Experts Seek New Business Strategy For Airlines’
- Advocate Mergers To Stay Afloat
As the operating environment gets tougher for airlines and businesses, experts have suggested that airlines should pool resources together to form strong airlines group to save them from bankruptcy. President, Aviation Round Table (ART), Mr. Gbenga Olowo, who shared this view, said that the systematic operational merger would be the only way for the airlines to remain in business in a short while from now.
“This is the only way to rescue market share from foreign airlines that must repatriate up to 95 per cent of their income back to their home countries in dollars and continue the weakening of the naira.”
“Truth be told, the airlines, as we have it today, cannot be described as strong schedule players. All the existing seven operators should pool their resources together, operate under one AOC, harmonise their schedule and stop the ongoing unhealthy competition among themselves.
Then we will be having two near-strong players,” Olowo advised in a chat with woleshadarenews in Lagos. A managing Director of one of the extinct airlines who spoke on condition of anonymity, said with a declining fleet size, route expansion would be limited, robust schedule very difficult and down time for maintenance would impact negatively on schedule.
Attributing the local airlines’ problems to lack of policy focus and hostile operating environment, he decried the high charges indiscriminately levelled on the airlines.
Charges on domestic airlines include those on Common User Terminal Equipment, landing and parking charges, passenger service charge, avio-bridge charge, rent and service recovery charge.
There are also on-duty card charge, toll access payments, airside operator vehicle permit and electricity charge. The source explained that the Nigerian aviation industry has contributed immensely to the socio- economic development of the country, as it is central to global aviation business in Africa.
He added that only a vibrant Air Navigation Service Provider (ANSP) that is run as business concern would be able to tap into the potentials. It would be recalled that deregulation of the airline industry worked well initially.
The natural tendency of companies to seek monopoly power took over, and nobody tried to stop it until now, when it is really too late. Everybody seemed to be starting up an airline. Many of the carriers expanded into dozens of new markets.
The number of people who flew increased geometrically. Indeed, with the rise of discount tickets, flying became something many Nigerians could afford, at least once in a while.
Supporters of deregulation could proudly say that it had worked as envisioned: It had brought about lower prices and greater consumer choice. With shrinking revenue, high cost of Jet A1, hostile investment environment and the absence of industry developmental policies, among other challenges, the airlines are in dire strait. The Nigerian airspace presents itself as a shorter route for aircraft traveling to the American continent from Asia.
It is often the bride of most international airlines. However, Nigeria aviation sector is full of bottlenecks and delays that are designed to exploit and strangle the growth of the industry.
The airports suffer from poor reputation of operational efficiency and safety. Over the years, the Nigeria aviation industry has experienced several accidents, making safety an issue in the industry.
The Nigeria Civil Aviation Authority (NCAA) revealed that the collapse of airlines is as a result of the inability to evaluate business plans as well as the weakness of the business environment and lack of forecast for manpower development. Both local and foreign airlines in the country use three million litres of aviation fuel daily, amounting to N660 million daily.
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