X-raying Nigeria’s underwhelming aviation trajectory

Despite having the continent’s largest economy and population, and strategic location in the middle of West and Central Africa, Nigeria is yet to capture what some would refer to as its rightful position as an aviation hub. However, demand-side inhibitors, such as the lack of a national carrier, high airline fees, infrastructure, sound and workable policy to make the nation’s airlines thrive among others must be addressed if the country is to fulfill its potentials, writes, WOLE SHADARE

Catch up game

Nigeria certainly has catching up to do with the likes of Egypt, Kenya, Ethiopia, South Africa and  Morocco– five countries with Africa’s largest national carriers with international routes and whose airports in turn service hub-and-spoke traffic across the continent. Yet Africa as a whole is under-represented when it comes to indigenous airline capacity. Non-African carriers handle 80% of continental traffic, and it is still common for passengers to connect via Europe when flying between two African destinations.

The top European, Gulf and North American airlines have secured landing rights into Nigeria, mainly through Lagos, which accounts for 75% of international arrivals. For many, Nigeria is proving to be one of their most profitable and best-performing routes by load factor, as they benefit from a steady and less price-sensitive corporate base. It is believed, for example, that British Airways makes more money 14 times to Lagos and Abuja weekly than it does operating 10 flights to New York daily as per yield.

Carriers

Nigeria, with its sizable population and projected aviation growth, is perhaps an exception to the argument that for economies of scale, West Africa needs fewer rather than more national carriers. Each year Nigeria loses potential earnings from non-serviced routes to foreign airlines. Since state-owned Nigerian airways ceased operations 2003, followed by Air Nigeria in 2012, the government has pursued financial backers and technical partners to re-launch a new national carrier. The government hired kPMG to identify potential strategic partners, short listing South African Airways, Ethiopian airlines and Lufthansa in early 2015.

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Some African airlines

The Nigerian government is said to be moving very fast with the establishment of the much awaited national carrier as the government has selected ‘a preferred partner just as it has begun talks with the partner as they are at the final stage of Full Business Scale (FBS). The Minister of Aviation, Hadi Sirika is keeping the preferred bidder close to his chest.

Sirika recently told reporters in Abuja at the end of a meeting of the Federal Executive Council (FEC), that the Federal Government was committed to providing a national carrier for the country.

He said the initial plan to establish a national carrier in 2021 was affected by the outbreak of the Covid-19 pandemic.

The minister stated that there is no going back on getting a national carrier for the country.

He said: “It is still in top gear; we are coming back to the council; hopefully in the next two weeks to present the memo on the national carrier. We went to the council to approve the outline business case for the carrier; then, the council raised some questions and asked us to go and look at the memo again and bring it back.

“So, once it comes back and the outline business case is approved by the council, we will go to the full business case which is now going to the market and establishing the national carrier.

“It is our intention to have the national carrier running in 2021, which is this year; unfortunately, due to COVID-19, which took the greater part of last year, since March last year, activities have almost been impossible.’’

 

Air Peace

At present, Air Peace considered Nigeria’s biggest carrier by fleet size can be categorized as almost insignificant going by the pedigree of the five big airlines earlier mentioned. State controlled Arik and Aero offer little or nothing and are both facing concerns over unpaid debts. Other carriers operating in the country include Dana, Ibom Air, Overland, Max Air, United Nigeria Airline, Azman and others are bugged down by so many issues.

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Arik Air used to operate a fleet of 26 aircraft and served 16 domestic routes from Abuja and 12 from Lagos. While its regional network was concentrated around West and Central Africa, it also sought to expand its footprint into the North and East of the continent to take on Kenyan Airways and Ethiopian airlines before it ran into trouble and subsequently cut down its operations. It stopped all international operations to London, New York, Johannesburg and Dubai.

Aero contractors, meanwhile, operated a fleet of 15 aircraft serving 13 domestic routes, as well as Accra and West African routes. They are left with about five aircraft and had since left the West Africa routes to concentrate on its capacity and its MRO facility.

Open up

The Africa Union agreed in principle to an open-skies policy in 1999, though this has yet to happen on a regional level, limiting available flights and keeping costs relatively high. International air transport association studies have concluded that open skies would contribute $128m per year to Nigeria’s GDP and lead to the creation of more than 17,000 jobs.

A lack of domestic competition also contributes to high fares, though local airlines contend this has more to do with high operating and input costs.

 

Murtala Muhammed International Airport, Lagos

For a $80 economy fare ticket on a 55-minute flight between Lagos and Abuja, more than half the price goes to taxes and fees. Low competition has also contributed to poor service, with the civil aviation authority receiving around 50,000 complaints per year. To that end, a new passenger bill of rights was passed in 2013, requiring compensation for delayed and cancelled flights, lost luggage and other performance metrics.

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Poor capacity

Stakeholders acknowledged that foreign carriers have the upper hand because they dominate the Nigerian routes and they do that because Nigerian carriers do not have the capacity. As they dominate the Nigerian routes they decide the prices and comparatively, Nigerian travellers pay the highest fares in West Africa. Some of the stakeholders argued that it would be difficult for Nigeria to control airfares on its routes because it does not have strong carriers that can effectively compete.

An airline owner told Aviation Metric that it was even difficult for the defunct Nigeria Airways to successfully fly international destinations, remarking that whenever Nigerian carriers start international operation they begin to flounder.

One key reason is lack of capacity and the inability of the Nigerian government and the airlines to respond to the strategies adopted by foreign carriers to dominate their routes.

 

Arik Air’s aircraft

Having the right aircraft, charging the right fares and scheduling the operations at the right time is the responsibility of the airlines, but an airline can coax its government to introduce policies that will infringe on its rival airline and make it difficult for the foreign carrier to operate. They do this regularly against Nigerian airlines. That is where the Nigerian government comes in.

Last line

With government support, domestic airlines can grow and become very strong to compete with other airlines that fly to Nigeria. Experts say no airline can thrive without government support. It is so with Nigeria.

Wole Shadare