Why Nigerian airlines have high mortality rate, by AON
Obsolete infrastructure that hampers the ease of doing business, introduction of new charges without consulting the carriers, epileptic supply of Jet A1 have made nonsense of feasibility studies of airlines and reduced poor utilisation of aircraft, airline operators under the aegis of Airline Operators of Nigeria (AON) have said.
Chairman, AON, Capt Noggie Meggison, made this known in a paper he made available to Woleshadare.net recently.
He said that this development has made airline operators to operate each of their aircraft for just five hours against the average of 10 hours worldwide per airplane.
However, for their combined fleets of both long and short-haul lengths, here are the daily aircraft utilisation rates in hours per day for US airlines in 2016: American (9.84 hours); Delta (10.55 hours); United (11.37hours); US Airways (10.01 hours); Southwest (11.01); JetBlue (11.77 hours); Frontier (11.45 hours) and Virgin America (11.33hours).
The Jed Air chief noted that these are some of the main reasons for the short life span of Nigerian airlines, averaging about eight years, wondering how carriers in the country would break-even with the situation.
From the foregoing, therefore, it means the mortality rate of airlines in Nigeria within the last 11 years stands at 57 per cent. This according to the AON boss is quite alarming because “it means virtually half of the airlines that existed within the period in review have all gone out of business and two of the major airlines exciting today are in receivership.”
He therefore called on the Federal Government to come up with a deliberate economic policy to help grow the aviation sub-sector of the economy.
He noted that Nigeria has huge potential as a country blessed with a natural God-given geographic location at the centre of Africa (4.30hrs to most parts of Africa); with most of its airport at approximately sea level, being the sixth largest producer of crude oil (JetA1), a human population of 190 million, and skilled manpower, yet Nigeria is not a hub for aviation activities on the African continent.
His words: “Following the air crashes of 2005/06, the Federal Government came up with a deliberate policy to ensure air safety in Nigeria. As fallout of that singular action, today, Nigeria has had an excellent safety record of 93 per cent between 2006 and 2017.
“The country also secured the Category 1 Status and most of the scheduled airlines are currently IOSA certified as a strong testimony of the country’s commitment to air safety.”
Noting that safety and economic policy go hand-in-hand, he said that where there is no financial profit for airlines, safety would be compromised.
A clear economic policy for the survival of domestic airlines, he reiterated, is very critical at this time, which has resulted over the years in the death of over 25 airlines in 30 years.
Meggison said safety and financial economic policy must go hand-in-hand as airline investors are in the business of aviation for the profit and can’t make profit without safety or have a safe airline without profit.
He listed some of the major issues that need to be addressed to grow the sector to include removal of Value Added Tax (VAT), lamenting that domestic airlines are the only mode of transport paying VAT. He said marine, road, rail and even the International airlines don’t pay VAT).
Besides, he called for the review of five per cent Ticket Sales Charge (TSC) to a flat rate in line with the global best practices and harmonisation of over 35 multiple charges, which add huge burdens on airlines.
It would be recalled that the International Air Transport Association (IATA) recently conducted a quick impact analysis of a potential removal of the domestic VAT of five per cent.
Using an average domestic airfare, it would reduce the ticket price by 4.39 per cent, which would mean a boost in domestic air traffic of 3.51 per cent or around 133,000 passengers a year together with the multiplier effect of additional turnover of revenue from other indirect businesses such as the more landing and parking fees for the airport, hoteliers, car hire, airline support services and most importantly, create spending to jump start the economy out of recession.
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