National carriers in the five-nation East African Community bloc stand to lose market share to international carriers should the proposed open skies policies be implemented, a study suggested yesterday.

The study by global management consulting firm InterVISTAS on costs and benefits of open skies shows that increased competition from non-national carriers could threaten the profitability of airlines in the region.

“While increased competition has the potential to weaken the viability and profitability of home carriers in some instances, liberalisation also offers a means to restructure the carriers and protect profitability by expanding into new markets,” InterVISTAS senior vice president for aviation forecasting Ian Kincaid said in Nairobi.

The research states that whether the home carrier prospers or suffers under liberalisation will highly depend on the quality of its management and how the carrier chooses to respond.

In 1999, the Yamoussoukro Decision was adopted by 44 African countries, recognising that the strict regulatory protection that sustains national carriers has unfavourable effects on a country’s economic growth.

The decision was aimed at liberalising air transport in African countries to create a conducive environment for foreign and regional investment.The survey commissioned by the East African Business Council and the EAC Secretariat is aimed at providing information on the impact of implementing the Yamoussoukro Decision in East Africa.

“Implementation of YD remains pending mostly due to a lack of clear and specific information regarding the impacts of enacting such liberalization,” Kincaid said.

EABC CEO Lilian Awinja reiterated the sluggish implementation of open skies by the EAC countries has locked the region out of substantial intraregional growth and development.

“We need this to be adopted sooner rather than later as it will compliment East Africa’s attractiveness especially when it comes to the ease of doing business,” Awinja said.

The study shows that liberalisation of air transport contributes to greater trade and tourism, inward investment, productivity growth, increased employment and economic development and is supported by a range of regional stakeholders.

“It is estimated that liberalisation between the five EAC countries could result in an additional 46,320 jobs and US$ 202.1 million (Sh20.86 billion) per annum in gross domestic product,” Kincaid said.

Source: The Star