The Nation Newspaper

Tag: carriers

  • Nigerian carriers’ plan to fly into US may ignite competition

    Plans by two carriers, Air Peace and MedView Airlines, to begin flights into the United States next summer could intensify competition on the route hitherto dominated by American carrier – Delta Airlines.

    The carriers are convinced that they could leverage the huge population of Nigerians residing and doing business in major American cities including Houston, in Texas, Washington, New York, New Jersey and Baltimore to drive traffic for the  proposed flights.

    The Nation exclusively gathered that though, the airlines have secured bilateral approvals from the Nigerian Government and the US, the airlines are putting finishing touches to other regulatory approvals needed for the flight to commence.

    Investigations revealed that the carriers were encouraged to begin US flights as part of the fulfillment of reciprocity clause in the Open Skies Agreement Nigeria signed with the US over a decade ago.

    Though Bellview Airlines, Air Nigeria and Arik Air were granted approval to fly into the US since 2009, only Arik Air accomplished the feat before it discontinued operations in 2016.

  • ‘Open skies ‘ll empower indigenous carriers’

    The implementation of an Open Skies Policy for Africa will enhance capacity for indigenous carriers, National Association of Nigerian Travel Agencies (NANTA), has said.

    Its Chairman, Board of Trustees Mr Akintunde Akala, who spoke in Lagos, said the policy would also protect indigenous carriers from the invasion of African air transport market by foreign mega carriers.

    He said until such a policy was implemented, foreign carriers would continue to rip off African travellers with air fares that are not competitive owing largely to lack of capacity by carriers in Africa.

    He said such a policy would enable African carriers forge the relevant technical, financial and operational partnership that would make them stronger on regional flight operations before going into intercontinental operations.

    Akala said African governments had not done enough to encourage their carriers through appropriate bilateral policies that will protect their carriers from the predatory and discriminatory practices of foreign carriers.

    One way African carriers could protect the lucrative market is to enter into code share agreement and leverage on the benefits of economies of scale that would make them share costs , profits and foster development through appropriate partnership.

    He said the African Airlines Association (AFRAA) should play a major  role in ensuring the proper implementation of relevant bilateral air services agreements to make Africa a single market for its carriers .

    The appropriate measure to be adopted, he said, was to remove hurdles that restrict the movement of passengers on the continent to accelerate economic development.

    Akala said: “The Open Skies Policy Africa would have been the best way to protect African carriers. But, its implementation is very slow. Until that is done African carriers would not be able to compete with the onslaught of foreign carriers.Because there are not many strong national carriers in Africa, we will find it difficult to compete with foreign carriers.

    “The best way to secure the African air transport market is for African carriers to cone together, through all forms of strategic partnership, be it merger, code share or interline agreements to fight against the invasion of foreign carriers.

    “Through such partnerships, the airlines will share costs, profit and accelerate development. AFRAA has a huge role to play in this arrangement. But, unfortunately Nigeria with very few strong carriers is not yet there to play a continental leadership role because it dies not have a national carrier. The African Union through AFRAA should consider deeply how to fast track the implementation of the Yamoussoukro Decision signed by 44 African States in 1999 to secure its carriers to boost capacity.”

    Meanwhile, the Chief Executive, International Air Transport Association (IATA).Mr Tony Tyler has urged African governments to remove taxes on aviation fuel to create jobs, help carriers grow and make air travel more affordable,

    Tyler said governments should also speed up a plan, known as the Yamoussoukro Decision, to open their airspace to local carriers by 2017. The plan was signed in 1999 by 44 African states.

    “At the moment, Africa punches below its weight in terms of connectivity with the rest of the world through African airlines,” he said on the sidelines of an aviation conference in the Kenyan capital of Nairobi.

    When implemented, Yamoussoukro could create 155,000 jobs and fly five million extra passengers a year around Africa, a recent IATA study of potential benefits in 12 major nations found, Tyler said.

    He said the cost of fuel, which comprises nearly 30 percent of an airline’s costs, is more than 20 percent higher in Africa than elsewhere, and called on authorities to cancel aviation fuel taxes in line with the rest of the world.

    “The opportunity here is for governments to cancel these unnecessary and penalising taxes,” Tyler told a news conference, noting the benefits of increased air travel would outweigh the short-term loss of fuel tax revenue for states.

    Mbuvi Ngunze, the chief executive of Kenya Airways, said the taxes varied from one country to another and that poor energy transport infrastructure also drove up costs.

  • ‘Why foreign carriers don’t sign agreements with local airlines’

    The Regional Manager, Africa and Middle East, South African Airways, Mr Aaron Munetsi, has identified poor understanding of how to run network operations as part of the factors militating against interline agreements between local and foreign carriers.

    Interline are agreements that allow domestic carriers distribute passengers flown into the country by foreign carriers.

    According to Muntetsi, many foreign carriers are constrained to enter into such agreements because many Nigerian carriers see airline business as moving passengers from point to point as against the global practice, where a single ticket booked on a global alliance could take passengers to points beyond routes flown by their choice carriers.

    He said until indigenous carriers see airline business as global networking, they would not be able to enter into global alliances.

    He also said until airlines share similar operational philosophies, it would be difficult for them to foster any partnership.

     

  • ‘Adopt single entry point for foreign carriers’

    ‘Adopt single entry point for foreign carriers’

    Aviation experts have canvassed the adoption of single entry point for foreign carriers, describing the multiple entry points granted by the government as another attempt to further cripple indigenous airlines.

    The experts: Mr Gbenga Olowo, chief executive officer of Sabre Travel Africa, and Mr Taiwo Adenekan, who are both aviation economists, described the granting of multiple entry points to some foreign airlines as another antagonistic policy that could further impoverish domestic airlines that are battling operations afloat.

    They spoke in separate interviews last week in Lagos with The Nation.

    They urged the Federal Government to emulate steps taken by some foreign governments to protect their airlines by only granting one entry point to Nigerian carriers .They listed the foreign carriers with multiple entry point into Nigeria to include: British Airways, Virgin Atlantic Airways, Emirates, Air France /KLM, Ethiopian Airlines, Turkish Airlines , Lufthansa Airlines and others .They said the designation of Emirates and Turkish Airlines to fly  into Lagos, Abuja and  Kano only amounts to selling of the nation’s birth right , as indigenous carriers do not enjoy such right in United Arab Emirates and Turkey.

    They  said such multiple entry points given to foreign carriers further helped to destroy the potential of domestic carriers, as the foreign carriers make much profit from Nigeria.

    The experts said that the call by the House of Representatives to review the bilateral air services agreement Nigeria signed with other countries is long overdue, when the foreign carriers, which are beneficiaries of the agreement make billions of dollars yearly from Nigeria.

    Specifically, Adenekan advocated the open bid for Nigeria’s seven most lucrative international routes to foreign carriers, from where over $ 500 billions could be made for seven years to float a national carrier.

    He listed the routes to include: Lagos-New York, Johannesburg, Rome, Frankfurt, London, Jeddah and  Dubai.

    According to Adenekan, granting flight frequency to foreign airlines will further weaken the capacity of domestic carriers.

    He described the granting of multiple entry points to foreign carriers as a disservice to the growth of indigenous operators, urging the government to consider protectionists policies to assist local operators.

    He said: “How do you expect domestic airlines to do well, when government I’d granting multiple entry points to carriers to fly passengers from their operational hub into different cities and airports in Nigeria.

    “What then will be left for domestic carriers?

    “The foreign carriers should only be allowed to fly their passengers into one city, from where the domestic carriers will distribute under some partnership.

    “How come Arik Air is not allowed to fly into more than one airport in the United Kingdom and United States.

    But, British Airways, Virgin Atlantic, Emirates, Turkish Airlines, Ethiopian Airlines , KLM/ Air France , Lufthansa Airlines fly into more than one city in Nigeria.”

    Some of the carriers fly into Lagos, Abuja , Enugu , Port Harcourt and Kano. This gives them unfair advantage over Nigerian carriers.

    Our indigenous carriers do not enjoy this leverage in other countries. This is one area government must consider a  review of the multiple entry point policy. “

    Olowo on his part said until domestic airlines key into survival options of collaborations, consolidation and merger, their operations will not be competitive enough to withstand the capacity of foreign carriers.

    He said until the capacity of domestic carriers is improved foreign carriers will continue to have the competitive edge.

    He said only viable flag carriers supported by protectionists policies could arrest the trend.

     

     

  • Over four carriers coming

    Over four carriers coming

    Air fares on domestic routes may soon crash following the emergence of new entrants in the industry.

    The new airlines include Discovery Air, Hak Air, Azman Air Services Limited, West link Airlines and others that are at the finishing stage of securing their Air Operators’ Certificate (AOC) from the Nigeria Civil Aviation Authority (NCAA).

    Other airlines that had suspended operations but are staging a come back include First Nation Airways, Chanchangi Airlines, Afrijet Airlines, Capital Airlines as well as Associated Aviation.

    Confirming the development, outgoing Assistant General Secretary of Airline Operators of Nigeria (AON) Mohammed Tukur said the increase in the number of airlines would bring about lower fares.

    Tukur said AON was not opposed to new entrants, adding that the government should create an enabling environment for domestic carriers to thrive, without giving undue advantage to some operators.

    The plan by Discovery Air to hit the skies next month, is generating anxiety among airline owners who see it as a major competitor because of its structure and aircraft.

    At the Murtala Muhammed Airport Terminal Two of the Lagos Airport, new offices and counters have been branded for Discovery Air, which sources say may take over the structure of Air Nigeria.

    The airline, it was learnt, has acquired some operational aircraft.

    According to sources, major personnel eased out of former Virgin Nigeria Airways, may form the bulk of the staff of the new carrier.

    The carrier, it was learnt, would offer cheaper fares.

    It intends to alter the operational equation on the Lagos, Abuja and Port Harcourt routes.

    Hak Air has acquired four aircraft; it plans to hit the skies soon as its personnel are working round the clock to offer a new regime of fares.

    The promoters of Hak Air, it was learnt, are leveraging on the experience of liquidated national carrier, Nigeria Airways, to run a successful airline.

    A source hinted that Azman Air Services Limited, which intends to operate from the MMA2, Ikeja, Lagos has concluded plans to acquire aircraft that would offer lower fares.

    The airline has links with some officials in government, who would leverage on that to deliver a top of the range low fare carrier.

    West Link Airlines is planning scheduled operations as it has concluded plans to secure aircraft type that would reduce its operating costs to enable it to offer cheaper fares.

    Its Managing Director, Captain Ibrahim Mshelia said last week that fares could crash if the government intervenes in the price of aviation fuel.

    Mshelia canvassed local refining of aviation fuel as one of the measures to bring about lower air fare regime to boost profitability for airlines.

    He said if the cost of aviation fuel is reduced significantly, attendant costs could be reduced to ensure profitable operations because over 60 per cent of operating costs goes into aviation fuel.

    Other costs that operators may contend with are the huge cost of offshore maintenance of their aircraft, and aircraft spare parts.

    On how to reduce air fares of domestic flights, Mshelia said: “ We send crude out; it is refined and sold back to us at exorbitant cost. I believe that if we refine our own aviation fuel, it would cause the price to come down and air fare reduced.”

    The return of First Nation Airways is unsettling some leading operators who are thinking of crashing fares to attract passengers.

    At counter airline, activirties have peaked ahead of the planned commencement of flights.

     

     

     

     

     

     

     

     

  • IATA cautions African carriers

    The International Air Transport Association (IATA) has warned that African carriers would face high operating costs in the third quarter of this year, with the cost of aviation fuel averaging 21 per cent higher than other parts of the world.

    Its Chief Executive Officer and Director-General of IATA, Mr Tony Tyler, explained that African carriers would also face stiff opposition from carriers outside the region, in long haul operations.

    Tyler said carriers from Africa would need to work hard to resolve aero- political barriers that still stands in the way of enhanced regional connectivity.

    He said: “The region’s airlines continue to face high operating costs, especially for fuel, which is on average 21 per cent more costly than in other parts of the world.

    Long haul services face stiff competition from carriers outside the region, while significant aero-political barriers still stand in the way of enhanced regional connectivity.

    He said: ”African airlines continue to be the weakest performers, with passenger load factors below 70 per cent operating margins averaging less than one per cent and profits of just $100 million.

    Compared with the $100 million loss of 2012, however, this is a better performance. Passenger capacity growth 6.7 per cent is expected to be outstripped by demand growth of 7.5 per cent This will improve load factors.”

    Meanwhile, the IATA upgraded its global outlook for the airline industry to a $12.7 billion profit in 2013 on $711 billion in revenues.

    This is $2.1 billion better than the $10.6 billion profit projected in March of this year and an improvement on the $7.6 billion profit generated in 2012.

    “This is a very tough business. The day-to-day challenges of keeping revenues ahead of costs remain monumental. Many airlines are struggling. On average airlines will earn about $4 for every passenger carried—less than the cost of a sandwich in most places,” said Tyler.

    He said: “Profitability is thin, but there is a solid performance improvement story over the last seven to eight years. More efficient use of assets is the main contributor.”