SWOT Analysis: Evaluating Nigerian Airlines’ Potential, Defects

Airlines are oblivious to the challenges they may face when they foray into the sector. While some made provisions to face the challenges others take the wrong steps from the first day. Some of the carriers have enough strength to take care of all of the weaknesses. In fact, the strength is big enough to turn these weaknesses into advantages and opportunities, writes WOLE SHADARE

Most preferred mode of transportation

With the invention of aircraft in 1903 by the Wright Brothers, the concept of air travel was introduced to the world. The beginning of the airline industry in specific dates back to 1909 when DELAG, a German company, introduced an aircraft. This was a dramatic change from balloons and gliders which people previously used to fly in.

Airplanes in themselves have changed over the decades, including everything but not limited to the exterior, interior, technology involved in in-flight entertainment and services provided, and flights available.

Equally important is the fact that the airline industry is one of the most popular and important sectors of any country. Be it any kind of trip the most preferred option of travel is flights as they are convenient and time-saving.

The airline industry plays a major role in connecting people with different countries across the globe and it also adds significantly to countries’ Gross Domestic Product (GDP).

The airline industry has seen a fair amount of turmoil over its relatively brief existence, perhaps as the result of its youth or perhaps, as others have contended, due to mismanagement and failures of regulation to maintain stability in the industry.

Regardless of the reason, however, it is a fact that many major airlines have demonstrated a consistent problem in generating profits and keeping their business aloft, as it were.

Pin down

Virtually all Nigerian airlines are very safe, but there are many things that have held them down. Over the years, they have been battered by inconsistent government policies, the environment they find themselves, and individual decisions that have led to self-destruct like unhealthy competition, lack of mergers, cooperation to strengthen their operations, and wrong business models that have crippled them among others.

A cursory analysis of the Nigerian airline industry using the SWOT (Strengths Weaknesses Opportunities Threats) could further determine the existentialities of the carriers and where they fall into one that could also help them to navigate the capital-intensive aviation industry.

Setting up an airline company is a difficult and expensive process. Initial investments need to be of a substantial amount and the laws that need to be adhered to would be much more closely monitored by relevant authorities and law enforcement bodies.

The non-adherence to this or lack of attention to detail has led to the high turnover of airlines in the country as many of the existing airlines are struggling. These struggles are overwhelming to the airlines as nobody is able to predict what becomes of them in the next year amid mounting debts and organisational structure.

Doubts

The strength of an airline lies in its high profitability, safety, and good services amongst others. It is doubtful to rate any of the country’s airlines as profitable considering the fact that their books are never opened to scrutiny for the public to see how truly healthy they are.

Not a few saw Medview as profitable because of its expansion to lucrative routes to London and Sharjah, United Arab Emirates (UAE). The carrier aside from taking a good decision to go to the stock market also conducted Hajj operations which were very lucrative.

It did it for many years and competed very well with other airlines. Not long after it consolidated, the problems started for the airline as its stocks fell so low on the trading floor with investors lost money.

Over time, the carrier’s strength became its weakness, its inability to take opportunities later led to threats that consumed the airline.

Fizzled promises

There are other notable cases of airlines that came with so much promise but fizzled out not too long after they started a business. The likes of Virgin Nigeria, ADC, Sosoliso, and Chanchangi were so promising. Sadly, they have become a footnote in the country’s aviation industry.

Airlines like Arik and Aero which are still in operation have become a shadow of their former self. Many Nigerian carriers’ today are said to be weak with poor infrastructure, high cancellation rates, and high barriers to entry. They are also considered small and fragmented with no clear-cut direction in terms of the right business model to apply.

For more than two decades now, Nigerian airlines and their association (Airline Operators of Nigeria) have been complaining about terrible business conditions. They are always moaning and groaning about lack of funds and asking to be ‘rescued’ one way or another by the government.

Yet in the same period, though some airlines have collapsed, several new ones have emerged and grown rapidly while newer ones keep coming on stream.

At any given time, there’s always a story in the news about one airline or another about to launch. But alas, no sooner do the new airlines come on board than they join the fray crying about lack of funding and debilitating business conditions.

Low market penetration

Beyond the prevailing harsh operating environment, the faulty business models airlines operators often adopt may be responsible for the perennial low market penetration and short lifespan of local carriers in the country.

Not a few consider Nigerian airlines to be strong when they start acquiring newer aircraft and opening new routes. These are ordinarily, signs of progress but these can never be considered as progress or success until all weaknesses are corrected quickly, tap into opportunities, and avoid threats that can consume the business.

However, the threats in the environment which are external factors include the unstable global fuel price, increased terrorism scares, and continued government subsidies for competitor airlines which reduce the open market competition.

While a lot of capital is invested in the development of state-of-the-art airlines, airports which are the ground infrastructure of the industry are yet to witness exponential improvements. Developed countries are equipped with the most up-to-date technology in their airports.

However, airports in developing countries provide a stark contrast with the airlines that fly in and out of their infrastructure.

Expert’s view

A former director of operation of an airline, who pleaded anonymity, told Aviation Metric that, “for any company, it is pretty common to have some weaknesses. Companies need to find strategies that can remove those weaknesses. When a company is in a competitive market, any weakness can impact its growth against its competitors.

“A company must consider the opportunities that they can get to survive the high market competition. They must set their policies as per those opportunities to ensure their growth in the future. They should also consider the condition of the market while working on their opportunities.”

Last line

The airline industry has its strengths, weaknesses, opportunities, and threats, which will continue to change with time and advancement in technology. This does not mean that the business of providing air transport for passengers cannot be profitable.

However, in fact, several carriers have managed to make handsome returns for shareholders and maintain significant profit margins.

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