Should the Government of Ghana Fund a New National Airline Flagship?

Abstract

Air transportation is a dynamic sector that influences the global economy. Surveys have been documented on the aggregate growth rate. The survey enables investors to establish profitable airline industries to meet passenger demand. Therefore, the redistribution of air transport demand in Africa is a promising area of investment. Studies have shown that most state-funded carriers have been poorly equipped to achieve success. As a result, the failures of state-funded airlines in Africa have been documented. Ghana has suffered a similar fate with the collapse of its airlines.

Background

The growth of the aviation industry and airports has helped to connect the global market with the movement of goods and services. Air transportation has formed the quality of everyday activities (Ban Ki-Moon, 2010). Air transportation affects lives, economy, and GDP. The future of air transportation as a driver for the economic, social capacity and development is linked to the collective ability to manage, maintain, and sustain air travel procedures and operations (Gonzalez, 2010).

Air transport has a broad influence on a country’s economic climate by supporting direct and indirect events that shape the global space. Besides measurable financial benefits, air transportation generates substantial advantages by lowering the loss of trade and activity, drawing in brand-new companies to places, and supporting the growth of brand-new technology and circulation procedures and products. The need for airline operations developed and developing countries indicates the recognition of its complementary prospects.

The coronavirus pandemic has a damaging influence on the aviation industry. As a result, IATA (2020b) projects that many airlines may suffer varying levels of inconsistencies until 2023.

Gudmundsson et al. (2020) believe that business operations may gradually return to normal my 2022 if the situation is managed to avoid another economic recession. The aviation sector’s activity is highly influenced by many factors such as political instability, social factors, natural occurrence, capital funding environmental variables, and regulations.

The advent of the global pandemic, which could be man-made of a natural event, has affected the market space and limited the flow of customers, goods, and services. The challenging mortality rate influenced the closure of serval air space by most governments. Although the aviation sector contributes to economic growth, the increase in mortality rate is a global concern. As a result, restriction in human movement is a measure to checkmate the spread of the novel virus.

Before the coronavirus pandemic, air travelers’ life expectancy was relatively high compared to the challenging prospects of some sections of the business market. Today, the aged and ill patients have a lower life expectancy due to the novel virus (COVID-19). Such observations make it troublesome for the aged to embark on vacations, thereby lowering the airline operations. Countries like Ethiopia, Egypt, Tunisia, Kenya, and South Africa have recognized the overall national growth via air transportation on business, tourism, and economic development.

The aviation market is the bedrock of Ethiopia’s financial recovery as it accounts for over 50% of GDP while making up greater than 70% of foreign exchange. Air travel is one of the fastest expanding industries in the globe. The airline company market has undertaken huge modifications in recent years because of increasing regulation, reductions in air prices, growing competitors, and economic crisis. The capital requirement for a national carrier requires government involvement in most developing counties like Ghana.

The aviation sectors’ impact cannot be understated as its revenue contributions over 60 percent of revenue inflow in Tunisia, Egypt, and Ethiopia. The assumption accounts for the need to establish a national airline carrier in Ghana. Ghana’s aviation sector has been poor management over the last four decades.

Many successive governments have tried to revive the country’s national airline without success. At these challenging times, the current government has reaffirmed the need to revamp its aviation sector with a new airline carrier. As found in Figure 1, the passenger movement in 2018 showed that Asia-Pacific had the highest number of customers airlift.

The statistics show that Africa has 5.2 percent of the total volume of passengers in 2018. The value shows that air transport stimulated global economic growth and financial recovery. As found in Figure 2, 103 million passengers were airlifted from Africa in 2018, while operators airlifted 233 million customers from the Middle East.

Statement of the Problem

The aviation market creates and stimulates employment and economic growth across many areas, consisting of airline companies and ground-based facilities. In developed countries such as the USA, UK, and the UAE, the aviation industry contributes a minimum of 5.6% to GDP, suggesting that air transportation stimulates economic activities. Therefore, as a nation develops, the aviation market grows in a similar capacity to boost economic activity.

The IATA industry statistics reported that airline carriers airlifted over 2.9 billion passengers and 55.6 million tonnes of airfreight 2014 across 40,000 routes. The links between markets and cities create essential frameworks that improve a country’s productivity. More significantly, air transportation enables foreign direct investment (FDI), company cluster growth, expertise, and other spillover impacts. The analysis produced by Oxford Economics is among the initial efforts to approximate these benefits of connectivity.

Africa accounts for 4% of global air travel services and has the highest growth potential (Button, Martini, & Scotti, 2017). Ghana’s aviation industry is one of the fastest-growing and most competitive sectors in West Africa, with an average annual growth of 10 percent (Hammond, 2019).

Consequently, Ghana’s aviation industry has been ranked as the best one in Africa’s safety (Hammond, 2019). This fact contributes to the sustainable competitive advantage of Ghana’s air transportation sector. The Aviation Ministry of Ghana signed an agreement with Boeing Inc. to purchase airbuses for efficient transport operations across West Africa, Asia, Europe, and North America (Asante & Achia, 2020). In 2018, the Ghana Civil Aviation Authority announced the revamp of its national operator certificate from aviation start-ups.

However, these initiatives are affected by the pandemic, which has caused the destabilization of several economies and widespread uncertainty on national and global markets, including aviation transportation. Thus, the government requires huge capital funding to establish a new airline carrier in Ghana. The aviation industry’s benefits cannot be overemphasized, and the current global instability may affect or prevent the project phase. This thesis seeks to investigate if the government should fund a new national flagship.

Research Questions

1. What is the impact of the new airline on Ghana’s economy?
2. What is the impact of the pandemic on the aviation sector?
3. What is the impact of the hospitality business on aviation?
4. What is the influence of the new national airline carrier towards economic recovery?

Aim of the Study

This research aims to investigate if the government of Ghana should fund the new national airline carrier.

Objectives of the Study

1. To evaluate the effect of the expediency of new airline establishment in Ghana.
2. To determine the impact of Covid-19 on the aviation sector.
3. To determine the impact of the hospitality industry as it influences the aviation sector.
4. To evaluate the impact of the new airline on Ghana’s economic recovery.

Significance of the Study

The aviation sector adds to the wider economic framework’s financial efficiency by enhancing its degree of productivity. By offering local and international services, and higher accessibility to foreign markets, air transportation sustains exports, raises competition, and the demand from foreign-based manufacturers. The assumption motivates companies to focus on relative benefits areas, permitting opportunities to manipulate cost advantages, which lowers production prices and benefits domestic consumers.

Prices can be lowered by the exposure of domestic companies to global practices. IATA created a connectivity sign to measure the level of combination within the global air transport network. The impact of a new airline carrier in Ghana has overwhelming consequences on the economy and civil space. Therefore, this research would be a guideline for the approval and implementation of a new airline carrier for Ghana.

Air Transportation Services and its Impact on the Economy

Air transportation is a viable means of moving goods and humans from one location to another. The ease of movement sometimes complements the cost of transportation. As a result, researchers forecast the geometric expansion of air transportation to accommodate more carriers and investors. The research findings show that annual travelers could rise by 2022 in a circumstance of high development. Air carriers’ volume to satisfy the explosion of demand must be complemented by establishing new carriers for capability development and economic recovery.

Air transportation has a generic and resilient financial influence on the economy and a catalyst for other sectors such as manufacturing, hospitality, food, and labor. The aviation sector serves over two billion customers yearly and 45% of interregional exports and merchandise imports. Wealth and job opportunity is a direct impact of aviation induction in any nation. The sector contributes to enhancing living requirements and easing destitution. Air transportation investments facilitate the diverse labor workforce’s deployment to contribute to various means for development for employment opportunities.

Employees such as staff, dispatchers, voyage and customized authorities, safety and security, flight staff, and airline ticketing managers raised their GDP via the labor market. According to Triame (2000), over 4.5 million people are employed globally by aviation induction. The research findings show that over US$ 275 billion of GDP is paid to employees in the aviation sector. The value as to economic development and improve the standard of living.

For indirect impact, the air transportation market produces over 25.8 billion jobs via purchases of equipment, device architecture, goods, and solutions. The supply chain comprises aviation gas providers, construction companies, airline facilities, and manufactured goods within terminal retail outlets, call centers, equipment, and taxi services. Under induced benefits of the aviation sector, air transport generates employment, wages, and income for employees.

Expenditures by direct and indirect employees are classified under induced benefits. These workers spend over 3.5 million-dollar annually via bank transactions, hospitality service, and other company demands within the airport terminal. Therefore, the aviation market is reliable when measured by the GDP per staff. The survey estimates that employees contribute over $ 185,000 annually (OEF, 2005).

Under the multiplier effect, the aviation industry is a facilitator of economic development. The aviation industry creates a multiplier effect on the business sector, such as investments, labor supply, market performance, and levy taxes. Air transport plays a critical function to trade because it enables investor’s participation in the global market.

Mergesa (2007) observed that Africa is disadvantaged from the significant aviation service, primarily because of capital, labor, and air carriers’ capacity to utilize economic climates. The aviation sector encourages nations to specialize in their comparative strengths. For example, some African countries like Kenya export fresh veggies to Europe via air transportation. Air transport improves the product’s shelf life by cutting the time of movement. Air transport improves living standards by broadening chances for international trade investment. The aviation sector impacts tourism sectors as tourists depend on transportation.

As a result, air transportation encourages tourism, while the transportation industry depends on tourism to generate a need for its solutions. With advancements in technology, investors anticipate that the tourist industry would employ over 100 million workers globally. The hospitality industry includes guesthouses, restaurants, bars, leisure tasks.

The obscuring benefits of tourism comprise retailing in vacations, site adventures, recreation journeys, educational visits, survey research, and other attractions. Air transport supports the diversification of the regional financial base to enhance profits through taxes as business revenues. This input results in the advancement of allied industries such as fabrics, jewelry, pottery, nourishment, and drinks with considerable indirect employment.

Reports show that Ghana has a large number of tourists in Africa. The findings show that tourism is the fourth earning sector in Ghana (Ghana Statistical Survey, GSS, 2010). A survey by Arosdw (2009) revealed that 64 percent of companies believe that air transportation is critical for business investments in Europe. The survey showed that 22 percent of the business, related decisions were based on the availability and non-availability of air transportation.

The author concluded that advancements and financial investment in R & D would be affected if air transportation services were constrained (OEF, 2005). According to a study of business firms, 56 percent of respondents consider air transportation an essential component of the operation. Thus, air transportation stimulates economic recovery and development.

Review of Literature

With the expansion of transportation infrastructure and the competition in lowering travel costs, air transportation demand sometimes overwhelms significant carriers. In 2019, the international airline metrics recorded over 9.6 trillion revenue passenger kilometers (RPK) (IATA, 2019). The RPKs value increased by 5.8 percent over the last decade. The development is influenced by globalization and liberalization of bilateral air service contracts (Winston and Yan, 2015; Oum et al., 2019).

China and other European countries are leading the aviation revolutions with massive investment in carrier architecture and equipment. Although Africa has been a large market for air transportation, African countries are yet to dominate worldwide. Under African perspectives, leading air carriers include Ethiopian air, Egypt Air, South African Airways, Royal Air Marco, Kenyan Air, and Tunisair. These carriers stimulate economic growth and productivity in domestic and global investors.

In 2019, the global airline metrics recorded over 1.23 billion traveler trips, with 55 airline carriers, 3039 transport aircraft, and 4500 routine flights (Civil Aviation Administration of China (CAAC), 2019). In achieving this feat, the aviation sector connects people and trade globally. However, air transportation promotes transmittable conditions to spread at a rapid pace. With the current pandemic and closure of international and domestic flights, the figures show that international flight became a transmission channel.

Air transportation is a resultant demand need and an action, which reveals the wellness of a region and population. The warnings concerning COVID-19 are critical as forecasts recommend compressed air and land closure for more extended periods. Economic analysts believe it could take years to recuperate the impact of COVID 19 on aviation (Harper, 2020).

Works of literature on the effect of the pandemic on aviation investigated significant implications for passenger traffic and its impact on the demand from investors, individuals, and shareholders (Graham et al., 2020). The current pandemic creates challenges for business owners, investors, and the government. With the shutdown of many economies, most countries would become distressed and cause a recession. The impact of recession would affect the standard of living of any nation.

The pandemic’s impact is affecting the aviation sector as investors are losing billions to maintain its fleet. The management team ensures the fleet is fueled by a minimum of 10 percent of its capacity to sustain ground engine and auxiliary power unit. This fueling gauge is compulsory for carriers parked in areas where there is no refueling station.

More extended periods of inactivity due to the pandemic may require adequate security amounting to millions according to the aircraft supplier’s referrals. This may consist of decoupling the carriers to prevent tire flat spot, conduct routine engine assessments of cooling devices, guiding and electric systems.

The Challenges of COVID-19 to Aviation

The aviation industry is dealing with extraordinary uncertainty over its enterprise. The government of various nations reacted to the pandemic by enacting border lockdown, airspace closure, and movement restrictions. Such measures have a severe impact on economic growth, GDP, and social welfare. Most businesses have filed for solvency while the nation’s economy is entering a recession. The duration of the lockdown would determine the resumption of air transportation.

Aside from essential flights, most countries banned nations and foreigners’ movement to and from the country. The development of new airline carriers is a method of expanding a country’s air capacity to meet the rising demand levels, boost economic rejuvenation, and create employment. Several new airports, including those in Munich, and Athens, were completed in Europe, while others have been established across Asia and America.

The investment expenditures for new airline carriers are enormous, and government participation is a global trend. The mechanism of sustaining new airline carriers must be sufficient to withstand the shocks of business management. With the current pandemic, most countries are focusing on controlling the spread of COVID-19. However, the government must create channels for economic recovery, and such investments are appropriately implemented, outweighs the cost of completion.

New Airline Carrier

The establishment of a new airline carrier influences an economic climate by creating job opportunities in the aviation market and producing socioeconomic assistance via domestic channels. The establishment of new carriers provides funding and produces flight schedules, which drives the demand for air transport services. The findings by ALerp (2000) argue that new carriers stimulate economic recovery. The findings categorized five areas of measurement.

• The economics of aggregate using production and price features.
• The macroeconomic method utilizing determinable basic stability and land utilize models.
• The provincial-level method using the price benefits and work impacts evaluation.
• The microeconomic technique using a residential or commercial property.
• The microeconomic strategy utilizing regression and numerical methods.

The operational tactics for a new carrier differ among companies. In contrast to a privately funded entity, the government finances publicly owned air carriers. Most government-funded projects are political or seen as a national edifice or pride that stimulates financial growth. Unlike other countries, the operations of a Ghanaian airline have failed for some reasons. The primary reason was poor management and lack of capital for upgrade and operations.

To safeguard national carriers, most governments impose restrictions on procedures by international air agreements. These constraints, along with government funding or favoritism, prevent complimentary market competitors. For example, the Ethiopian and Kenyan governments sustained their national flag carriers to overcome the competitive trend in aviation markets. As a result, the reciprocal arrangements include constraints to shield Kenyan Airways and Ethiopian Airlines from low-cost carriers.

The establishment of new flag carriers requires government intervention because it identifies the political and financial assimilation of a country’s right to the global economic situation and air transportation demand. Air transportation demand in China, Japan, and Vietnam boosted considerably after the governments established bilateral global integration policies.

In contrast, air transport growth has been subdued in Africa due to the international community’s political and economic events. Macroeconomics and political instability affect air transportation advancements, as demonstrated in the researches of Bulgaria and Zimbabwe. The study shows that the flawed management system is one of the factors that affect airline carriers in Africa.

Consequently, Africa’s policies have been weak and cannot sustain the aviation industry’s development. Thus, political and financial stability levels influence the demand for air transformation in Africa. Globalization is the procedure of improving local standards or practices to international procedures or phenomena.

Globalization is a practice through which people are linked to a culture that unifies several social existence aspects. This process is a combination of fiscal, procedural, sociocultural, and administrative forces. Globalization refers to fiscal and trade liberalization or integrating individual economies into an exchange, foreign financial investment, funding flows, immigration, and innovation.

The Impact of COVID-19 Pandemic in Ghana

The COVID-19 pandemic’s impact appeared in trade imbalance, high food prices, financial hardships linked with the border lockdown, and aggressive decongestion policies to enforce social distancing amongst citizens. Business investment in Ghana relies on imports from local and international routes.

In Africa, trade agreements among ECOWAS members facilitate trade investments in Ghana. Amid the shortage in supplies triggered by COVID-19 infections, there has been ongoing economic instability across the nation (Glennerster et al., 2016; Globe Bank, 2014). The situation may worsen because of the import-dependent nature of African countries. Although essential commodities and market investors were excused from the partial lockdown, the global surge in infection poses a danger to business investments and the transportation of food cargos.

Food scarcity looms in most countries because of the distorted production periods associated with the lockdown (Monteith, 2015). With the advancement of internationalization, many government authorities are establishing national air flagships to boost the economy. This thesis tries to rationalize the establishment of a new air carrier in Ghana. With the advancement of AI, the aviation sector plays a vital role in the economy.

Global Situation

The predicament by the COVID-19 pandemic is driving the global economic position to uncertain depths and creating issues for an economy trying to recuperate from the financial recession. Beyond the death rate and infection spread, coronavirus is unsettling a unified economic climate with value chains. The pandemic’s impact affects global trade, commodity costs, monetary earnings, foreign exchange, monetary flows, travel limitations, and tourist ban, to mention a few.

The pandemic affects economic climates, predicting a global recession in 2021. Global economic climates are based on trade, solutions, and sectorial investments. The ban on human movement, restrictions on imports, and other cargo products severely impact the global economy. Most governments enacted decrees, laws, and legislations on boundary closures to minimize movement and contain the spread. These measures create an economic crisis and affect business growth. Tourism, air transportation, oil, and gas investments have been are visibly impacted by the coronavirus pandemic.

The interruption of international trade, the rise in product costs, and the enforcement of traveling restrictions in African countries have an adverse impact on development. Research analysts predict a 38 percent drop in trade investments for imports and exports in Africa. Hence, the loss in value is approximated at around 400 billion dollars. To combat the spread of the infection, vaccine formulation will increase public expenditures in Africa.

The expenditures would create hardship for surviving economics in Africa and Europe. Given the growth of third world countries, the pandemic of this proportion would affect trade and inflect poverty on vulnerable populations. The pandemic postures significant difficulties for domestic, regional, and global levels. Although Africa is less affected by the pandemic than other continents, the spillover impacts of global developments or broken supply chains would create an economic crisis.

The dependency of African economic recovery in international economies predicts a negative financial offshoot for the continent. It is difficult for Africa to utilize this gap due to its failure to transform abundant raw materials for international and domestic markets. Despite the situation, whether optimistic or cynical, the pandemic will have a hazardous socioeconomic impact on Africa.

International traveling restrictions affect aviation. During the flu epidemic, air travelers followed strict regulations based on demographic qualities and infection threat. However, the scenario of the current pandemic is challenging. Travelers have little input because of the comprehensive travel restrictions placed on international and domestic flights.

The recuperation of business-related travel depends on the surveyed impact of the spread. The World Health Organization has directed the restrictions of human inflow by 69 percent as a precautionary measure to contain the spread. A study of American residents’ travel behavior revealed that participants intended much shorter trips and delayed schedule during and after the pandemic.

Tourism and Air Transportation

The tourism and hospitality sector has emerged in international economy services. The aviation sector complements revenue maximization under the hospitality industry. The hospitality and tourism industry can operate functionally where essential services are integrated into that region. As a result, each tourist destination must have available airline routes, flight alternations, and options, accommodation, home entertainment, food cuisine, to mention a few.

Transport is the most crucial factor in the tourism market because it supports traveler’s demands. The main feature of transportation is transit, lugging people, and goods without hassle. Thus, the aviation sector sustains and facilitates hospitality investment. According to Mareu (2000), the aviation industry complements the tourism and hospitality sector. The demand for air transportation is proportional to the distance between two destinations. As distance increases, travelers are willing to use air transportation. Thus, the aviation sector contributes to the development of other business sectors as it supports economic recovery.

A flight terminal’s essential function is to ensure secure, organized, and trusted air transport procedures for travelers and cargo shipments. The unpredictability of choices and travelers’ and airline operators’ demands make airline operations challenging for administrators. Each segment or business component in aviation is necessary for the feasibility and success of the investment. Therefore, quality services should be pivotal in sustaining airline carriers. The failure of most national carriers proves the inefficiency in administration.

Although most business failures are induced, the administrative frameworks to manage and operate such an industry are often inadequate. Such inadequacies make some national air carriers perform poorly or remain inactive to global trends or dynamic development shifts.

With the growing concern of the pandemic and other global uncertainties, airport terminal must adopt a strategic administrative framework to secure its passengers. Such architecture requires capital funding, specialized management systems, and effective operational staff. The establishment of national airline carriers in African has been viewed as an achievement and a financial investment. National air carriers require huge investment and effective management.

However, inadequate management systems in Africa and West Africa, in particular, accounts for most failures of business investments. The collapse of Ghana’s national air carriers is a practical example of inadequate management systems. Ghana unsuccessfully managed its national airline in 2004 and 2010. Like its counterparts, Senegal and Zambia have initiated moves to relaunch its national carriers after many decades without a state-funded investment. The commercialization of national airline carriers is an alternative plan to avoid poor management and inefficiency.

A new national carrier and the tourism industry are structurally synergistic as the former exists because investors provide transport solutions for guests, most of which travel for tourism purposes. The airline terminal and operational facilities are inseparable components of the hospitality sector because they influence travelers’ experience. By implication, the aviation industry facilitates economic recovery and devilment. With the pandemic’s uncertainty, investors in aviation may recalculate service lunch periods due to airspace restrictions.

The major towns and cities in Ghana have high-end and middle-class hotels used by tourists and business investors. Most restaurants are strategically located to target travelers and tourists (Asante & Achia, 2020). The guesthouses are distributed throughout Ghana and have facilities that can fit travelers’ needs from any part of the world (Nutsugbodo, 2016). The hotels are ranked based on the variety of services they provide and the associated costs.

The hospitality industry in Ghana is the fourth most profitable in Africa (Button, Martini, & Scotti, 2017). The high cost of services is due to the expenses on energy and gas. Moreover, Ghana is considered a destination for many international tourists and business people, hence a destination for the air traffic market. However, previous studies do not explain the extent to which the existing hotels have been occupied.

The value of airport terminals for the local economy depends on the management system. Therefore, effective commercialization of national carriers would complement business investments and trigger economic growth. The reliance on regional economic situations on air transportation solutions, mainly when tourism is the primary income source, is vital for developing economies. As a result, neighboring regions could provide concessions to attract foreign direct investments.

Thus, the growth of air traffic via passenger demand enables the globalization of tourism. The emergence of low-priced airline companies has affected the hospitality sector because aviation has a multiplier effect. Gašparović (2011) examined the connection between air transportation demand and tourism to ascertain the impact on economic recovery. The findings verify the relationship between the aviation sector and economic recovery.

The author proved that countries with significant airline carriers created jobs, investments, recreation sites, and better living standards. The paper highlights the expanding relevance of air transportation to the economy. Wittmer (2006) evaluated the correlation between air transportation and hospitality. The author defines tourism as the stimulant of aviation modifications, while air transportation is the catalyst for advancing new tourism locations.

Dobruszkes (2006) analyzed low-priced European carriers and their networks. According to his research, low-priced airlines covered Europe by 2004. As a result, new flight routes were introduced due to the demand for air transportation. The authors concluded that low-cost carriers attracted immigrants globally, which triggered migration. Thus, air transportation primarily impacts economic growth and job creation.

The assumption of aero-nationalism was the defense of national safety. The defense of national sovereignty functioned to certify airline viability. Based on this context, the government was concerned with its airspace. Consequently, the government provided balance and protection for the airline as an alternative during emergencies.

According to Aeief (1999), air connectivity unlocks economic growth, attracts business investment, and human capital. Air connectivity enhances tourism, which is critical to financial prosperity. The capacity to connect customers globally highlights the competitive growth and expansion in the aviation sector. Based on these assumptions, air connectivity is enhanced by location, infrastructure, airline models, regulatory and financial frameworks.

These enablers are crucial in expanding air transportation. According to Aileu (2000), airline sustainability depends on these cardinal factors. The author argued that air connectivity promotes better operations and informed decision-making. The investment capacity of established airlines can be maximized when appropriate steps are enforced. Thus, Ghana’s new national airline carriers’ commercialization must adopt a proactive measure to overcome previous failures’ challenges.

The findings from several literature works show that air transportation creates the link and convenience for business investments, allowing companies to capture international prospects, easing vacationers’ arrival and movement. However, inadequacies within the management structure and airport infrastructure prevent the capitalization of economic gains.

Aviation models enhance the operational structure of airline carriers. Airline carriers have embraced new models to overcome the dynamics of business trends. Strategic business models include low-cost airlines, network, and hybrid fleet providers, and hybrid vehicles. Network fleets operate routes centered on its principal base. Under these designs, the company connects people via flexible solutions that satisfy the requirements of vacation and business passengers.

According to Vasup (2000), a compelling commercialization strategy would include public regulatory policies. These approaches enhance air connectivity and sustainability. The aviation industries have been regulated with many air service agreements (ASAs). These agreements enable nations to dominate international air spaces. Such arrangements determine the number of new airline carriers within a geographical location. These restrictions cause some airline failures in Africa.

However, the introduction of the ‘open skies’ agreement has not been adopted by aviation’s leading powers. As a result, air traffic restrictions remain visible across borders. Under the sovereignty, possession, and management of airlines, many air service agreements encourage government authorities to deny any airline’s designation regulated by the financial party.

As it stands, the possibility of normalizing air transportation based on cross-border policies may not be removed. Governments seeking to determine the level to which they liberalize their public regulations and policies must consider many variables. For example, a nation’s geographical attribute influences the level to which liberalization will enhance air transportation and air connectivity.

The Proposed Project

The development of Ghana’s Airline industry is an example of bad management practices. The cost of governance in African rises beyond the threshold of capital development. As a result, the government lacks the stimulants to control and manage its investments effectively. Sometimes these investments are backchannels sources to siphon government treasury for personal gains. Consequently, the collapse of Ghana’s national airlines was caused by several underlying factors.

The colossal debt created by government officials contributed to the collapse of the county’s national carrier. As stated by Draeg (2000), government officials flew national carriers without making payments for flights. A resultant impact was the accumulation of massive debt for the management.

Consequently, the national carriers did not have a permanent chief executive with a long-term plan for the airline. Long term planning is an effective management design to avoid the obstruction of management succession. Against this backdrop, the relaunch of a new national carrier in Ghana must commercialize the investment to prevent previous establishments’ trends.

The global air traffic shows that Africa is lagging. Although air transportation boosts the economy by creating jobs, international trade, revenue generation, and development, African airlines have been slow in actualizing the aviation sector’s gains. The chart below shows the pace of African airlines as it reflects passenger traffic. African routes have been poorly utilized due to huge taxes and regional restrictions. African must unite its trade agreements to overcome the challenges of hosting its presence on the global aviation map.

The African aviation industry is challenged with a restricted business environment, unmanageable fleet, low maintenance framework, and inadequate infrastructure. The need for airline growth is based on its impact on the economy. Surveys show that road and railway construction is more expensive than building airlines. From an economic perspective, the aviation sector provides foreign direct investment opportunities while improving exports’ local content.

The Reasons behind the Failure of Previous Ghanaian Airline Flagship Projects

Ghana Airways was established in1958 and ceased operations in 2004, while Ghana International Airlines began its services in October 2005 and ceased to operate in 2010 (Amoah, 2014). Ghana airways ceased operations when the government could not fund its cost of operations. The carrier had a high debt profile, and the financial situation worsened due to high severance packages for its directors and employees. The organization solely depended on state funding.

Because of insufficient funding, the management increased flight costs to generate the required revenue. The emergence of private carriers influenced the use of predatory pricing to stifle poorly funded airlines. The country’s national airlines became inefficient due to mismanagement of funds, the abdication of duty, and unhealthy corporate management practices.

Research Method

According to Adams (2006), a research method describes the procedure, collection, and analysis of data from a sample or survey of companies or individuals associating to specific qualities, traits, cohort, perspective, or opinion. A researcher is concerned with uncovering information that never existed or examining prevailing evidence. Therefore, research methods allow the investigator to collect specific data, testimonials, develop understandings and remedies to address the study’s gap (Adams & Brace 2006, 4, 20).

An appropriate research design validates the research outcome and recommendations. A measured approach offers the accumulation of large sample groups to collect via surveys, discussions, interviews, responses, and opinions (Adams & Dental Braces 2006, 34, 38). Information was collected through self-administrated internet-mediated surveys. In accordance with social distancing guidelines, the researchers used phone conservations, emails, and social media platforms to map collect the study information.

The researcher sampled twenty-five participants comprising representatives of the aviation sector, regulatory agencies, and business investors. The representatives of business investors include managers from the hospitality and tourism industry. The researcher adopted a grounded theory to investigate the study objective. A grounded theory is a planned or organized procedure applied to a research design. The research design could be quantitative or qualitative.

However, the researcher used a qualitative research method to conduct a comprehensive evaluation of the effectiveness of establishing a new airline carrier in Ghana. Given the failure of previous airline carriers in Ghana, this study assessed a government-funded national air carrier’s commercialization in Ghana. With the degree of uncertainty in the aviation industry, a qualitative model is appropriate to investigate the phenomenon’s social construct. Under the grounded theory, the research findings would be adopted as a ‘grounded’ model of the study’s objectives.

Research Validity and Reliability

Research validity is a procedural method for evaluating the study outcome. Validity encourages the verification of all processes that determine the research findings. Therefore, research validity describes the extent to which the study objectives were measured. A researcher can validate a study outcome by assisting the connection to grounded theories of the phenomenon. Research reliability describes the consistency and repeatability of an investigation.

Reliable research would produce the same results in several regions under the same condition. Validity challenges include background checks of the sampled population and the post-product opinions. According to Miller (2011), reliability describes the degree to which a survey inquiry produces a consistent outcome on repeated trials. Reliability challenges include researcher bias, data blunders, human error, coding errors, and participant bias.

According to Wilson (2010), reliability problems are connected to bias. The investigator, researcher, analyzer, evaluator, or participant could influence a research bias. When a researcher executes a subjective strategy in a study, the degree of trustworthiness becomes jeopardized (Wilson, 2010). Based on the research validity and reliability assumptions, the author emphasized standardized questions and data to achieve validity and reliability.

The researcher assessed and evaluated the source content to avoid bias. The secondary sources for this study were examined before use. The author selected respondents based on their relevance to the investigation. As a result, the sampled population were participants resident in Ghana. The participants comprised representatives of the business community, regulatory agencies, government officials, and the aviation sector. Although the issues souring reliability and validity cannot be eliminated, the researcher conducted the study using the appropriate design plan to reduce human error and bias.

The prerequisite for a study design facilitates the phases of the research. It results in creating valid and reliable outcomes with minimal time, effort, and cost. A study design can help to plan the approaches to be utilized for gathering data for an investigation. Research methods help the researcher pursue the study’s aims in the most effective possible fashion (Renz, Carrington, and Badger, 2018). Therefore, the research method must be chosen with extreme caution to prevent errors that distort the entire project’s reliability.

Therefore, research design and methods play a vital part in attaining the dependability of the outcomes obtained, which creates the base of the study’s full procedure. Despite the importance of research methods, the goal of this well-planned design is not accomplished occasionally. Many investigators do not achieve the objective of the study designs and could reach misleading decisions. Therefore, the use of inappropriate research methods creates a meaningless exercise.

Based on this assumption, researchers must select an appropriate research design for the investigation. The study plan aids the researcher to arrange ideas and spot the inadequacies and flaws. The researcher will discuss the study design with different specialists for their opinions and critical analysis, and it would be problematic for any critic to supply extensive review and comments about the study.

Research methodology describes the pattern by which investigators describe, explain, and predict phenomena. Consequently, the research methodology is the analysis of methods in which knowledge has been obtained. The intention is to provide a framework and direction for the study. Research methods constitute the processes, strategies, and calculations utilized in the study (Assarroudi et al., 2018). The processes comprise theoretical practices, experimental research, numerical strategies, and statistical procedures. Research methods are a term that describes the organized procedure for conducting surveys, analysis, and investigative studies.

There are distinct methodologies utilized in various research, and the expression is classified as study design, data gathering, and information analysis. Research methods attempt to explain why the thesis was conducted, how and the hypothesis were devised, what information was gathered, and what specific method was adopted to encode and analyzed the results. Research methods can be qualitative or quantitative. Structured research must attempt and integrate qualitative and quantifiable methodologies based on financial and time limitations. Research methods are utilized in academic research to examine hypotheses, theories or test the impact of a variable on another.

Qualitative Research

Research methods could be qualitative or quantitative. A quantitative approach includes the selection of weighable data for analysis. A quantitative strategy could be experimental, inferential, and simulative designs. The qualitative approach utilizes the procedure of abstract evaluation of thoughts, attitudes, and performance. Qualitative research methods sometimes utilize the researcher’s opinions and insights to form an unbiased analysis (Vasileiou et al., 2018).

The qualitative design utilizes comprehensive interviews, group discussions, questionnaires, or projective methods. The term qualitative suggests the emphasis on procedures that cannot be analyzed or quantified by amount, size, intensity, or frequency. Qualitative researchers highlight that the socially created nature of certainty, the impractical connection between the research, topic, and the philosophical constraints that form the study.

By comparison, qualitative projects highlight the dimension and evaluation of the underlying associations between factors or variables. Such analyses exclude the processes that make up the investigation. Qualitative research has its errors, flaws, or limitations. Since qualitative evaluations are independent of the quantified sample population, the findings are sometimes flawed.

Data Collection

This study seeks to establish the commercial effectiveness of establishing a new national carrier in Ghana. Although Ghana is an example of a failed airline investment, this study seeks to solve strategic and operational challenges in managing the proposed investment. Based on this objective, the authors examined the economic viability of funding a new airline with the global pandemic’s current uncertainty. The researcher collected primary and secondary data from valid sources and databases.

Representatives from qualified segments of the sample population were interviewed to gather unbiased responses, perceptions, and opinions on the advantages of establishing a new airline carrier in Ghana. Chief executives in the hospitality sector, business experts in the economy, aviation analysts, government officials, and tourism investors formed the primary group for this investigation. Due to the pandemic and air travel restrictions, the authors used online media platforms to gather responses from the sampled participants.

The online survey questionnaires accomplished the qualitative strategy of the study. The initial survey consisted of 25 participants from various backgrounds, which formed the study’s primary sources. The study’s contextual information was obtained from academic publications, peer-reviewed articles, journals, government databases, and aviation correspondents. The primary and secondary sources bridge the research gap and offer the investigator an informed understanding and description of the study (Ghauri, Gronhaug, 2005, 90-93).

Questionnaires

Social-Economic Impact Assessment for Ghana

• The commercialization of Ghana’s new national flagship would facilitate the sustainability and management of the investment
• Liberalization of the country’s aviation policy would enhance profit maximization
• Resource mobilization would affect the demand for air transportation
• Adequate provision for business investors would positively affect the proposed project
• The new airline would create jobs, tourism, and foreign direct investment

Management and Policy Recommendations

• Government policies have a direct impact on the sustainability of the new national carrier
• Strategic policies must cover technical management, operational framework, and financial resources
• The use of low-cost airlines would sustain the organization and reduce the cost of operations
• Specialized management team improves operational efficiency
• Strict airline policies create financial and operational challenges for airlines

Multiplier Effects of the Proposed Project

• Quality standards, high employee retention rate, and training standards improve service delivery
• Political stability and lower taxes supports tourism and hospitality investments
• The ease of doing business enhances the demand for air transportation
• The government must provide waivers for investors in the hospitality industry to stimulate economic recovery
• Security and environmental safety encourages the tourism and hospitality industry

The Impact of COVID-19 on the Proposed Project

• COVID-19 has affected aviation, tourism, and investment opportunities
• A post-COVID-19 may stimulate growth for the proposed project
• A post-COVID-19 era would influence tourism
• A post-COVID-19 would encourage new business development
• A post-COVID-19 period would encourage tactical changes, speed, and resource allocation

Results

Given the challenges of conducting a face-to-face interview due to the global pandemic’s restrictions, the researcher emailed the survey queries to the sampled participants. The questionnaire was categorized into four sections. The study seeks to investigate if the government should fund a new national flagship airline. As a result, the investigation considered the current global challenges and investment opportunities in reaching its recommendations.

Based on these contexts, the questionnaire was divided into four segments, which include social-economic assessment, management and policy recommendations, multiplier effects, and COVID-19 impact. The researcher selected the study participants from the hospitality sector, business experts in the economy, aviation analysts, government officials, and tourism investors. The initial population of 50 was trimmed due to failure to meet the terms of the research practice. Some of the candidates turned down the request to participate in the evaluation, while others did not return the acknowledgment message.

The acknowledgment messages served as a confirmation of the willingness to participate in the research. The researcher selected five participants from each group to form the quorum of 25 members. The participants sent their responses via online medium, and each sample was printed and coded based on the categorization format. Following ethical research practice, the responses from participants were treated as confidential without real names. Coded nametags were assigned to each response form and sorted under each category.

Based on the research design, the investigator conducted a purposive sampling by selecting individuals appropriate for the survey. The responses of the participants were analyzed based on the theoretical sampling practice. The researcher utilized theoretical sampling procedures to investigate and clarify the need to approve a new national flagship under the current business uncertainty. The results of the investigation are summarized below.

Social-Economic Impact Assessment for Ghana

The researcher considered five questions under this category. The questions were answered by the selected participants based on the appropriateness of their relevance. As a result, participants were advised to choose the options that best suit their options under each question. This section addressed the social-economic impact of establishing a new national flagship airline in Ghana. From the survey, most participants believed that a new national carrier would positively stimulate social-economic growth.

As found in table 1, twenty participants strongly agreed with the survey query. The survey questions 1-5 evaluated the social-economic impact of the proposed project. For question one, the participants agreed that the new national airline’s commercialization would facilitate the investment’s sustainability and management. The participants considered previous projects’ failures and suggested that a new national carrier be commercialized to enhance performance. The experts agreed that the country’s aviation policy’s liberalization would enhance profit maximization in air transportation, tourism, and other business investments.

This response formed the basis for question two. For question three, the participants agreed that resource mobilization would enhance the demand for air transportation. The respondents emphasized that adequate provision for business investors would stimulate other businesses’ economic growth within the airport terminal. This consideration focused on the failures of previous air transport investment and the need to stimulate economic recovery. As found in Table 1, the aggregate of the responses showed that 92 % of the sampled group agrees that the new national carrier would significantly influence Ghana’s social-economic drive.

Management and Policy Recommendations

The grounded theory refines investigation findings to produce a valid and reliable model that describes the social phenomenon. Based on this context, the researcher analyzed the second theme of the study objectives. The second theme comprised questions on management and policy recommendations.

The first question evaluated the impact of government policies on the sustainability of the new carrier. Based on the second theme, the respondents agree that most airlines’ collapse was provoked by strict government policies, both local and international. From the responses, the researcher deduced that effective government policies enable business growth. The next question considered managerial recommendations in actualizing the new national carrier. There was a unanimous agreement that strategic policies remain the machine for technical operational and financial management.

The capacity to allocate resources and capital funding enhances the success of any investment. For the third question, the respondents were divided on the use of low-cost carriers. Representatives of the aviation sector argued that some LCC required high-cost maintenance in the long term. The aviation experts opposed this view as they agree that some LCC may not meet international standards to attract huge passenger demand. For the fourth question, the researcher seeks to assess a specialized and qualified management team’s operational efficiency impact.

Given previous failures, the respondents argue that management strategy determines an organization’s operational success. By implication, qualified indigenous management must sustain the new national carrier’s objectives and vision. The study participants agree that a specialized management team improves operational efficiency.

The last question under this section seeks to assess the impact of harsh policies on airline investors and shareholders. Although aviation policies differ in geographical perspectives, harsh policies adopted to stifle or create monopolistic behaviors would kill competition and affect service delivery quality.

The respondents agree that predatory pricing is primarily the reason for airline failures. However, harsh policies to mitigate predatory pricing creates financial and operational challenges. The aggregate of responses under this section shows a unanimous agreement on establishing standardized management and policy recommendations. As found in Figure 3, 96 % of the respondents agree that policy recommendation and management would sustain the new national flagship.

Multiplier Effects of the Proposed Project

Having reviewed the social-economic perspective, management, and policy recommendations for a new national carrier in Ghana, the researcher assessed the project’s multiplier effects. The investigation seeks to ascertain if the Ghanaian government should fund a new national carrier given two similar failures. The participants were required to comment on the multiplier effects of the proposed project. Five questions were provided under this theme.

The first question seeks to assess the impact of quality standards, high employee retention rate, and hospitality investments on service delivery. The respondents agreed that quality standards and high employee retention rates are indicators of quality service delivery. The next question seeks to assess the influence of political stability, lower taxes on business investments. The proposed national carrier would create a multiplier effect on other organs of development.

As a result, the presence of a new national carrier would encourage the construction of excellent hotels. By implication, the proposed project would have a multiplier effect on several supply chains. However, political instability and higher tax regimes may discourage investors from the regions. Therefore, the respondents agree that political stability and a lower tax regime would enhance the multiplier effect of the proposed project.

The third question under theme three seeks to assess the ease of doing business in Ghana. Ghana ranks 122 on global ease of doing business. By implication, the government must enact policies that support business growth and capacity building. Therefore, the participants agree that the ease of doing business must be improved to accommodate the likely surge indirect investment. As a complementary question to theme three, the fourth question seeks to assess waivers’ impact during and after the post-COVD-19 era.

Just the 2008 economic crisis, the respondents believe that business waivers have a ripple effect on investment opportunities. As a result, government waivers in the hospitality industry would attract new investors. Such a strategy would create hotel construction jobs, hotel management, and tourist guides for recreation and vacations. The last question seeks to evaluate the impact of security preparedness and environmental safety on the tourism and hospitality industry.

The respondents agree that security preparedness has a multiplier effect on the demand for air transportation and tourism. A region with a safe environment becomes the location for tourist attractions, business events, and investors’ retreats. Therefore, the Ghanaian government must establish an effective security force to secure the region. The aggregate of responses under theme three shows that 92 % of the participants agreed that the new airline would create a multiplier effect if several recommendations were implemented.

The Impact of COVID-19 on the Proposed Project

Due to restrictions to contain the spread of COVID-19, this survey was conducted via online media. The researcher provided questionnaires for the sampled population via online media channels. The questions covered vital areas that would provide an informed opinion on establishing a new national airline in Ghana. Given the current challenges, the decision to invest huge capital in securing a new national carrier must be approved after careful recommendations based on the project’s potential benefits.

Thus, fifteen questions were sent to 25 participants that cut across the aviation sector, the hospitality industry, representatives of the government, investors, and regulatory agencies. In accordance with research ethics, all returned emails and messages were considered as a sign of participation. Thus, the researcher considered the requirements of confidentiality during the analysis of individual responses. The respondents unanimously agreed that the pandemic is affecting global trade and investments.

Most businesses have been closed, and the surviving ones have made tactical changes to reduce operations costs. Based on this context, the current uncertainty may affect new business investments. However, the participants acknowledged that a post-COVID-19 era could stimulate economic recovery and investment opportunities. As a result, new entry could challenge competitively given the strength of its management team. The respondents agree that tactical changes, speed, and resource allocation must be deployed to stimulate economic recovery and development.

Discussions, Recommendations, and Conclusions

Successful business models guarantee smooth operational implementation. As a result, a strategic business model for the new national carrier would sustain the investment. Based on this research’s findings, the government of Ghana can effectively relaunch its national flagship under an enabling business environment.

The uncertainty of the pandemic would become the springboard of a new national carrier. The impact of grounded flights is enormous, and most airlines have been reporting huge losses and downsized their workforce. However, a new national flagship can gain a favorable advantage after the pandemic by leveraging several predisposing factors to accelerate efficiency and sustain its operations. Based on responses from key shareholders in the aviation industry, representatives of the hospitality industry, business excerpts, and government agencies, a new national carrier would drive capital resurgence, economic recovery, and development.

Therefore, the government must commercialize the new national carrier by providing operational autonomy, create vibrant image management, develop a captive market, employ a permanent indigenous director, provide low-cost maintenance fleets, developing alliances with international routes and an aviation academy.

The respondents believed that the African government must commit to the ‘open skies’ deal to negotiate favorable international routes for its national carriers and airlines. Since such a task cannot be done independently, a United Africa can renegotiate air traffic deals with Asia and Europe. Such negotiations would expand Africa’s margin in the aviation industry.

Connectivity in aviation is the capacity to move individuals from one location to another. A network indication of each process guides the seamless movement. The challenges of African airlines can be mitigated by resolving the ‘Yamoussoukro decision’ (YD). The impact of the ‘open skies’ would transform Africa’s aviation sector. Under the YD framework, Africa in general and Ghana, in particular, would benefit from air transport liberalization via lower fares, shorter travel routes, new routes, and frequencies.

Consequently, Ghana’s air traffic growth would stimulate tourism, trade deals, and inward investment. After the pandemic, the resurgence of air traffic growth would enhance productivity, economy, GDP, and job creation. Based on these findings, it is recommended that a new national carrier would stimulate economic recovery and boost direct foreign investment. Under the YD framework, Ghana can expand its traffic rights to cover the fifth freedom traffic. Consequently, the country would strengthen flight frequencies and capacity. Such a drive would enable shorter travel timelines and lower fare rates.

Recommendations

Air transportation in Ghana will provide direct and indirect growth. Consequently, Open skies, economic growth, free trade, and foreign direct investment would facilitate Ghana’s new national carrier. Social-economic evaluation describes the advantages and disadvantages of a proposed project or the community.

By implication, Ghana’s job employment rate would positively affect the new project. Consequently, the proposed establishment of a new carrier would support business mobility, efficiency, and investment growth. Under the liberalization analysis, the government must implement significant policy reforms to enhance airline management, service quality, business competition, and development. Under policy recommendations, effective aviation management in Ghana would impact air carriers, airports, aerospace, and air connectivity.

By implication, the proposed national air flagship would stimulate direct, indirect, induced, and catalytic impact on Ghana’s economic system. The aviation experts strongly agreed that air the new national flagship would directly affect aerospace by increasing the number of service personnel within each flight terminal. The number of air traffic control and aircraft maintenance team creates job employment and other economic activity.

The capacity to manage the new project should be based on individual specialization. As a result, effective commercialization of a new national carrier would stimulate economic growth and recovery. Given the slow pace of economic growth in Ghana, establishing a new national carrier would promote industrialization, trade liberalization, job employment, and foreign direct investment. The findings of this research show that adequate measures must be adopted to support the new management.

Based on this context, this thesis proffers recommendations to sustain its business operations. The findings show that the new national carrier’s government and management must provide innovative infrastructures and architectures to meet passenger demand. The capacity to provide a favorable traveler’s experience, safety, and comfort would galvanize support for viable investors. The partnership platform must be developed from a commercial perspective to avoid the failures of previous investments.

The management must drive its operations to encourage global connections. Thus, the government must establish a practical regulatory framework that reflects its demands and fosters air transportation development. Consequently, the management must demand extra air travel capacity to prevent a lack of air transport to rival neighboring nations. Airlines must discover avenues to boost air connectivity for shorter routes, reduce fares, and better travel experience. Therefore, stakeholders must collaborate to preserve domestic and international standards and practices.

Conclusions

The thesis seeks to investigate if Ghana should fund a new national flagship airline. The preliminary findings show the rapid growth of African as a whole and Ghana’s in the particular aviation sector. However, the aviation sector’s operations have been negatively affected by the coronavirus pandemic, and most airlines have suspended operations, while others have limited their services to cargo transportation.

Some airlines have been forced to continue with selected operations to raise capital for finances to maintain the airport’s infrastructure. The government of Ghana had established Ghana Airways in 1958 and Ghana International Airlines in 2005. Both carriers collapsed when the central national leadership withdrew its financial support. The lack of funding compelled airlines to increase services’ costs to raise sufficient revenue to fund their operations.

Consequently, airline traffic shifted to private carriers with better services at reduced costs. The competitive commercial environment did not favor the operations of the national airlines. The findings show that a new national carrier would stimulate economic recovery and development.

The research findings show that a new national carrier would improve social-economic recovery and stimulate a multiplier effect on other economic sectors. The government must commercialize the proposed airline and establish a strategic management succession plan to avoid operational challenges. Consequently, the government must lower taxes, repeal harsh policies, and improve the ease of doing business to encourage business investors.

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