Domestic market depends on the international inflow Domestic market does not get international inflow International market remains undeveloped International inflow is restricted to protect LAM LAM fails to exploit the opportunity & no other carriers can try

  37. The virtuous cycle Trigger: liberalization policy develops the international market Increases international traffic Increases inflow of passengers into the domestic network Gained support on the domestic market Efficiency and low prices drives tourism & investment Increase of foreign traffic into domestic market

  38. Needed reforms • Liberalization of the international traffic • Boost offer • Lowering prices • Increase inflow into domestic market • Ease technical barriers in the local market • Increase providers / offer • Promote investment in tourism • Generate more demand • Which brings more international pax

  39. Needed reforms (continued) • LAM Competitiveness Program • Restructuring reform • Adapt to the new challenges: business plan • Reallocation of resources • Capacity building program • Management options • Change in ownership structure (PSP) • Management contract

  40. Obrigado

More Related