The high mortality rate of domestic carriers has become a source of worry to operators, regulators and passengers. The disappearance of airlines and, sometimes, depletion of their aircraft fleet may have put the few surviving ones on edge. Experts warn that the existing airlines may be living on borrowed time, if the myriad of operational challenges bedeviling the sector are not addressed. Senior (Aviation) Correspondent KELVIN OSA-OKUNBOR reports.
The air transport sector is troubled. Since 1985, when the sector was deregulated, several attempts by private sector operators to run successful carriers have failed to achieve the desired result. Many aircraft that have hit the skies disappeared a few years after, leaving a sour taste in the mouths of their promoters, passengers and industry regulators.
Harsh operating environment, which has seen cost of operations rising higher than revenue; heavy taxation and dearth of infrastructure, among others, are responsible for the short lifespan of the airlines.
With the average lifespan of airlines put at 10 years, experts fear that the few existing ones may soon fizzle out, unless urgent steps are taken to stem the tide.
For instance, the Aviation Roundtable President, Mr. Gbenga Olowo, did not mince words when he warned that airlines would continue to fail until the government addressed the afore-mentioned challenges of the operating environment. He noted that carriers had not done well in the last four decades because of the challenges.
Olowo put the disturbing situation in perspective. Hear him: “Going back to almost 40 years, the government-owned airline, Nigeria Airways, failed. Pioneer private airlines, such as Okada and Kabo, failed. The third generation airlines – ADC, Bellview, Chanchangi and Sosoliso – failed.
“Similarly, the fourth generation airlines, such as Richard Branson’s Virgin Nigeria, and Air Nigeria also failed. Believe me, given the same operating environment the national carrier yet to be born will fail.”
Olowo is not an alarmist. Checks by The Nation revealed that in the last few decades, scores of airlines have collapsed, leaving their promoters, passengers and industry regulators disheartened.
They include ADC Airlines, Afrijet Airlines, Air Atlantic Cargo, Air Nigeria, Albarka Air, Al-Dawood Air, Amako Air, Amed Air, Arax Airlines, Axiom Air, and Barnax Air.
Others are Bellview Airlines, Capital Airlines, Chrome Air Service, Dasab Airlines, Earth Airlines, EAS Airlines, Easy Link Aviation, Freedom Air Services, Fresh Air, GAS Air Nigeria, Hamsal Air, Harco Air Services, Hold-Trade Air and IAT Cargo Airlines.
There are also Intercontinental Airlines, Mangal Airlines, Meridian Airlines, NICON Airways, Nigeria Airways, Nigeria One, Nigerian Eagle Airlines, Nigerian Global Aviation, Okada Air, Overnight Cargo Nigeria, Pan African Airlines, Premium Air Shuttle, Sosoliso Airlines, Space World International Airlines, TAT Nigeria, Trans Sahara Air, Trans-Air Services, Triax Airlines and Virgin Nigeria Airways.
The Centre for Aviation Safety and Research (CAS-R) Chief Executive Officer (CEO), Sheri Kyari, attributed the depletion of aircraft to the absence of a viable maintenance, repair and overhaul (MRO) facilities in the country. He said it was costlier to do checks abroad.
Kyari said: “The issue of fleet depletion that we are witnessing is nothing new because the main factor is the lack of MRO facilities. If there are MROs, people will simply move their airplanes to such MRO and you can have a slot that is well-planned for you.
“But a situation where we take our aircraft outside the country means that if they don’t get a slot here, they have to start looking for slots around the world, which is not good enough.
“Two, if they are going to do checks in the country, it’s going to be a lot cheaper.”
There is a high tendency that you are going to have cheaper labour at home and you are going to pay in naira. But what is happening today is that operators take their aircraft outside the country and start sourcing for dollars.”
Kyari added that, for some, who are leasing aircraft, if the aeroplane is due for check and they take it down or it’s due for check and they cannot pay, it is removed from their inventory.
Airlines’ dramatic decline
The government-owned Nigeria Airways Limited, perhaps, set the stage for the crisis in the sector, which forced many of them to disappear. Arguably one of the first generation airlines, Nigeria Airways attained its peak with about 32 aircraft in the 1980s.
However, a combination of poor planning, accumulated debts, mismanagement and undue government interference brought it on its knees. Consequently, the Federal Government liquidated the national carrier in 2003.
Other private-owned airlines that rose from the ashes of the liquidated airline soon started experiencing difficulties.
The General Manager, Public Relations, Nigerian Civil Aviation Authority (NCAA), Mr. Sam Adurogboye, recalled, for instance, that of the 150 carriers on the regulator’s register in 2000, only eight were still operating.
They include Arik Air, Air Peace, Overland Airways, Medview, AZMAN Air, Dana Air, First Nation Airways and Aero Airline.
Adurogboye said: ”At the time NCAA started in January 2000, we had about 150 airlines in our register. In 2006, the number came down to 28. The rest went under. It was not because NCAA did not do its regulation properly. At a point, the number reduced to 12. And as we speak, we have eight airlines. It is because we do what we need to do, that is why those who have to fizzle out will naturally do out.”
Indeed, by 2000, Albarka Air, Amako Airlines, Axiom Air, DASAB Airlines, Earth Airlines, EAS Airlines, Easy Link, Freedom Air Services, Fresh Air, Meridien Airlines, Spaceworld International Airlines, Chrome Air Services, Capital Airlines, Bellview Airlines, Trans Sahara Airlines, Wings Aviation, Sosoliso Airlines, Virgin Nigeria Airways, and Hamsal Airlines were still operating, utilising different aircraft types in their fleet.
However, a few years down the line, the number of carriers shrunk due largely to air crash, ban of the use of certain aircraft type, and the recapitalisation policy introduced by the government. Experts also cited the non-implementation of gazetted policies as another factor that limited the performance of airlines.
For instance, from the robust list of carriers in 2000, the air transport sector experienced a downward trend, partly as a result of a series of air crash that hit the sector. There was the EAS Airlines crash in Kano, 2002; Bellview Airlines crash in 2005, in Lisa, Ogun State, as well as ADC Airlines crash in Abuja the following year.
The bout of air crashes that hit the sector provoked concerns over air safety, forcing the Federal Government to introduce some stringent measures to stem the tide. Consequently, the government, to ensure better services and safety, set a deadline of April 30, 2007, for all airlines operating in the country to re-capitalise or be grounded.
About seven airlines were said to have failed to meet the deadline and were banned from flying in Nigeria’s airspace from April 30, 2007. Some of the affected airlines were ADC Airlines, Fresh Air, Sosoliso Airlines, Albarka Air, Chrome Air Service, Dasab Airlines and Space World Airline.
Ban on aircraft type
Apart from the recapitalisation policy, another significant measure that reduced the number of airlines between 2000 and 2007 was the 22 years age limit placed on aircraft to be ferried into the country by new airlines, as well as the ban on the use of BAC 1- 11 aircraft type that was involved in the EAS Airlines crash
Apart from EAS Airlines, other carriers affected by the BAC 1-11 aircraft ban included Okada Air, Albarka Airlines, Trans Sahara Airlines, and Freedom Air Services. This ban sounded the death knell for the affected airlines, which primarily had BAC 1- 11 aircraft in their fleet.
Also, the ban on the use of Boeing 737-200 series for scheduled flights, affected Chrome Air Services, Associated Aviation, Chanchangi Airlines, Fresh Air and Bellview Airlines.
These developments are said to be responsible for the dwindling fortunes and reduced fleet size of airlines’ fleet.
More carriers have also exited the scene because of NCAA’s requirement that no airline should carry out scheduled flights with a single aircraft on its fleet. This directive affected Afrijet, Discovery Airlines, IRS Airlines and Air Nigeria.
Hope for troubled sector
But it has not been entirely a tale of woes for carriers. In the face of the daunting challenges that have forced not a few operators out of business, some carriers appear to be trudging forward. For instance, within three years of commencing operations, Air Peace said it has grown its fleet of aircraft exponentially.
Its Corporate Communications Manager, Mr. Chris Iwarah, said: “Our fleet has grown in the last few years that we introduced revolution in the sector. From a fleet of three Dornier jets and five Boeing jets, we have grown our aircraft to about 24 with the delivery of triple seven Boeing aircraft for our international operations.”
He announced that while some airlines may be experiencing depleting fleet, “Our fleet has continued to increase over the years.”
Dana Air and Med-View have also maintained their fleet. For Med-View Airline, which went public last year, four of its five aircraft are active. Similarly, all the four aircraft in the fleet of Azman Air are active.
Also, in the last few years, the coming of Arik Air, for instance, upped the ante with its unique selling point of “brand new airplanes”.
Apart from its rapid fleet expansion programme, which saw an addition of about 28 aircraft in the last 10 years, Arik Air was able to raise the stakes by competing with foreign carriers until it began to experience industry challenges.
For instance, from its fleet of 28 aircraft, the airline has about 10 serviceable aircraft, and debts running into billions of naira.
Similarly, Medview Airlines has grown in fleet size and operational scope as the only carrier operating flights on intercontinental routes.
The Nation learnt that the fleet of the country’s carriers has reduced from almost 81 aircraft about a year ago to just 42, leaving 39 others grounded. Over the past year, airlines’ aircraft fleet depleted by 58.9 per cent.
Apart from Air Peace and Azman, many carriers are said to be downsizing. The most affected airlines are Arik Air and Aero Contractors, which experienced reductions from 26 to 10 and 13 to two aircraft.
First Nation Airways has only one active plane in its fleet of two, as one of its jets has remained grounded at the Murtala Muhammed International Airport in Lagos since last year.
The dwindling fortunes of Arik and Aero have not been helped by their take over by the Asset Management Corporation of Nigeria (AMCON). Since then, the two airlines’ fleet size and operational capacity have shrunk.
Officials of the two airlines, however, declined to comment when The Nation contacted them on issues around their operations since the takeover by AMCON.
Way forward
Air Peace Chairman Mr. Allen Onyema has called on the government to set up a probe panel to unearth the reasons behind the high rate of operational failures of domestic airlines.
Onyema listed some of the challenges responsible for the failure of most domestic airlines to include high cost of aviation fuel, otherwise called JET A1 (aviation fuel alone gulps about 40 per cent of total operating cost of an airline); high cost of insurance, harsh operating environment, lack of unity among airline operators, harsh policies of the government and multiple charges.
The Air Peace chief said, for instance, that there were about 37 charges levied against airline operators by various authorities, including the NCAA, Federal Airports Authority of Nigeria (FAAN) and Nigerian Airspace Management Agency (NAMA).
“If these taxes are not reduced, more airlines will die,” Onyema warned, adding that some legislations also lead to the failure of airlines.
According to him, other problems affecting the survival of airlines include lack of foreign exchange, spare parts, and maintenance facilities, such as the Maintenance Repair and Overhaul (MRO) facility.
Airline operators’ perspective
The Airline Operators of Nigeria (AON) Chairman, Capt. Noggie Meggison, said the shrinking size of domestic carriers and the sector at large was the reflection of the tough business environment that had continued to take its toll on the industry.
He expressed fears that none of the surviving airlines were immune to collapse as almost all wee running at about 50 per cent of their strength.
Meggison said: “Considering that the cost of fuel accounts for about 40 per cent of the operational cost of most airlines, the colossal rise in price of the product by over 100 per cent has equally increased the operational cost astronomically.
“In the light of this, our feasibility studies and financial projections are greatly threatened, thereby putting the airlines in a dangerous and difficult financial position.”
Although airlines have been shrinking in their numbers in the last 10 years, with corresponding fleet depletion, passenger traffic has been increasing.
According to data from FAAN, passenger traffic movements at domestic airports in 2005 increased from 3,817,338 to 3,848,754 in 2006, representing 0.82 per cent.
The figures moved from 4,162,424 in 2007 to 5, 136,920 in 2008, representing 23.41 per cent; whereas the figures moved from 5,644,572 in 2009 to 6,273,545 in 2010, representing 11.74 per cent.
In 2011, passenger figures increased from 6,746,290 to 6,879,286 in 2012, representing 1. 97 per cent. In 2013, passenger movements increased from 7,261,178 to 7,374,509 in 2014 and 7,164.169 in 2015.
The upward swing in passenger traffic has, perhaps, underscored the urgent need to address the challenges facing airlines in order to meet the demands of passengers.
