Foreign Airlines’ Exit: Opening For Nigerian Carriers

While Foreign Carriers Are Withdrawing Their Services, Nigerian Airlines Should See It As An Opportunity To Win Back The Market But They Lack The Wherewithal To Do So. WOLE SHADARE Reports

Awaited opportunity
In a normal situation, the exit of foreign airlines from Nigeria should have been welcomed with so much joy because the scaling down of international carriers’ operations or stoppage of service to the country or some routes in Nigeria should have provided Nigerian airlines the opportunity to fill the vacuum they have created. Everything points to the fact that Nigerian carriers are very weak, small and fragmented.
They do not have the capacity and capability to call the bluff of these international airlines. For Nigerian airlines to survive and prosper in today’s world, they need a critical mass of aircraft, air traffic and an optimal route network.

Arik Air, to its credit, has most of the ingredients to be effective and efficient. It has the largest airline fleet in Nigeria, with over 20 modern aircraft, the largest route network and almost certainly the largest revenue turnover. So, the size and scale of an airline’s operations are important. It is very hard to compete against bigger African and international airlines with just a handful of aircraft.
Airlines’ long suffering
For years, airline operators, stakeholders, particularly, members of Aviation Round Table (ART) have been very vociferous in their condemnation of granting multiple designations to foreign airlines, which they claimed have put their businesses in jeopardy.
The more they protested, the more foreign carriers open more route network in the country and spread their wings to places such as Lagos, Abuja, Kano, Port-Harcourt and lately to Enugu. Nigeria has Bilateral Air Services Agreements (BASA) with over 40 nations. This underscores the fact that the air transport system is still in the woods.
From a few foreign carriers that were flying into Nigeria a few years ago, the number later increased exponentially.
From BASA to ‘Open skies’
While BASA is synonymous with European and Gulf carriers, Nigeria also enjoys ‘Open Skies’ pact with the United States. This agreement liberalises air transport between both countries and does not have restrictions on the number of flights that can be designated into each other’s territories.
In line with the ‘Open skies’ pact, Delta and United began flight services to Lagos and Abuja with Arik reciprocating. United had since stopped services to Lagos, leaving Delta on the Atlanta-Lagos route. While some countries have activated theirs, only two carriers, Arik and Medview Airlines are weekly competing with these mega carriers.
BASA’s are treaties between two nations that agree that flight operations should be done between the two countries based on principle of reciprocity or at best, payment of royalties for the extra frequencies flown by one of the parties.
Nigeria’s losses
This ugly development is short-changing indigenous carriers as well as the country with foreign airlines remitting over $5 billion out of Nigeria on ticket sales yearly. Apart from multiple entry points into Nigeria, some foreign carriers, before Nigeria fell into recession, had two daily flights out of the Lagos Airport. Emirates Airline, for instance, operated two daily flights out of the Lagos Airport to Dubai. But the airline had, since last June, limited itself to just one daily flight into Lagos.
The carrier went a notch further by stopping flight to Abuja last Thursday. The carrier, in a statement, said the decision was made after a review of the airline’s operations, to ensure best utilisation of its aircraft fleet for overall business objectives. With the interruption, the airline is left with once-a-day operation from Lagos.
It will be recalled that Emirates, some months ago, ran four flights daily on the Nigerian route, two apiece, from Abuja and Lagos. With the scarcity of foreign exchange and partial devaluation of naira last June, it began to reduce flight operations, while the likes of Iberia and United Airlines, among others, withdrew services.
The development might, however, not be exclusive to Nigeria. President of the airline, Tim Clark, at an International Air Transport Association (IATA) event in Dubai, recently said Emirates could reduce the frequency of its flights to African cities or cut routes completely if current economic and financial challenges on the continent continued.
Clark said foreign airlines flying to Africa now refuel abroad because jet fuel supplies had become more expensive and scarce. “In certain African countries, the currencies have really gone down, so we’re reflecting on a number of these to look at where it’s just not worth the travel,” Clark said.
He added that Emirates’ load factor – a measure of capacity utitlisation – for the rest of 2016 and 2017, would probably be in the mid-70s to low-80s in percentage terms.
Foreign airlines expansion
Aside Emirates that expanded operations to Nigerian cities during the booms day, Ethiopian Airlines operates into four Nigerian cities, including Lagos, Abuja and Enugu and Kano. Yet, no Nigerian carrier has traffic rights to fly into Ethiopia.
Turkish Airlines operate into Lagos and Kano; British Airways operate into Lagos and Abuja airports enjoying multiple entry rights into Nigeria. No Nigerian carrier flies into two points in the United Kingdom. Air France and Lufthansa Airlines fly into Lagos and Port Harcourt airports.
No Nigerian carrier has traffic rights into France and Germany. While British Airways and Virgin Atlantic Airways operate into Nigeria, Arik Air and Medview operate flights into the United Kingdom. The failure of Nigerian carriers to reciprocate some of the bilateral air services agreements is due largely to lack of capacity, as indigenous carriers cannot match any of the foreign carriers on routes when the agreements are either utilised or reciprocated.
Experts’ views
A former Secretary General of African Airlines Association (AFRAA), Nick Fadugba, said Nigeria does not have local airlines that can readily fill the gap and provide the same efficient and high quality service by many foreign airlines.
“It has become a big problem for airlines in Nigeria because various Nigerian governments have been very generous in giving traffic rights, concessions, designations and entry points to non-African and African airlines alike. Meanwhile, Nigerian airlines are now left with just three per cent of the air traffic market to and from Nigeria.”
He said African airlines collectively carry only 20 per cent of the air passenger traffic to and from Africa. Nigeria has the largest economy in Africa as well as the most vibrant air transport market on the continent. “It is hard to rationalise and justify why Nigerian airlines have such a small share of their own market.
The fact remains that Nigeria is a signatory to the Abuja Treaty of 2004 under, which the Yamoussoukro Decision of 1999, liberalising African skies, is legally binding. Nigeria has no choice than to abide by the treaty.
President of Sabre Travel Network, Mr. Gbenga Olowo, said Nigeria has not been able to reciprocate traffic rights to most of the partnering countries, adding that this has resulted in huge negative balance of trade against Nigeria and capital flight.
He also stated that it has also put strong pressure on the naira by further weakening the exchange rate. Oluwo added that this aids unemployment, as Nigerian airlines growth remains stunted.
Conclusion
Single point entry of choice in Nigeria would be beneficial to the country’s airlines. This will stimulate domestic traffic and hub creation; an indirect way of market protection for Nigerian flag carriers and subsequently retain the wealth at home.

Wole Shadare