Aviation in Mozambique: let it air!

Authors:

Claire Hassoun

Editors:

Alfonso Cabrillo Losada, Joao Po Jorge

Sector:

Transport and logistics

Date:

July 2016

Document category:

Public policy memo

Claire Hassoun – Transport and Logistics Engineer – Waza Director. A transport engineer by training and recently graduated with an Master in Public Administration from Harvard Kennedy School, Claire has been working in the International Development field on infrastructure projects in West and Central Africa for seven years, mainly in the energy and transportation sectors. Since she arrived in Mozambique last year, Claire has been focusing on transportation and logistics networks at regional and national scales. Amongst other projects, she worked on a book project focusing on the making of Mozambique as a world class logistics hub, with Senior Harvard Fellow Issa Baluch. Claire is now working as a consultant on public policies in infrastructure and mobility in Mozambique.

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Mobility in Mozambique: let it Air!

When Mozambicans are asked about the transportation difficulties and the low rates of domestic tourism, they often blame the national flag carrier Mozambican Airlines, Linhas Aéreas de Moçambique (LAM) for its outrageously high prices. With LAM it is allegedly more expensive to go to Pemba (1,700 km beeline from Maputo) than to go to Portugal (8,400 km). This and other criticisms of LAM, such as its frequent delays, are often attributed to LAM having no competitors. However, the reasons behind the airline’s problems are more complex than simply monopoly, and our study indicates areas where relatively straightforward improvements in LAM’s modus operandi could bring significant benefit. This paper focuses mainly on the business models and challenges faced by the LAM and MEX (LAM’s subsidiary), which are the main operators for domestic traffic in Mozambique.

LAM’S BACKGROUND and MANDATE LAM Linhas A reas de Mo ambi e, was created in May 1980, taking over from CFM’s air irectorate E A ( irec o de E plora o de ransporte A reo), which used to be the aviation department of CFM, the state-owned Ports and Railways company of Mozambique. While CFM had been handling railways, ports, air transportation and trucking services since its creation in 1931, it was divided up after independence and now concentrates its current activity on rails and ports management.

Photo by Mauro Pinto

LAM inherited from DETA all its rights and obligations. These include the public air transportation of passengers of cargo and of long distance mail both nationally and internationally. LAM’s mandate has not been amended since its creation. LAM transported 750,000 passengers in 2014 (estimated decrease to 695,000 passengers in 2015). It represents 75% of total passenger air traffic in Mozambique, and retains a minimum cargo shipping service (estimate of 4,000 tons shipped in 2015).

COST, MOBILITY AND BUSINESS ! Whilst the cheapest economy tickets for a domestic flight with LAM are usually cheaper than their equivalent for a flight to Portugal – confirming a common misperception - it is certain thus that the claim that international flights are cheaper is often something of a misperception - some of LAM’s routes are expensive for the mileage. Most of LAM´s routes are expensive for the mileage compared to the region’s standards.

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They do not offer budget tickets for average customers of the kind that can be found with numerous airlines in neighboring Tanzania, which compete with each other to offer affordable travel – following the e ample of E rope’s ‘no-frills’ airlines that have made air travel so m ch more accessible to the wider population. With no options other than LAM, national air travel is therefore out of reach for the vast majority of Mozambicans, who have never traveled or only travel occasionally by air. Beyond the impact on mobility, air travel costs contribute significantly to the bill of doing business in Mozambique, and reduces its competitiveness with most of its neighbors. Perhaps except for extractive industries, which seem to anticipate these high costs in their development and operational expenditures, this impediment reduces the development of small and medium business opportunities and weakens the ambitions and potential of key sectors such as tourism. EXTERNAL CHALLENGES LIMITATIONS: GEOGRAPHY & MARKETS These high ticket prices result partly from characteristics common to sub-Saharan air transportation, such as a higher cost of fuel and thin markets, and the fact that these factors are especially prevalent in Mozambique. Although the passenger traffic has increased significantly over the past 5 years due to the development of mega projects in natural resources, traffic amounts to only 750,000 passengers in 2014 (compared to 550,000 in 2012), out of a population of 25 million. Passenger traffic mainly consists of domestic traffic (60%) and regional (intra-Africa) traffic, as classified by Aeroporto de Mo ambi e (ADM). As with all transportation modes in Mozambique, the air sector at domestic level faces the challenges of serving relatively small markets whilst trying to cover a vast geographical area. As a comparison, the distance by road between Maputo and Pemba in Cabo Delgado province is e ivalent to the distance between akar (Senegal) and Abidjan (Cote d’Ivoire) or Madrid (Spain) and Copenhagen (Denmark). In addition, the extreme southern location of the capital city of Maputo means that the majority of traffic is disproportionately concentrated in the south of the country. Out of the 20 airports operated by ADM and served by LAM, half of the traffic in 2014 was concentrated in Maputo, and 87% was concentrated in five airports (Maputo, Nampula, Beira, Pemba and Tete, where the main ongoing mega projects are located). This forces the air transportation network to be star-structured, rather than a “h b and spoke” network. Hub-and-spoke network is the option preferred by transportation planners as it minimizes detour distances and trip times between origin and destination terminals through one or several main hubs which is the center of gravity of the network. For Mozambique, a hub and spoke network could be centered on Beira or Nampula/Nacala airports and thus serve more efficiently the country. LAM Network in 2016. source LAM

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INTERNAL CHALLENGES LIMITATIONS: INEFFICIENCIES OF LAM’S FLEET & SERVICE PROVIDERS Geography and small markets are not the only causes for high prices for domestic flights. LAM and MEX’s fleets consist of 6 different types of aircrafts o t of 13 aircrafts as follows: 8 Embraers (93 50 and 30 PAX capacity), 3 Bombardier (76 and 72 PAX capacity) and 2 Boeing 737 (132 and 111 PAX capacity). This variety is unusual even by African aviation standards, and results from market and bilateral relations such as international cooperation initiatives (Embraers were financed by Brazilian government in late 2000s). The numerous different kinds of aircraft make maintenance more complex and expensive, as it requires different sets of spare parts, specific maintenance and operation skills, as well as crews which all result in high operation & maintenance costs; it also dramatically weakens the ability to recover from service disruption (eg. delays or route change, see below).

Other costs are passed on to LAM’s c stomers incl ding e pensive catering (despite the mediocre meals) and the exceptionally high scanning fees charged by private company Kudumba, which has a monopoly on all airport scanning services in Mozambique. Other fees are applied for passenger baggage, and are directly passed on passenger tickets, thus increasing their price.

PERCEPTIONS OF THE QUALITY OF SERVICE Air transportation services in general suffer from a bad reputation because the quality of the services they provide, both at airports and on planes, is often not regarded as value for money. LAM is no exception in that regard despite improvements in the early 2010s. However, the quality of the services they provided seem to have entered once again in a negative cycle. They appear to be worsening, due to several factors detailed hereafter, and an inadequate response to address and improve the situation. Delays “Ripple delays” or delays in chain of operation resulting from an earlier delay in the day that impacts the subsequent schedule, are a major difficulty faced by all airlines nowadays. Usually more common in the hub-and-spoke network model, this chain reaction is also suffered by LAM. LAM is not an exception as it operates at full capacity, with a limited and diverse fleet and a very tight schedule, so has very little slack to absorb any delay. LAM recently started to report on the causes of these delays (early 2014), enabling it to start addressing the problem. Although LAM managed to reduce its delays significantly in 2015, it still experiences delays to date and seems unable to find a path to minimize them to optimum levels, partly because of inherent flaws in its logistics. Regular service vs. demand-driven offer A look at LAM’s network provides some e planation for delays as well as for other perceived inefficiencies. Its routes (mostly to Northern provinces) combine various domestic destinations and international travelers. Flights are often inconvenient and long, with frequent stops that leave more opportunity for delays in any one journey. One relevant example is there is no direct the flight between Maputo and Dar Es Salaam. LAM offers a 7-hour-long-trip to Dar Es Salaam through Nampula and Pemba every other day. Less frequently, it provides a shorter option with no stop in Nampula but it sometimes can also stop in Beira.

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The regular service is inefficient for business trips and discourages long-route travellers that are often the ones with a higher capacity to pay. On top of the lengthy trips, its passengers in transit to Dar es Salaam are constrained as LAM forces passengers in transit to Dar es Salaam to disembark with their hand luggage, in both Nampula and Pemba. The same is true on the route back from Dar Es Salaam to Mozambique, with the additional hassle of clearing customs and unfriendly regulations immigration procedures in Pemba. This unfriendly regulation for passengers stems from the requirement by Mozambique law to pass through customs clearance and immigration control at the first point of entry and last point of exit, even when in transit, which is a very unusual and inconvenient procedure for transit passengers. On top of it, poorly equipped airports offer few services e.g. internet connectivity. These long sequences of short flight legs might allow LAM to provide regular services within the northern region but the combination of inconvenient stops with poorly equipped airports which offer few services (e.g. no reliable internet connectivity, insufficient food and beverages), makes the travel experience incompatible with business or tourism trips. The schedules are also unreliable, due to higher repeated risks for cumulating delays, further discouraging customers in general, and especially those traveling for business on tight schedules. Designing an optimal network which would balance the service on more profitable lines with the necessity to keep public service to remote areas is a perfectly possible option. It might offer lower frequencies, but if thoroughly planned could allow flights at affordable prices. A deeper analysis of the demand, from both current passengers and potential customers, would help identifying a more adaptive structure of the network and offer. Inefficient logistics The poor logistics and airport infrastructure of Mozambican airports significantly affects aviation operations, most notably when it comes to refueling. Out of 20 Mozambican airports, only nine are equipped with fuel facilities (Maputo, Beira, Tete, Pemba, Inhambane, Vilankulo, Nampula, Quelimane and Nacala). To deal with this problem, LAM is must take the following time-consuming measures: Fly to low capacity airports (like Lichinga, in Niassa province) with a large-capacity Boeing 737 or Embraer e190 aircraft, in order to have enough fuel for the return trip. Otherwise, due to long distances, smaller planes are often taken to make unscheduled stops, on occasion for refueling, increasing again risks for causing delays. 

Require passengers to disembark with their hand luggage at refueling stops, even those that are scheduled, such as in Nampula on the Maputo – Pemba route.

As well as causing significant inconvenience and delay, all these steps result in expensive mark-ups on passengers’ tickets. On the other hand the apparent sol tion of e ipping all airports with f el storage is not cost-free in terms of both capital and operation expenditures. Alternatives have to be assessed through a cost benefit analysis of the global logistics chain, fleet specifications and demand. Feedback from customers LAM has no effective formal feedback mechanism for customers, making their satisfaction hard to measure and the major causes for discontent more difficult to identify reliably. However, LAM staff members report direct complaints from customers, on the ground or over the phone, related to delays, the absence of communication, or last minute changes over a routing. elays and cancellations are reported as the primary so rce for passengers’ discontent hey are perceived as excessive by passengers, relative to other airlines they use for business travels, making

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LAM extremely unreliable. Amongst other frequent service disruptions, these delays break the promise the airline makes to offer a reliable service. More problematic perhaps is the way LAM’s staff handles these disr ptions. LAM s ffers from a lack of communication with passengers in the event of disrupted service. Passengers are left to themselves to accommodate for the faced delay. Actually, LAM does not have any real c stomers’ service, and their ground staff is not trained in customer service. Frequently, passengers even give p on the company’s staff ass ming that they have no intent to handle the sit ation and wait patiently for long hours in boarding rooms. In e treme cases they rely on MAHS’s staff (Map to Airport Handling service), wherever they do provide services, to communicate with the passengers for operation alterations, including routing alterations or delays. LAM also lacks a system through which it compensates passengers for delayed flights. The frequency of disruptions, combined with a lack of communication and compensation by the airline negatively impacts LAM’s rep tation and overshadow the improvements that have happenned over the past decade.

PUTTING LAM’S MONOPOLY INTO PERSPECTIVE In a country as large as Mozambique, a crude measure of access to transport services and mobility is the density of roads relative to populated land area. In this context, LAM has little competition from other methods of transportation because of poor road and rail infrastructure and, in recent times some areas, security risks on land routes. It takes 2 hours to fly from Maputo to Nampula (about 2,000 km by road, xxx beeline) but about 30 hours, i.e. 3 days for a car to drive from Maputo to Nacala, and about 5 days to drive a truck from Maputo to Nampula. In this context of economic niche for transportation, LAM (and its subsidiary MEX) is the exclusive service provider for domestic air transportation, although some other 12 companies are licensed for air cabotage. It is commonly felt that this de facto monopoly is ltimately to blame for LAM’s inefficiencies and high ticket prices, as without competition it has little incentive to provide better service or reduce prices. If LAM had competitors, there would indeed be more pressure on LAM to address factors res lting directly from LAM’s own practices and to increase press re on the government to remedy those that stem from other state infrastr ct re and logistics. B t j st as LAM’s prices are not entirely a direct result of lack of competitors, so the nature of the monopoly itself is not as simple as many believe. By law, Mozambique does not have open-skies for international transportation. However, the law states that it is an open sky at a domestic level. Nevertheless, LAM continues to retain its monopoly on domestic travel in practice, as several implicit barriers to entry exist. The first of these is Mozambi e’s e plicit re irement for the existence of a national flag-carrier. Mozambi e’s national strategy for integrated development of the transport systems maintains ‘the need for the existence of national flag carrying airlines as a crucial aspect in the strengthening of self-esteem development of the national business community, exercise of sovereignty and consolidation of independence and national nity”. hese statements ill strate Mozambi e’s protectionism of its sovereign air space, and in particular of its national carrier. This protectionism, even if by law, does not prohibit other companies from operating domestically in Mozambique. In addition to Mozambi e’s small and fragmented market it makes Mozambique a difficult prospect private airlines. There are currently no other airlines to compete with LAM domestically. Two companies - Fly Africa and MAIS - have shown an interest in entering Mozambi e’s national markets over the past co ple of years b t have not yet done so.

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The barriers to entry for newcomers is not uncommon on the African continent. Liberalization of airspace comes as a trade off for regular services in such thin markets, and can be considered as a real threat to public service for less profitable links, all the more so in economically vulnerable environments where air transportation demand can decrease significantly with lower growth prospects. Feedback on other experiences in Africa show that policy makers tend to wait for increase in the demand before considering opening their skies. However, hybrid solutions exist, but they require further analysis to understand the economic drivers of the demand.

A LOSS-MAKING PUBLIC SERVICE LAM itself is not profitable, instead operating as a loss-making p blic service. Most of LAM’s passenger traffic consists of civil servants and government representatives, and to a lesser extent, businesses (mainly for mega oil, gas and mining projects) and NGOs. LAM operates as if it did not need to be commercially viable, turning to public funding when necessary rather than simply going out of business as a private company would. Loss-making routes Because of its public service mandate, LAM continues to operate unprofitable lines with flights operating at low capacity. When passenger numbers are too low even for LAM, the company cancels the flight ca sing major passengers’ inconvenience and making the operation airline nreliable. Medivac obligations In addition, LAM is obliged to transfer seriously ill passengers (a process known as medevac). A source of inconvenience and discomfort to other passengers within the aircraft, offering sick passengers transportation on stretcher on a commercial cabin causes delays from the installation and removal of the medical equipment on board. In addition, this is a risky operation which can entail f rther delays and service disr ption as the passenger’s condition might deteriorate considerably during the flight. Medivac is one of the main barriers to entry argued by other carriers who say that such an obligation is not commercially viable if also applied to them. Costs are estimated as higher than the indirect costs from the European Union’s ban of Mozambi e’s national flag-carrier. Misplaced priorities As noted LAM and A M’s p blic service mandate and obligations were inherited. LAM was la nched nder Samora Machel’s presidency in order “to se the plane as a vessel for friendship amongst the peoples of the world”. Unlike many other national flag carriers created after independence in African countries in the 60s and 70s, LAM has survived over the past 30 years, but at a heavy cost. Its inefficiencies can be traced back to these original values of pride and public service, still enshrined in the country’s transportation strategy. Whilst laudable values, pride and public service should not come before sustainability. LAM is a stand-alone company, and should be managed and operated as such, rather than rely on the state to bail it out when it fails commercially. It must better manage its costs and revenues beyond a shortterm survival strategy, in order not to drain the state budget. Such success stories exist, foremost amongst them being LAN-Chile (Línea Aérea Nacional de Chile, National Air Line of Chile) detailed below.

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POSSIBLE SOLUTIONS Better management of e isting assets and policy improvements co ld significantly improve LAM’s services and finances in a relatively quick and cost effective manner. The following section provides broad guidelines on actions to undertake. However, an in-depth a dit and f ll nderstanding of LAM’s e isting operations and potential market is required to seriously tackle the complex challenges faced by a sector. This must be supported by a strong commitment and vision from the top management and Mozambi e’s government to achieve long-term objectives. Collecting data – improvements through understanding existing operations and services Service improvement requires first and foremost an in-depth understanding of current operations. Strategic and management decisions must be driven by facts, data and feedback. In 2014, LAM started to collect information on the causes of delays, the cost and revenues of all operations, as well as an analysis of its suppliers. However, this was the result of a long process, which had to overcome much resistance to changes. Indeed, data collection as well as performance review is not common at LAM. With the development of new IT tools, implementing systematic collection and processing of data has become affordable and with a little of smart design it can help managers to face the challenges of a necessary institutional cultural change. The role of reporting is to be a strong basis on which to improve the entire system. It is important that all staff members, from handling operators to the middle and top managers, feel accountable as part of an integrated service. Unhelpfully, many are afraid of such reporting as they do not want to feel criticized, but this is not the objective of this data collection. Acting on information: improving services Once LAM understands its costs and operations, it is important to act on this information by designing better public policies and management strategies. ·

A more efficient operational network First and foremost, LAM needs to re-design its network in a more efficient manner. Based on an understanding of the main flows, origins and destinations, they can design a real hub-and-spoke network which will better serve the needs of current passengers, and allow for profitable routes to better subsidize those with less traffic. If appropriate, air cabotage could be diversified through the implementation of air taxi services, a low-capacity-aircraft service that used to serve remote areas before independence. Reshaping the network would also allow for a better managed fleet and more flexibility, helping avoid ripple delays and enabling LAM to operate more efficiently over Mozambi e’s large geographical area. On a second stage the standardisation of LAM’s fleet to serve the re-designed network would allow significant improvement in operation costs and reliability. Better customer service Secondly, efforts should be made to improve the quality of customer service on the ground and on board. This could include better communication from the staff – especially regarding delays - so that

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customers can better manage their time. Such measures are straightforward, come at very little cost, and could be rapidly implemented. Improving reliability Thirdly, LAM could help restore its reputation through becoming more reliable. This means not only fewer delays and cancellations b t also an end to LAM’s practice of altering flights at the last minute. LAM should avoid changing schedule or route unless it is essential – eg. because of a passenger ne pectedly taken ill on board or re est from government’s official to adapt the ro ting for government’s meetings f el s pply incidents etc. Making LAM more commercially viable LAM’s passenger load factor or seat occupancy rate (SOR1) has been decreasing since 2011, showing a load factor of 63% in 2014. The year 2015-2016 might show a short-term increase in the Seat Occupancy rate (SOR), due to the current context in Mozambique, which makes air transportation look much safer than land transportation (according to LAM sources, in March and April 2016, most flights flew at high load). However, this may be rapidly cancelled out by the fact that for both political and economic reasons, Mozambique is becoming rapidly a far less attractive destination for both tourism and business. Should the political tensions decrease and the security situation improve, LAM will again have the opportunity to increase customers. This spike, therefore, must be regarded as temporary and LAM needs to do all it can to expand its customer base in a sustainable way. LAM is not in a commercially viable situation. To become more profitable, LAM should have a clearer idea of what part of the business is deficient and what part is running a sustainable path. If there is a will to continue with a discount approach to large groups (i.e. civil servants and families) it must be done in full knowledge of its costs and its justification.. It can still continue its public service role by flying to remote areas, but at a lower frequency more appropriate to the low demand. iIf LAM fulfills these first goals of making its network more efficient, improving its customer service and becoming more reliable, it will be in a better position to attract more customers and become more profitable. Supporting value chains to attract customers to the existing services A first strategy for attracting new customers should focus on customers previously discouraged by high prices. Markets with the most potential should be identified through studies, followed by efforts made to target them by providing appropriate services at the right price. These more obvious potential customers could include domestic business customers, or locals traveling for leisure and tourism. However, identifying these markets is only the very first step of the process. Attracting new customers will require further changes in approach. First, it requires LAM to co-operate with government efforts to promote foreign and domestic tourism, resulting in more potential air passengers. Second, it must adapt to playing a role as part of a larger tourism ‘val e chain’ – i.e. all sectors that play a role in tourism. LAM’s role covers not only air passengers b t also cargo s ch as the food sed by hotels. LAM does not have a dedicated cargo line, and cargo is shipped in the cargo hold of a passenger aircraft only when the passengers’ l ggage leaves eno gh space for it. his shows that cargo transportation is not regarded by LAM as a valuable service, and explains the very low level of cargo that LAM has been shipping since its creation. Finally, since cargo service are offered according to opportunity, cargo 1

Seat occupancy rate is the ratio of passengers to available seats on board a given flight.

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fares offered by LAM are so low, and charged at costs at best. (When carefully analyzed, costs per kg of cargo exceed the price, because the costs are not well estimated and known). The low emphasis laid on cargo shipping represents a huge opportunity cost. There is currently an increasing demand for cargo transportation by LAM owing to security risks on the roads caused by politically-motivated violence, particularly in Central and Northern Mozambique. A longer-term demand comes from the steadily increasing growth from the north, which lacks easy access to goods from South Africa for instance. On the other hand, demand from passengers has also increased on some routes for the same reason. When LAM flights are at full capacity, cargo remains on the tarmac – there is not even space in the airport storage facilities, making the cargo service unreliable. In order for the supply chain to function efficiently, LAM must operate more consistently and reliably or it has a knock on effect throughout the chain. Beyond the implementation of airport facilities, coordination with other transportation modes will be necessary for freight transportation in main logistics nodes (coordination with ports and railways operations). In that respect, the new international airport of Nacala could be a key intermodal node of this supply chain, connecting freight from marine vessels in Nacala to domestic and regional destinations in the inland countries bring opportunities to amortization of this recent and expensive infrastructure. If Nacala opens to international routes some of the northern regions could be at a reasonable driving distance from international routes. Intermodal cooperation applies to main tourism clusters (e.g. with local transportation for tourism like bus companies, taxies and other services). Safety Safety reg lation and compliance is another key problem. Mozambi e’s national aviation does not meet EU safety standards and, as a result, has been banned by EU regulation. As a result, all companies registered at the national aviation authority of Mozambique are banned from flying in the EU. The first consequence is the interdiction to directly operate the route Maputo/Lisbon. Perhaps more problematically this blacklisting is often perceived and wrongly nderstood as LAM’s performances per se. As a result, while LAM is not directly responsible for it, it suffers tremendously from this black-listing. It is banned by international company staff who fly through Johannesburg for a Maputo-Pemba on South Africa airlines in order to avoid LAM services. This major constraint to the development and growth of Mozambi e’s aviation at its f ll potential is not further addressed in this paper, as it has been well discussed in other forums. THE WAY FORWARD - AVIATION AT THE CORE OF MOZAMBIQUE’S LOGISTICS An action plan LAM is financially challenged today, and not commercially viable. This situation can be addressed, but only with the shift in paradigms we mentioned in terms of collection of up-do-date and detailed data, marketing strategy and proper integration into the value chain. Most urgently, we believe that LAM needs to concentrate on improving its existing services. Opening new routes adds pressure to LAM’s str ggling b siness and creates an impression that the operation is financially sound. It will require strong leadership to address this in a proper manner. The country already has adequate supply of infrastructure in terms of number of airports, and should stop investing in major new infrastructure and expanding LAM’s network beyond the rehabilitation and maintenance of existing facilities and improving of the existing services. LAM needs to focus on its core business, which is to transport passengers and freight within the region (mainly the South

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African Development Community - SADC). Its service must be organized around a sound network, based on properly interpreted market studies. Run properly, aviation could become a key service supplier for Mozambique. Once the problems outlined above have been addressed and goals achieved, LAM could target other markets that require new infrastructure, such as creating cold chains services for agriculture. Setting up efficient hubs in Nacala, Nampula or Beira is part of a more global planning of decentralized economic activities in Mozambique, spread out upon several economic nodes and clusters. Some infrastructure decisions to invest in Nacala economic pole fits into this strategy which requires a coordinated and concerted strategy between all economic stakeholders. Such a strategy, which calls for concerted actions from different ministries and sectors, requires a strong vision at a national level.

A possible vision for Mozambique: walking in the steps of Chile Mozambique can draw many lessons from the experience of Chile over the past decade, a country as challenged as Mozambique in terms of geography (north-south coast, thin markets, proximity to significant markets etc) but whose economy was boosted by the development of the aviation sector and its national company LANChile. According to a report by IATA (International Agency of Air ransportation) the development “reflects the transition of the Chilean economy away from manufacturing and mining towards a more service based economy. 28% of sales were directly dependent on good air transport links, while 70% of Chilean firms found air transport important for their ability to serve a larger potential market.” The development of LAN can inspire Mozambi e’s leaders who put priority on the aviation sector ten years ago, and managed to reap benefits in tourism, agriculture, foreign investment, and more broadly to the entire economy.

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A Comparison between Chile and Mozambique’s geography