Travellers’ Insights Into Nigerian Aviation Industry

The Phillips Consulting Limited’s Nigeria’s aviation industry 2022 survey report is a must-read for industry stakeholders. WOLE SHADARE who was at a Breakfast meeting held by the firm in Lagos recently to discuss challenges in the aviation industry observes how issues highlighted in the report could shape airline business, and customer service and help the growth of a sector with enormous potential

The COVID-19 damage

In 2020, the aviation industry in Nigeria was decimated by COVID-19, with the sector retracting by 36.98 percent against 2019’s Gross Domestic Product (GDP). But once authorities lifted restrictions, travelers slowly took to the skies.

Early post-lockdown travelers tended to fly for leisure and business, and this extended to other classes. In 2021, the Nigerian aviation sector witnessed considerable growth in passenger traffic of 45 percent, with 13 million travelers as opposed to nine million in the previous year. These numbers are even more impressive when it is considered that globally, growth was only 30 percent in the same period.

For analysis of how the aviation industry has fared since after COVID-19, Aviation Metric is relying extensively on Phillips Consulting Limited’s (PCL) report on “Nigeria’s Aviation Industry: Customer Satisfaction Survey Report 2022”.

During the height of COVID-19, PCL released a report that outlined the devastation on the airline industry and how to navigate recovery. Its assumptions proved reasonably accurate, and many of its predictions came to pass, even though challenges remain.

For example, domestic travel has standardized the customer experience, while international travel is subject to country-specific nuances and complexities.

Aviation as economic stimulant

Aviation is a key contributor to global economic development, transporting people and goods across countries and stimulating economic activity, job creation, tourism, and trade. In 2021, the total scheduled passenger carried by the global aviation industry was 2.19 billion; 21 percent higher than the 1.81 billion recorded in 2020.

The growth in the tourism sector with the rising number of international tourists travelling by air and liberalization in trade and services have supported the expansion of the global airline industry.

Meanwhile, the unprecedented growth recorded in passenger traffic is interrupted by the twin global crises-the COVID-19 pandemic and war in Europe. The pandemic has been described as the most significant challenge the aviation industry has ever faced, replicating previous global shocks such as the 1979 oil-price crisis, the Gulf war, 9/11, and the 2008 global financial crisis.

Nigerian aviation on recovery track

 Next to road transportation, air travel is the second highest modal contributor to transport output in Nigeria. The origins of the Nigerian aviation industry can be traced back to 1920 when Royal Air Force aircraft landed on a polo field (serving as a Military air base) in Maiduguri. By 1930, civil and military aircraft were transporting passengers across various destinations in Nigeria, such as Lagos, Kano, and Sokoto.

The country’s aviation sector is key to developing the economy, facilitating international trade, and stimulating job creation, technological innovation, and tourism. Over the past decades, the aviation sector has undergone several transformation phases; the deregulation era is worthy of mention.

The sector’s deregulation began in 1985, liberalizing from only Nigeria Airways to licensing private sector carriers to encourage industry competitiveness and meet growing demand.

Structural issues undermine growth prospects

With a population of nearly 220 million people, the aviation industry is characterized by huge growth potential. According to the International Air Transport Association (IATA), the clearing house for over 250 global airlines forecast Nigeria’s passenger growth will outperform overall Africa’s passenger growth at CAGR 7.5 percent over the long term of 2018—2035.

From a policy standpoint, Nigeria has Bilateral Air Services Agreements (BASA) with over 78 countries including China, Canada, India, the United Kingdom, Portugal, Morocco, Canada, Singapore, Qatar, and others. The country has also had an ‘Open Skies’ agreement with the United States since 2000. Although, the inability of Nigerian airlines to service their full rights under BASA agreements has been a consequence of several systemic aviation issues; it is indicative of inadequate fleet size/lack of capacity and an uncompetitive cost base.

In addition, in 2018, Nigeria opened its skies to 32 other African countries following the implementation of the Yamoussoukro Decision and the entry into force of the new Single African Air Transport Market (SAATM).

The new open skies policy within Africa may increase the share of Nigerian airlines on international routes, provided these airlines offer a competitive product to other countries’ carriers.

However, despite the vast potential, the sector is still faulted with numerous inherent challenges. Notably, Nigeria’s aviation industry is characterized by a high level of market exits by domestic and foreign operators.

Competitive landscape

The Nigerian aviation industry’s competitive landscape covers about ten different industry players that fly domestic and international routes. Air Peace (flies 20 domestic, seven regional, and two international routes) is the only domestic airline that flies international (Johannesburg and Dubai) routes.

Ibom Air which flies seven domestic routes is the first and only state-owned airline; financed by the Akwa Ibom State Government. Others are Aero Contractor (currently out of operation) flies 12 domestic destinations; Arik Air (11 domestic destinations); Azman (11 destinations); Dana Air; Green Africa (Eight domestic destinations); Max Air, Overland (10 domestic destinations) and new entrant, ValueJet.

The potential influx of new carriers with low-cost and legacy models indicates growing capacity in the sector. For instance, a new carrier, ValueJet which commenced operations a few weeks ago backed by an all-Bombardier CRJ 900 fleet of three aircraft; including the partnership of Nigeria Air with Ethiopian Airlines will have mixed impacts on the aviation industry. Not a few expect the influx of new carriers to engender competition may potentially force down fares in the medium term.

Domestic landscape dominated by Air Peace, Ibom Air

In a far-reaching survey conducted by PCL, Air Peace, and Ibom Air as the most preferred airlines in Nigeria. According to the survey, Air Peace (31.67%) and Ibom Air (19.58%) jointly control half of the domestic passengers’ market share. Surprisingly, 16.24% of passengers do not prefer any airline. Arik ranks as the third most preferred airline by passengers.

The consistency of Green Africa at bottom of the most preferred and least preferred airlines was attributed to its new entrant and brand awareness among respondents.

Preferred versus least preferred airlines

Ironically, almost half of the respondents 47% identified Air Peace, Arik Air, and Aero Contractors as their least desired airlines. 41% selected Dana, Azman, Overland, United Nigeria, Max Air, Ibom, and Green Africa as their least preferred airlines. These results according to PCL appear to contradict the results of the most preferred airlines.

According to the majority of respondents, Air Peace was their least preferred airline because of the carrier’s poor communication of information and high pricing, and rated as the most expensive domestic airline to travel. The poor communication issue connects the dots in the clash between the Emir of Kano and Air Peace in February 2022.

For Dana, 36 percent of respondents who chose Dana as their least preferred airline are wary of the airline’s poor communication of information and low safety standards citing the damning NCAA’s report on the airline.

Aero, Max Air, Arik, and Ibom Air received the flaks for poor communication of information for their choice as least preferred airlines, United Nigeria Airline and Azman were picked by respondents as the least preferred airlines for the poor record of timeliness and poor communication of information.

Lagos, Abuja airports most frequent departure points

The survey shows that more than half (56%) of the respondents selected the Murtala Muhammed Airport, Lagos as their most frequent point of departure. The Nnamdi Azikiwe Airport is chosen by more than a quarter (30%) of respondents, whereas just 4% of respondents utilize the Mallam Aminu Kano International Airport.

Moreover, just 10% of respondents utilize the Eastern region-based airports (Calabar, Enugu, and Port-Harcourt airports).

Last line

The aviation industry is highly customer-focused. The quality of service rendered by carriers will continue to play a key role in shaping the competitive landscape in the sector. Hence, improving customer experience is a precursor to growing customer acquisition, retention, and market share. Passengers’ experience with flight delays, cancellations, and challenges with luggage across most airlines is an indication that domestic carriers require improvement in fleet planning, operations, strategy, and technology.

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