Experts believe there is urgent need to restructure aviation to enable it contribute ‘significantly’ to national development, Correspondent KELVIN OSA OKUNBOR reports.
EXPERTS are not happy with aviation’s contribution to the Gross Domestic Product (GDP). The sector can do more, if it is restructured, they argued.
Under the current GDP of N80.3 trillion or $509.9 billion, aviation contributes $0.7 billion, which is about 0.4 per cent; other countries are leveraging the aviation sector to develop their economies.
Comparatively, aviation contributes about 27 per cent to the GDP of the United Arab Emirates (UAE) and about 2.1 per cent to South African economy.
President, National Association of Aircraft Pilots and Engineers (NAAPE), Isaac Balami, said the in-coming government must take urgent steps to restructure the sector.
He listed the challenges of the sector to include lack of effective strategies for policy implementation and creation of requisite structures and environment for sustained growth .
On his part, former general secretary of National Union of Air Transport Employees (NUATE), Comrade Abdulrasaq Saidu called for scrapping of the Ministry of Aviation.
Aviation sector, he said, should be merged with the Ministry of Transport as it’s done in other parts of the world. Saidu said if the in-coming administration wants to retain the Ministry of Aviation, it should appoint a professional with aviation knowledge rather than bring in politicians who are not experienced in running air transportation.
Balami said the government must give attention to the state of domestic carriers, which he said ought to be the fulcrum of activities in the sector.
He said: ’The Nigerian aviation industry has endured numerous setbacks. The current situation is far from perfect. Challenges in the aviation sector are not limited to negligence, lack of financial availability or incompetent management.
“This is mainly due to the lack of effective strategies for policy implementation and the creation of requisite structures and environment for sustained growth.”
State of airlines
He said government should put in place appropriate policies that would stimulate the growth of domestic carriers.
Such policies Balami said should promote the good health of domestic airlines.
He said: ”There’s no gainsaying that airlines are the basis of aviation and should, therefore, be its fulcrum. Ideally, all policies, programmes and actions of industry stakeholders,in particular should be such that will promote the good health of airlines. This has not been the case in Nigeria.
“As a result, the Nigerian aviation landscape is littered with corpses of airlines bearing various epitaphs. The airlines have died due to many factors not limited to poor regulation, funding, management, uncertain policy environment, undue interference in management, unfair competition and excessive taxation.”
Balami said the situation has become worrisome such that it has become difficult to find a viable airline in Nigeria if international aviation benchmarks are strictly complied with.
Regrettably, he said it is becoming difficult to find a domestic airline that has declared dividends in Nigeria in the last five years.
“(The aviation industry is ubdergoing) suffocating operational environment evident in the skyrocketing cost of aviation fuel, cost of maintenance, cost of aircraft and spares in the face of worsening exchange rate, excessive charges, multiple taxation, ageing fleet and uncompetitive fares.
“Inadequate managerial capacity and a dysfunctional management structures due to ownership behaviour;
“Absence of long term strategic planning and the will power on the part of owners and managers;
“Absence of specialised banking/favourable financial environment;
“Unfair competition and unnecessary monopoly with foreign mega carriers, worsened by Government’s uncaring attitude exemplified by multiple designations granted to foreign mega carriers which prevented local carriers from the market;
“Absence of clear government policy on airline business rehabilitation, revamping or revitalisation; and shortfall in enforcement of technical and economic regulation on the part of the Nigerian Civil Aviation Authority (NCAA),“ he said.
Merger and acqusition
If the industry must grow, Balami said the Federal Ministry of Aviation should foster an arrangement through incentives that will bring about merger of airlines, culminating in the emergence of one or two mega-carriers.
He said: ”The government could achieve this through Bank of Industry (BoI), which should adopt a carrot and rod method.
The carrot could be by offering soft loans to merger carriers that achieve a certain level of capitalisation while the rod would be the withdrawal or suspension of the Air Operator Certificate (AOC) of airlines that fail to meet prescribed capitalisation after a given time.
The other option is to restrict them to certain routes.
Multiple taxation regimes
The experts said the industry could be on the part of growth if steps are taken to eliminate multiple taxation, charges and levies.
Balami said: “The Federal Government should review the multiple taxation regimes presently in place. To start with, government should stop charging Value Added Tax (VAT) on air transportation, especially because air transport is the only transport service being charged VAT.”
Road, rail and water transportation services are currently exempted from paying value added tax . Doing this is to ensure the principle of equity.
The Federal Airport Authority of Nigeria (FAAN), Bi-Courtney Aviation, NCAA and other government agencies should immediately review downwards their landing, parking and other charges.
The charges are rather arbitrary and on the high side, especially considering that services are not commensurate with the charges when compared to other economic climates.
Operators’ position
Some airline operators have expressed reservations over government’s proposals to restructure some aspects of the sector as it affects their operations.
Chairman, Air Peace, Mr Allen Onyema said those canvassing merger of airlines should have a rethink.
He argued that operators could cooperate on many areas without forcing them to merge.
He said he is favourably disposed to code sharing among domestic carriers rather than merging airlines.
Onyema said: “We can go into code-sharing with any airline that wants to do business with us. We will prefer code sharing to merger. We have invested so much into our operation that it will be difficult to merge with another airline that is not ready to pursue our goal in setting up of Air Peace; we want to employ more Nigerians; we are out to provide jobs for Nigerians.
“There are many areas the government should consider other than merger of airlines .There is no doubt that the environment is extremely, overwhelmingly harsh. There are a lot of things you have to take into consideration; the airline operators are reeling under inconducive business environment.
“Take for instance, you cannot compare this country with America or Europe. In America, if anything goes bad on the plane, you can go to the next aircraft parts market and get it fixed. In Nigeria, if you don’t have it in your warehouse, that plane is grounded. You are losing time, you are losing money. So the cost of operating commercial airline in Nigeria is high. Government should be mindful of the fact that these airlines are already disadvantaged right from the day they got their AOC. Nigerian airlines are already disadvantaged right from the day they are licensed to fly. So, government should also be thinking about how to alleviate their problems,” he said.
Managing Director of Medview Airlines, Alhaji Muneer Bankole said the in-coming government should consider how to set up a national carrier.
Such carrier, Bankole said, would redeem the sovereign image of Nigeria.
He said: ”First and foremost, from what I have heard from the president-elect, he is so dissatisfied with the situation that a country as big as Nigeria has no national airline. And we all here witnessed the death of Nigeria Airways. We witnessed the death of National Shipping Line, so all those things he has said he needs to bring them back because he knows them and he asked why and where and what went wrong.
“A country such as Nigeria with the population we have, we need to have an airline that will carry our image beyond the shores of this country. You have seen Ethiopian Airline, Egypt Air, South Africa Airways even Air Maroc, they have many aircraft in their fleet.
“So, we too could do something better to improve this industry and let Nigerians feel proud. This is why I am saying that the president elect has said it many times that he promised to do something for all of us.”
The Medview chief suggested that government may take aircraft in the fleet of existing airlines to establish a stronger carrier.
He said: “The government might say we are taking three, four, five aircraft to bring everybody together and let’s start from this team and see how you can grow. First and foremost we need commitment from individual carriers to show sincerity of purpose for whatever we want to deliver for this government.”
Local content initiative
Experts say if the industry must address its many lapses , the Ministry of Aviation should immediately establish a Local Content Desk/Office.
Setting up the desk, they say will enable the mobilisation of relevant stakeholders to take advantage of the intention of the National Assembly to institute an Aviation Local Content Act.
In a position paper, the stakeholder are unanimous that the present issue in relation to anti-labour practices and abuse of expatriate quota in the aviation industry, which is before the Minister of Labour should form the basis for immediate action.
According to them, the issue of abuse of expatriate quota is indeed, a serious menace in the sector and it is of extreme importance that the Ministry works with the unions to eliminate this for the growth and development of the industry.
Aviation master
plan/road map
The experts say part of the restructuring to be done in the sector should include the implementation of an industry master plan and roadmap. This road map, according to their position paper, should create a template for assessment, review and determination of the present state of affairs.
They recommended that concerted effort must be directed towards the development of Lagos as a hub given its existing infrastructure and market development.
They futher said the government should review the issue of multiple destinations indiscriminately granted foreign carriers at the detriment of local carriers and the economic development of the Nigerian aviation sector.
“The government should urgently bring into fruition the plan to re-establish a national carrier.
“Government should hasten the completion of at least, one aircraft maintenance hangar in the country, such as the Uyo facility that is already at advanced stage, but now abandoned due to high costs.
“ Government should hasten the certification process of at least the major airports. This will go along with the development of one or two hubs in the country, particularly the Lagos hub; develop the Nigerian College of Aviation Technology (NCAT), Zaria into an international institution and should implement the aerotropolis project,” they said in their position paper.
