Government could do more to encourage the local airlines
The recent message from aviation stakeholders was as blunt as itcould be: the sector is in dire straits with prospective investors becoming increasingly difficult to convince while business confidence has sunk to dismal levels. “Despite the fact that passenger growth has increased and the market is expanding, the number of aircraft operating in the country has reduced. That tells you that the aviation industry is shrinking. The reason is basically because no investment is coming in,” said Captain Ado Sanusi, Chief Executive Officer of Aero Contractors.
Nigerian aviation industry does not have good record of viable airlines. Many airlines that were established in the past went under within an average of five years. Nothing indeed highlights the precarious nature of the sector than the fact that airlines launched with fanfare disappear from the airspace after operating for some few years. Okada, Chanchangi, Bellview, Harka, Triax, ADC, Sosoliso, Albarka were some of the privately-owned airlines that operated for a while before closing shops. This is discouraging to investors. Besides, the margins in the sector are thin, especially since revenues are earned in naira while expenses like maintenance, spares, lease amortization, insurance premiums are incurred in foreign currencies.
Between 2015 and now, about four airlines operating scheduled flights have also vanished. These are Discovery Air, First Nation Airways, and more recently IRS Airlines and Associated Aviation.
Attempts to resurrect the public-owned Nigeria Airways which at a time had more than 30 aircraft also failed, after several millions of naira had been sunk into the project. Arik Air, one of the airlines with commanding control of the country’s airspace a few years ago, is still flying courtesy of the Asset Management Corporation of Nigeria (AMCON). The airline was collapsing under crushing debts. Aero was
in similar cul-de-sac before AMCOM also came to its rescue. The list of failed airlines in Nigeria is long.
A major challenge confronting Nigerian airlines is the disposition of government to policies that tend to favour foreign carriers against local operators. In many countries, foreign airlines are made to partner with local carriers for increase in frequencies or code-share as a condition to operate within the domestic space. But in Nigeria, foreign carriers are not only allowed to operate freely, they are multi- designated to different airports in the country. For example, Ethiopia
Airlines operates to Abuja, Lagos, Kano, Port Harcourt and Enugu. British Airways operates to two destinations and Turkish Airlines, three destinations. This kills local airlines. If for instance Ethiopia Airlines was operating to Lagos alone it would have to code-share with local carriers to airlift its passengers from different parts of the country to Lagos where it would then airlift them to Addis Ababa, its operational hub. Such partnership will generate revenue for the local airlines. But that is not what obtains.
Meanwhile, among the few domestic airlines still in operation, Air Peace, with 26 aircraft, is the undisputed leader. But that position is now being threatened by allegations of money laundering filed in the United States against the airline’s chief executive, Mr Allen Onyema.
This poses a great threat to the sector. Even with Air Peace in operation, passengers are at the receiving end of the weakened capacity as vividly demonstrated during the Yuletide when they were not only forced to pay outrageous fares, but delayed for several hours.
Last week, the Director of Consumer Protection, Nigeria Civil Aviation Authority (NCAA), Adamu Abdullahi acknowledged the tough business environment under which the airlines operate and made some pledges in form of incentives and wavers.
While suchinterventions will go a long way, what is critical at the moment is for the federal government to ensure that Onyema gets fair treatment if he goes on trial in the United States. We are not concerned about whether Onyema is right or wrong. That is for the law to determine. But when any business controls over 50 per cent of the sector in which it plays, there is a burden on the government to show a duty of care when such business is threatened.