Aviation’s contribution to economy insignificant despite potential, says Nwuba

Nwuba in a paper he presented at a Webinar, entitled, “Repositioning the aviation sector for revenue generation and growth: Role of Legislation, “branded the country’s airlines as one of the highest turnovers of registered domestic airlines in the world.”

He put the average lifespan of businesses of airlines at between five to ten years, adding that more than 150 airlines were registered as of 2000, and 28 survived until 2006.

In 2007 alone, seven air licenses, he said were withdrawn by the Nigerian Civil Aviation Authority (NCAA), adding that most Nigerian airlines are struggling to stay afloat.

Identifying many factors advanced the abysmal failure of Nigerian airlines, most fundamental, the absence of a local content policy and legislation.

His words, “Nigeria is signatory to over 90 Bilateral Air Services Agreement (BASA), most unfairly skewed against Nigerian airlines including the open skies treaty known as the Single African Air Transport Market (SAATM). BASAs entered into without adequate consideration of their impact on aviation in Nigeria.”

“Over 25 foreign airlines operate flights into Nigeria. Only one Nigerian airline operates internationally. One or two Nigerian airlines operate on regional routes.”

He however stated that the Federal Government looks to reverse the trend through the Nigerian Aviation Sector Road Map, an infrastructure plan aimed at boosting the aviation sector’s contribution to the economy, stressing that the plan aims to increase the sector’s current contribution of 0.6 percent to 5 percent, equivalent to over $14.166 billion or N6.516 trillion.

“There are concerns that the road map focuses too much on hard infrastructure and ignores legal infrastructures such as laws and regulations. Legal infrastructure can be a powerful tool for transformation of the aviation sector, as it can support competition, enterprise, and development of the economy.”

Nwuba recalled that Olisa Agbakoba Legal had put forward a proposal for a Fly Nigeria Bill similar to the Coastal and Inland Shipping (Cabotage) Act 2003, which opened up N10 trillion local maritime economy.

Modeled after the Fly America Act of 1974, he said it sought to protect and give market share to Nigerian airlines.

“It prevents public funds from being ferried away by foreign airlines but ploughed back into Nigerian airlines to generate employment, revenue, access to capital, foreign investment, career projection for core professionals, and most importantly, ignite a dash for codeshare and alliance with Nigerian carriers,” he said.

Enumerating the challenges the country’s carriers face, Nwuba who is also Special Adviser to the President of the Federation of Tourism Association of Nigeria (FTAN), lamented foreign exchange required for airplanes, parts, training and virtually every operation for an airline has always been difficult to source.

“Life span is short because of ineffective oversight and enforcement of not only the Safety and Security Regulations but more importantly the regular auditing of the Economic Regulations to ensure the health of the airlines’ financial balance sheets.”

Solving the problems in the Nigerian aviation industry according to him is not about infrastructure even though infrastructure, he reiterated will improve the experience, it is however as proposed in the concept paper about building better airline businesses.

He listed two prospects that face the Nigerian airline industry today including a well-run and well-capitalized airline that enters the industry today and takes out 90% of the current operators or the cycle of starts and stops continues and at the very best extends the averages faced in the industry over the last 60 years.

“We can improve the odds by adopting some of the prudential guidelines in the financial industry today such as corporate governance principles, financial principles including capital requirements, reserves, and corporate structures, favoring public over private enterprise structures.”

“The Fly Nigeria Bill must be encouraged to attract more business towards local airlines and improve their competitiveness while we also review BASA and other aviation agreements.”

Wole Shadare