Monday, May 14, 2012

■ BOTSWANA: Open Skies deal signed; will Air Botswana survive more competition?

Air Botswana
The Botswana Government has recently signed two Bilateral Air Services Agreements (BASA) with Mauritius in Gaborone agreements bringing to nine the number of BASAs signed - the other eight being with Belgium, Kenya, Malawi, Namibia, South Africa, the United Kingdom, Zambia and Zimbabwe.

So what exactly is this BASA and what does it do? In essence, the BASA contains provision on traffic rights including the routes that airlines can fly and cities that can be served within, between and beyond the bilateral partners. The agreements also include the number of flights that can be operated, or passengers that can be carried between the bilateral partners, as well as the number of airlines the bilateral partners can nominate to operate services. 

The question remains though, in the long run, will a small regional carrier like Air Botswana be able to survive without a government bodyguard of sorts to protect it against larger, more competitive airlines, given that in 2010 the airline posted a USD$11.5million loss which was footed by the Botswana Government? 

Blue Sky Airways 737
Blue Sky Airways 737 in Gaborone
Domestically, potential for competition exists from a start-up named Blue Sky Airways but who thus far, seem to have stuck to a charter operation role.

Regionally and internationally however, Air Botswana has had its big brother - The Botswana Government - to protect its back against larger and more aggressive competitors. But, for how much longer? With Botswana's biggest export being diamonds, and with the relocation of the De Beer's subsidiary Diamond Trading Company (DTC International) from London to Gaborone last year, there is increasing pressure on Botswana to truly liberalize its airways, especially with regards to its largest trading partner South Africa, with whom it has had a difficult relationship over the years, because of government protectionism of Air Botswana.

"The collapse of BASA negotiations with South Africa in 2009 forced Botswana to cease its Johannesburg-Maun direct flight as the southern neighbours retaliated against Air Botswana's continued monopolisation of the lucrative route.
For years South African airlines tried to break into the lucrative route but the Botswana government declined to open the coveted corridor in order to protect Air Botswana, the national carrier.
Before the signing of the BASA two years ago, no other airline, except Air Botswana was permitted to have a scheduled flight from Johannesburg - which is the air access point of nearly all long-haul traffic from Europe and USA - to Maun, the largest tourist attraction in the region."

By all means, the market for passengers certainly exists whether for business or for pleasure -  Botswana's passenger volume grew 9% on 2010 with 788,461 passengers travelling -  but once the Botswana Government truly frees up its airspace and its airline industry, will a new privatized Air Botswana end up going the way of the old Zambia Airways, Air Zimbabwe or Air Malawi who essentially exist(ed) for the sake of national pride yet remain(ed) grossly uncompetitive and poorly run? Or will it transform itself into the next Kenya Airways or Ethiopian Airlines and find its own competitive niche? Only time will tell.