THE LIBERALIZATION EXPERIENCE:THE CASE OF GHANA

A

PRESENTATION

BY

CAPT. JOE BOACHIE,

ACTING DIRECTOR-GENERAL,

GHANA CIVIL AVIATION AUTHORITY

AT THE SEMINAR ON “AVIATION IN TRANSITION: CHALLENGES AND OPPORTUNITIES OF LIBERALIZATION”

HELD AT ICAO HEADQUARTERS, MONTREAL, CANADA,

22 – 23 MARCH, 2003

OUTLINE

1. INTRODUCTION

2. EXPECTED BENEFITS

3. OPERATING ENVIRONMENT

4. GHANA’S EXPERIENCE

* GAINS

* IMPEDIMENTS

5. CONCLUSION

INTRODUCTION

• GOVERNMENT OF GHANA FORMULATES THE “VISION 2020” PROGRAMME IN 1995

• FLOWING FROM THIS PROGRAMME IS A GHANA TRADE AND INVESTMENT GATEWAY PROJECT

• STRATEGY: CREATION OF LIBERALISED ENVIRONMENT TO PROMOTE TRADE AND INVESTMENT TO ACHIEVE ACCELERATED ECONOMIC DEVELOPMENT IN GHANA

• AIR TRANSPORT LIBERALIZATION ONE OF THE KEY AREAS IN THIS RESPECT

• THE RESPONSIBILITY OF THE AERONAUTICAL AUTHORITY: TO IMPLEMENT AIR TRANSPORT HUB

EXPECTED BENEFITS

• ACCESS TO NEW MARKETS• IMPROVED EFFICIENCY OF AIR CARRIERS• ROUTES EXTENSION WITHOUT EXPLORATORY

COSTS THROUGH COMMERCIAL ARRANGEMENTS e.g. STRATEGIC ALLIANCE, CODE SHARING.

• INCREASED SAFETY AND SECURITY.• TRADE STIMULATION• INCREASED EARNINGS FROM TOURISM AND• INVESTMENT OPPORTUNITY

OPERATING ENVIRONMENT

• ABSENCE OF STRONG HOME AIRLINE

• LOW GNP PER CAPITA

• SEVEN (7) YEAR TRANSITION

• AFTERMATH OF SEPTEMBER 11TH (9/11)

• CONDITIONALITIES OF INTERNATIONAL ORGANIZATIONS

GHANA’S EXPERIENCE

• GAINS

GROWTH IN THE AREAS OF :

* TOURISM * NON-TRADITIONAL EXPORTS * AIR TRAFFIC MOVEMENTS * PASSENGER THROUGHPUT

HUB PROGRAMME SLOW TO ADVANCE, EVEN THOUGH IMPROVEMENT IN INFRASTRUCTURE AND COMMUNICATION FACILITIES

• IMPEDIMENTS:

* HIGH AIR FARES ON OUR ROUTES

* VISA RESTRICTIONS

GHANA’S EXPERIENCE (Cont.)

GHANA’S EXPERIENCE (Cont.)

• SUBSTANTIAL OWNERSHIP AND EFFECTIVE CONTROL:

* SUBSTANTIAL OWNERSHIP AND EFFECTIVE CONTROL CRITERIA HAS BEEN REVISED

* GOVERNMENT OF GHANA’S “PLACE OF REGISTRATION AND / OR PRINCIPAL PLACE OF BUSINESS”

* NEW POLICY NOT READILY ACCEPTED BY BILATERAL PARTNERS

* DIFFICULTY IN ATTRACTING FOREIGN PARTNERS

* SOME BILATERAL PARTNERS PREPARED TO GRANT WAIVERS BUT THIS DISCRETIONARY PRIVILEGE NOT FULLY ACCEPTABLE

SELF HANDLING

LIBERALISATION ENCOMPASSES ALL ASPECTS OF THE AIR TRANSPORT SERVICES INCLUDING HANDLING OF GROUND CARGO AND PASSENGERS

AIRLINES EXPECT A MORE FLEXIBLE HANDLING REGIME THAT ENABLES THEM TO UNDERTAKE TO SELF HANDLE OR CONTRACT OUT TO THIRD PARTIES

SELF-HANDLING IS A RIGHT OF THE AIRLINES TO BE EXERCISED UNDER A LIBERALISED SYSTEM, SUBJECT ONLY TO SAFETY AND SECURITY CONSTRAINTS.

IN GHANA AS AT NOW, THERE IS ONLY ONE LICENSED GROUND HANDLING COMPANY.

OUR OBJECTIONS FOUNDED ON THE FACT THAT PASSENGER AND CARGO THROUGHPUT AND INFRASTRUCTURE DID NOT SUPPORT MULTIPLICITY OF HANDLERS

HOWEVER, GOVERNMENT OF GHANA HAS INITIATED STEPS TO INTRODUCE COMPETITION IN BOTH CARGO AND HANDLING ACTIVITIES AT THE AIRPORT

SELF HANDLING (Cont.)

PRICING (TARIFFS / FARES)

GHANA’S LIBERALIZATION POLICY PERMITS AIRLINES TO FIX THEIR OWN TARIFFS BASED ON MARKET CONSIDERATIONS

THIS REMOVES THE POWER OF GOVERNMENTS TO APPROVE FARES BEFORE THEY ARE IMPLEMENTED

IN VIEW OF THE ABSENCE OF COMPETITION LAWS REGULATING THE CONDUCT OF CARRIERS, GHANA HAS INTRODUCED A SINGLE DISAPPROVAL TARIFF REGIME IN ITS BILATERAL AIR SERVICES AGREEMENTS

THE RATIONALE BEHIND THIS IS THAT A COMPLAINT

CAN BE RECEIVED FROM ANY PERSON, THE AERONAUTICAL AUTHORITY INTERVENES FROM THE FARE BEING IMPLEMENTED

THE PARTIES WOULD BE ENCOURAGED TO ENTER INTO CONSULTATIONS IN ORDER TO FIND AMICABLE SETTLEMENT

GHANA’S POSITION IS VERY OFTEN RESISTED BY THOSE NATIONS WHICH FAVOUR GREATER LIBERALIZATION AND HAVE ADOPTED DOUBLE DISAPPROVAL REGIME

THESE NATIONS ARGUE THAT TO ALLOW ONE PARTY TO INTERVENE STIFLES COMPETITION AND AMOUNTS TO GOVERNMENT CONTROL

PRICING (TARIFFS / FARES) – (Cont.)

CONCLUSION

IN CONCLUSION, WE BELIEVE THAT LIBERALIZATION IS

GOOD AND GHANA’S EXPERIENCE HAS BEEN BENEFICIAL

/ POSITIVE. RESULTS ACHIEVED SO FAR INDICATE THAT

WE ARE MOVING IN THE RIGHT DIRECTION. BEING A

SMALL NATION, HOWEVER, THE PACE OF TRANSITION IS

NOT AS FAST AS THAT OF A DEVELOPED NATION. HENCE

OUR INSISTENCE ON CERTAIN SAFEGUARDS TO BE

INSTITUTED UNTIL WE ACHIEVE AN APPRECIABLE LEVEL

OF MATURITY.