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Air travel: Out of the woods
Last year and 2017 present a sharp contrast in air travel in Nigeria. Although the country is not totally out of economic downturn, WOLE SHADARE reports that the sector is gradually bouncing back
Setback
Nigeria’s air transport sector, which suffered a huge setback occasioned by economic recession that seriously affected every other sector is slowly picking up.
In 2015 and till early part of this year, it was a tale of woes for the sector as businesses that were aviation-related were under threat.
In 2015 and till early part of this year, it was a tale of woes for the sector as businesses that were aviation-related were under threat.
The cause of this problem was not rocket science. The exchange rate was astronomically high for businesses to thrive. Carriers such as Iberia, Alitalia and United left the country, bringing panic to a whole value chain of the entire sector.
Forex scarcity occasioned by fall in crude oil prices strangulated the local economy, making many airlines to struggle while others closed shop.
As the hardship persisted in the wake of Nigeria’s dwindling economy, carriers and transporters were put in difficult situation. They complained of low patronage. A visit to the Lagos airport then showed what an expert described as ‘apathy to air travel’.
Airlines under threat
While the crisis lasted, most airplanes departed half empty out of the country. The sector witnessed low patronage. Most people who patronised air travel drastically cut down their trips. Multinational companies equally reduced their trips and it took a toll on the sector. To compound the situation, Emirates stopped its Abuja services, and cut its 14 frequencies from Lagos to Dubai to daily flight. Other carriers that managed to stay replaced their bigger aircraft with smaller planes because of capacity reduction on the routes they plied. For instance, British Airways jettisoned its iconic B747 to a smaller A330. But later this year, the carrier plans to restore the jumbo jet on the London-Lagos route, saying capacity has continued to grow on the route since the third quarter of 2017.
While the crisis lasted, most airplanes departed half empty out of the country. The sector witnessed low patronage. Most people who patronised air travel drastically cut down their trips. Multinational companies equally reduced their trips and it took a toll on the sector. To compound the situation, Emirates stopped its Abuja services, and cut its 14 frequencies from Lagos to Dubai to daily flight. Other carriers that managed to stay replaced their bigger aircraft with smaller planes because of capacity reduction on the routes they plied. For instance, British Airways jettisoned its iconic B747 to a smaller A330. But later this year, the carrier plans to restore the jumbo jet on the London-Lagos route, saying capacity has continued to grow on the route since the third quarter of 2017.
The withdrawal of these mega airlines from Nigeria’s airspace meant job losses and reduced the government’s earnings. The International Air Transport Association (IATA) in a statement in May 2016, said, “The inability of airlines to access forex in Africa’s largest economy, if not resolved, would affect air travel within and outside Nigeria-and if that happens, it would undermine Nigeria’s position as West Africa aviation hub”.
Trapped funds
As a result of foreign exchange restrictions imposed by the Federal Government, foreign carriers had $600 million in ticket sales trapped in the country. IATA was unrelenting in its resolve to get the funds released. Government on the hand worked frantically to get the trapped funds released to the carriers to sustain their operations.
As a result of foreign exchange restrictions imposed by the Federal Government, foreign carriers had $600 million in ticket sales trapped in the country. IATA was unrelenting in its resolve to get the funds released. Government on the hand worked frantically to get the trapped funds released to the carriers to sustain their operations.
Just last week, IATA, the clearing house for 280 airlines across the globe, lauded the Federal Government for its efforts to reposition the sector, which it said was badly hit by economic recession.
IATA’s Area Manager, (South-West Africa), Dr. Samson Fatokun, at a press briefing last week when IATA Regional Vice President, Africa and Middle East, Mohammed Ali Albakri visited Nigeria, disclosed that government had released $425 million trapped funds belonging to the carriers.
Albakri’s delegation was expected to meet industry stakeholders from the Nigerian Civil Aviation Authority (NCAA), the National Association of Nigerian Travel Agents, IATA members airlines based in Nigeria and all domestic and international airlines.
According to Fatokun, “as at June, 2016 foreign airlines’ trapped funds stood at $600 million. As at June 2017, the Central Bank of Nigeria (CBN) had released to the airlines $425 million but we still have $175 million that is yet to be released. We had a lot of engagement with the CBN. We encourage CBN to maintain the tempo. It is not the profit of the airlines but revenue from the service they did. It is funds for staff salaries; maintenance and other things the airlines need”.
Job creation
Albakri says more jobs can be created and additional economic growth achieved in Nigeria if the West African nation used the transformative power of aviation as a strategic pillar to further strengthen and enhance its economic recovery and national development.
Albakri says more jobs can be created and additional economic growth achieved in Nigeria if the West African nation used the transformative power of aviation as a strategic pillar to further strengthen and enhance its economic recovery and national development.
He reiterated that air transport supported more than 650, 000 jobs including tourism-related employment, while contributing $8.2 billion to the country’s Gross Domestic Product (GDP). He said over the next 10 years passenger volumes are forecast to grow more than seven per cent annually, exceeding the global average by a healthy margin. He said for Nigeria, this means an additional 7.9 million passengers would take to the sky every year, creating significant opportunity to accelerate economic growth, boost prosperity and support development.
His words: “Despite significant investment in Nigeria’s aviation sector, the country’s air transport infrastructure still ranks low among African states. IATA recognises and supports the positive developments by the government on infrastructure and aviation processes.”
He urged continued adherence to international best practices and an optimal regulatory environment, adding that now that the country is emerging from recession, aviation could unlock the enormous economic potential that exists within Nigeria.
He encouraged the government to continue to promote aviation for its role as a catalyst and socio-economic enabler for the country and to promote stronger connectivity within Nigeria and its neighbouring African countries.
Albakri stated that now was the time to continue to invest in modern and efficient infrastructure to accommodate the future traffic growth that will occur.
Albakri stated that now was the time to continue to invest in modern and efficient infrastructure to accommodate the future traffic growth that will occur.
Businesses picking up
British Airways’ Regional Commercial Manager, West Africa, Mr. Kola Olayinka, in an interview with Woleshadare.net, said fares were progressively getting cheaper with more people taking to air travel now than in the last two years.His words: “Nigerians are still travelling, businesses are picking up. Of course, people will tell you that the challenges are still there. They are managing it; they are applying strategies. We can see some strength in the economy based on what the government is doing and we thought that it would only be fair for our customers who have endured hard times with us will start bringing back good fares, fantastic products and the B747 we are bringing back has more capacity for passengers.”
British Airways’ Regional Commercial Manager, West Africa, Mr. Kola Olayinka, in an interview with Woleshadare.net, said fares were progressively getting cheaper with more people taking to air travel now than in the last two years.His words: “Nigerians are still travelling, businesses are picking up. Of course, people will tell you that the challenges are still there. They are managing it; they are applying strategies. We can see some strength in the economy based on what the government is doing and we thought that it would only be fair for our customers who have endured hard times with us will start bringing back good fares, fantastic products and the B747 we are bringing back has more capacity for passengers.”
Olayinka reiterated that what is happening now was an indication that things were getting better, asking, “how many airlines do we have operating into Nigeria? Look at the size of our Billing Settlement Plans (BSP). They are in billions. We have over 32 airlines in BSP today. A few left. One of mine left but majority are still here. Let me tell you, if we are not doing very well, we won’t be here.
“Nigeria is a resilient market. We have the number, we are resourceful. We are not like some African countries when you get on the airplane, the people you get to see are other nationals but on Nigerian routes, the people you see are Nigerians and a few other nationals. We are smart, we are travellers. Anywhere you go in the world, you will always find a Nigerian”.
Last line
Despite the economic recession in Nigeria, demand for air travel is beginning to rise, according to latest report by the National Bureau of Statistics (NBS). The report indicated that no fewer than 15,232, 597 air travellers went through Nigeria’s airports in 2016. This is a welcome development for an industry that had been troubled by a lot of operational challenges.
Despite the economic recession in Nigeria, demand for air travel is beginning to rise, according to latest report by the National Bureau of Statistics (NBS). The report indicated that no fewer than 15,232, 597 air travellers went through Nigeria’s airports in 2016. This is a welcome development for an industry that had been troubled by a lot of operational challenges.
