Open skies over South Africa

Israel approved the ‘Open Skies’ agreement with the European Union in 2013.

The goals were to increase the number of foreign airlines operating in the country, expand the number of routes served, lower fares and stimulate tourism. An Open Skies setup makes it easier for airlines to negotiate their own terms for operation with their intended partner/particular airport. According to OAG (a UK-based global provider of digital flight information to airlines, airports, and government agencies), the total number of scheduled international departure seats from Israel grew by 46% from 2012 to 2016, from 6,441,569 to 9,399,299. The capacity was set to rise further to a record 11,041,535 in 2017. Imagine what Open Skies could do for South Africa’s tourism industry.

This incredible growth can be attributed to low-cost carriers entering the market, thanks to an easier operational environment. EasyJet has become the third most active airline at Ben-Gurion airport. Greece’s Aegean Airlines, Hungary’s Wizz Air, Turkish Airlines, and Russia’s Aeroflot have all enjoyed a significant jump in their number of passengers. The success of Open Skies has even led to talk of possibly allowing foreign airlines to operate on the local routes in the country, for example, between Tel Aviv and Eilat. These airlines may also be allowed to set up local operating bases at Israeli airports in the future.

Perhaps the best impact has been on Israeli travellers. With the increase in the number of low-cost airlines, operating from a wider variety of foreign locations, Israelis are finding it cheaper to travel, thus increasing their quality of life and resulting in them spending more in the places to which they travel. The easier one makes it for people to travel to and from a country, the greater the chances they will use their money to do so. South Africa, with its tourism industry just begging to be unleashed, could see incredible growth in foreign travellers and job creation if we also adopted Open Skies.

Initially there was pushback from Israeli airlines because the agreement would mean more competition for them from European counterparts. When an industry is able to breathe, free from government regulations, restrictions, and bureaucratic costs, the increased competition means that businesses that were formerly protected have to improve their services and products, as well as try their best to lower their prices to attract customers.

Noting the concerns of the local airlines in Israel, the authorities implemented the Open Skies program in a series of stages, ending in 2017. This gave the airlines time to adapt to increased competition as well as adjust for the security matters which increase costs on operating in Israel (this is one concern with which South African airlines would not have to contend). As things currently stand, most of the constraints on foreign airlines have been lifted.

While we have a couple of private airlines in SA, the government makes it much harder for them to compete by constantly bailing out South African Airways. The recent collapse of SAX could have been disastrous for those who had purchased tickets to travel with the airline. However the private sector, in the form of Comair, SA Airlink and a few smaller others, picked up SAX’s whole schedule overnight.

While passengers in a few places may have experienced delayed flights, they were not left stranded – if not for the private sector which we so love to condemn, those passengers may well have been stuck for a very long time.

The success of Open Skies in Israel cannot be disputed. In 2016, 17.3 million international passengers flew through Ben-Gurion Airport, compared with 12.4 million in 2012. Over the first four months of 2017, passenger traffic was up 20% compared with the same period in 2016. April 2017 saw 25% more passengers than April 2016.

We have limited competition in the airline industry in SA. The government should adopt an Open Skies policy and make it as easy as possible for local and foreign airlines to operate and compete, thereby resulting in more options and lower prices for the South African traveller while also boosting tourism.

Chris Hattingh is a Researcher at the Free Market Foundation

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