Domestic flights in Cape Verde only sustainable above 350,000 passengers, says minister

Cape Verde’s Minister of Tourism acknowledged today that an airline operating domestic connections in the archipelago must carry more than 350,000 passengers to be sustainable, justifying the lack of competition.

According to Carlos Santos, the number results from a study conducted in Cape Verde in the period 2018 and 2019, funded by the World Bank within the restructuring of the state airline TACV, which stopped operating domestic flights to focus on international flights.

“And that study points out that there is a ‘breakeven point,’ that is, the point from which the company or the sector begins to have results, and they point to that number, around 350,000 [passengers], below which the companies that are in the market will make a loss.

“That study does not tell the government to authorize a single operator. There is a tendency to set up this narrative,” he said.

The minister was speaking as part of a hearing of deputies of the Parliamentary Commission of Inquiry (CPI) on the privatization of TACV (in 2019, renationalized in 2021) and the exit of the domestic market.

Since May 2021, domestic air connections in Cape Verde — involving four international airports and three airfields — have been guaranteed only by the Angolan-origin group BestFly, when it replaced the then-sole operator, the Spanish Binter.

“The study brings the numbers to show that the market is scarce, and from a certain number on, we start to have positive results in the companies.

“Given this study, the government then takes measures to allow that there is always what we always fight for, which is competition if the government wants to guarantee mobility.

“And mobility rhymes with the sustainability of the company because the company, without results, cannot stand up.

“Then, if the State is interested in having a company that is profitable to be able to respond to the obligations of what is mobility, obviously it has to create instruments to guarantee this sustainability”, he added.

“That study doesn’t tell the State to oblige to have only one operator. Therefore, it is not true. Therefore, I said they bring numbers to help the government to decide,” insisted Carlos Santos when confronted by the deputies.

The priority, he also said, is to have “a de facto guarantee of mobility between the islands, whether the smaller or larger islands,” by air connection.

“Because we understand that only by unifying the micro-economies of the islands will we be able to have a healthy State, a State that, even though small, can have muscle.

“And for this, we intend to create the conditions, which don’t have to be the conditions for a public company, nor do they have to be specifically for a private company.

“We have to create the conditions for this mobility to exist,” he stressed, emphasizing the importance of internal air connections to promote tourism in the archipelago.

“For this, we need to regulate well, to have a strong regulator, with the credibility that it has and that it has cemented over the last 20 years and that today is recognized internationally,” he said.

For Carlos Santos, it is necessary, however, “to continue to modernize the legislation” towards the “new times” since “2018 is not the same as 2023” after the pandemic.

“To have legislation that protects passengers. And also have legislation that protects the companies because, without the companies, we cannot have mobility, and we are talking about sustainability.

“That is why we insist on having our legislation for, eventually, concession contracts, which is a product of the public service obligation,” he recognized.

Domestic flights in Cape Verde handled more than 22,000 passengers in September, a year-on-year increase of more than 50%, according to data from the Civil Aviation Agency (AAC) compiled earlier by Lusa.

The performance in September is still far from the same month in 2019, before the effects of the pandemic when domestic air connections handled more than 32,000 passengers in one month.

Domestic flights have been operated since May 17, 2021, only by the Angolan BestFly, under an emergency six-month concession awarded by the Cape Verdean government.

Since October 24, BestFly began operating only with Transportes Interilhas de Cabo Verde (TICV, a company acquired in July 2021), ending the emergency concession regime.

The Angolan group BestFly bought 70% of TICV’s share capital more than a year ago from the Spaniards of Binter, leaving the remaining 30% with the Cape Verdean state and concentrated domestic air connections only with TICV, which has not operated commercial flights since May 16, 2021.

In 2020, domestic flights in Cape Verde, then operated only by TICV, handled about 125,000 passengers, down 286,000 (-230%) from the previous year due to restrictions imposed by the covid-19 pandemic, and in 2021 rose to 143,876 passengers.

Passengers of domestic air connections in Cape Verde reached a record of almost 465,000 (total movement of 929,595 boardings and landings), with more than 10,200 flights in 2017.

With information from Lusa