Revenue: Nigerian carriers violate NCAA rule on disclosure

• Agency indicted for lax regulation

Nigerian carriers and over 290 others International Air Transport Association (IATA) members are to rake in $33.8 billion this year. This year’s forecast will see aviation’s financial foundation stronger than ever, according to the Director-General of IATA, Alexandre de Juniac.

He made the remark today while giving report on the air transport industry at the just concluded World Air Transport Summit in Sydney, Australia.

It is however not known how much Nigerian carriers rake in in revenue yearly as their finances are shrouded in secrecy except for Medview Airlines Plc.

Medview had early this year declared N1.50 billion profit before tax for the year 2017.

 The airline, at its yearly general meeting in Lagos, disclosed to shareholders an increase in turnover of 42 per cent at N36.961 billion from N26.039 billion in 2016 and an increase in profit after tax of 63 per cent at N1.255 billion from N772 million in 2016.

Consequently, a dividend of 3k per every 50k ordinary share will be payable to registered shareholders from April 3, 2018.Chief Executive Officer of the airline, Muneer Bankole, said notwithstanding the challenges of the economic environment, the company is firmly on the path of improved performance, sustainable growth, profitability and adequate returns to all stakeholders within the shortest possible period of time.

Bankole said the company was able to increase its revenue by expanding routes within Nigeria and into new markets such as Abidjan, Conakry and Dakar.

Aviation safety and security consultant, Group Captain John Ojikutu (Rtd) said the Nigerian Civil Aviation Authority (NCAA) should be held responsible for the failure of airlines to make their earnings public.

Ojikutu cited Part 18 of the Nigerian Civil Aviation Regulation (NCAR) that mandates carriers to submit their earnings/losses for scrutiny, adding that the action of the carriers was illegal.

 His words, “NCAA should be held responsible for this. It stipulates that they submit their balance sheet to know their health status. How did Arik gets so much indebted to the tune of N300b without NCAA knowing?

 The IATA boss stated that passenger demand is expected to grow 7.0 per cent and cargo by 4 per cent, just as airlines, he reiterated are creating jobs, paying-down debt and rewarding investors.

Carriers’ nine-year run of profitability began in 2010. Return on invested capital is expected to exceed the cost of capital for four years in a row according to the clearing house for global airline. At long last, normal profits are becoming normal.

According to him, “This is hard won through major changes-to the industry structure and its operations. But success is not only evenly spread. Almost half the industry’s profits are generated in North America, while better financial returns remain elusive for many. The goal is for the entire industry to operate in solid financial health.”

He described aviation as challenging industry in which to operate, noting that high taxes, costly and ill-conceived regulation, infrastructure capacity constraints, market shifts and the demands for labour are the normal repertoire.

Low-cost long haul he further stated is providing great value to consumers, hinting that it is also adding a new dimension to competition. He carpeted protectionism which he said could derail successful international joint ventures.

De Juniac he revealed that jet fuel costs are expected to be up 25 per cent on 2017. He however said that $7.76 “is our only buffer against shock future shocks. That is the average profit per passenger that airlines will make this year-a thin 4.1 per cent net margin.

This coming as inflation pressures are starting to emerge at this late stage of the economic cycle and airlines facing significant pressures from rising fuel and labour costs in particular.

IATA said they expect the full year average cost of Brent Crude to be $70/barrel. This is up frpm $54.9/barrel in 2017 (+27.5 per cent) and its previous 2018 expectation of $60/barrel

Jet fuel prices are expected to rise to $84/barrel (+21.4 per cent) Fuel costs will account for 24.2 per cent of total operating costs (up from a revised 21.4 per cent in 2017).

Overall unit costs are forecast to rise 5.2 per cent this year, after a 1.2 per cent increase in 2017; a significant acceleration.

Rising costs are equally said to be putting this under pressure, with robust profitability needed to reward investors, strengthen balance sheets and fund the growth of aviation jobs and its social benefits

Wole Shadare