MOZAMBIQUE’S INFRASTRUCTURE: A CONTINENTAL PERSPECTIVE

**Table 9. Benchmarking air transport indicators for Mozambique and select other countries**

|Country|Mozambique|Tanzania|Zambia|South Africa|Zimbabwe|Angola|
|---|---|---|---|---|---|---|
|Total seats (per year)|1,819,117|3,694,171|2,010,641|45,789,157|1,533,406|2,272,173|
|Domestic|1,144,644|1,871,255|437,658|31,767,537|237,835|1,199,016|
|International travel within Africa|582,836|1,237,153|1,459,766|6,314,557|1,109,986|484,179|
|Intercontinental travel|91,637|585,763|113,217|7,707,063|185,585|588,978|
|Per capita seats|0.087|0.093|0.168|0.954|0.118|0.134|
|Herfindahl-Hirschmann Index—air<br>transport market (%)|31.5|9.8|17.5|16.7|30.2|33.3|
|Percent of seat-km in newer aircraft|57|79.3|63.8|83.8|71.4|59.7|
|Percent of seat-km in medium or<br>smaller aircraft|56.7|48.6|62.8|32.8|42.7|13.9|
|Percent of carriers passing<br>IATA/IOSA audit|100|33|0|33.3|0|0|
|FAA/IASA audit status|No Audit|No Audit|No Audit|Passed|Failed|No audit|

_Source:_ Bofinger 2009. Derived from AICD national database (www.infrastructureafrica.org/aicd/tools/data). _Note:_ All data as of 2007 are based on estimations and computations of scheduled advertised seats, as published by the Diio SRS Analyzer. This captures 98 percent of worldwide traffic, but a percentage of African traffic is not captured by the data. The Herfindhal-Hirschmann Index (HHI) is a commonly accepted measure of market concentration. It is calculated by squaring the market share of each firm competing in the market and then summing the resulting numbers. A HHI of 100 indicates the market is a monopoly; the lower the HHI, the more diluted the market power exerted by one company/agent. FAA = U.S. Federal Aviation Administration; IASA = International Aviation Safety Assessment; IATA = International Air Transport <u>Association; IOSA = IATA International Safety Audit.</u> The number of city pairs served by airlines in Mozambique, both domestically and internationally, increased between 2001 and 2007, against the declining African trend. The greatest increase was reported in international city pairs, which increased from 10 in 2001 to 31 in 2007. Domestic city pairs rose from 22 to 30 over the same period (figure 7b).

In terms of airport facilities, nontraditional financiers are increasingly playing a role. The construction of a new terminal building in Maputo has been recently finalized, involving Chinese investment of around $75 million, as well as the expansion of an existing military airport in Nacala into a commercial airport, financed by Brazil.

# **Challenges**

Despite the growth in the sector, Mozambique’s air industry still faces major challenges, including a decline in competition following the death of a private carrier, the national flag carrier’s financial troubles, performance at the Maputo airport, and compliance with safety standards.

Competition in the Mozambican air market declined after the exit of Air Corridor. The overall Herfindahl-Hirschmann Index, at 31.5, is the highest in the region after Angola (table 9). Between 2005 and 2007, Air Corridor, a privately held operator, provided a high percentage of domestic capacity despite the fact that aircraft were grounded due to repairs and maintenance. In 2008 the airline went out of business, removing around 40 percent of the domestic seat capacity. After Air Corridor’s collapse the 20