Indigenous carriers are carving a niche for themselves in air transportation. But, they are grappling with the challenges of harsh government policies, inclement business climate, multiple aeronautical and airport charges, among others. To stakeholders, friendlier policies could stimulate their growth, writes KELVIN OSA-OKUNBOR.
Nigeria is losing in the global drive to position air transportation as enablers of economic development.
Reason? The local industry is yet to key into the global call for the harmonisation of aeronautical charges, pursuit of operator friendly tariff, lack of functional airports that are both airlines’ and passenger friendly, among others.
For these and other reasons, the country is yet to benefit from the benefits derivable from the sector, where countries are pursuing aggressive airports and air navigation infrastructure revolution and other interventions critical to exponential development of air transportation.
The International Air Transport Association (IATA) has been calling on the government to look into the challenges and complaints by indigenous carriers that would bring about lower airport charges, improved logistics for fuel supply, concession of airports and other issues.
Worried about the trend, a coalition of international organisations: IATA; Airports Council International (ACI); International Civil Aviation Organisation (ICAO); African Airlines Association (AFRAA), have launched a study to unravel why carriers in Nigeria have short lifespan. This is because in the last 20 years, not less that 20 airlines have appeared and disappeared from the scene.
The collapsed carriers include Nigeria Airways, Virgin Nigeria Airways, Okada Ai, Space World International Airlines, DASAB Airlines, Bellview Airlines, Chanchangi Airlines, IRS Airlines, Air Mid West, Afrijet Airlines, Capital Airlines, Associated Aviation, NiCON Airways, Freedom Air Services,Trans Sahara Airlines, Skykine Airlines, and Albarka Air Services.
The coalition is looking at ways to proffer solutions that would guarantee the sustainability of domestic carrier in the country while hoping to position them as catalyst of economic growth.
Notwithstanding the increasing passenger traffic in the last two years, domestic airlines are still finding it difficult to survive.
According to figures released by the Consumer Protection Directorate of the Nigerian Civil Aviation Authority (NCAA) last year, no fewer than 14.2 million air travellers were recorded. This represents a 20.8 percent increase over the previous year’s figures, which stood at 11.2 million passengers.
A breakdown of these figures futher reveal that though there are 34 airlines (both foreign and domestic) flying in the country, of the passenger figures for last year, nine indigenous carriers account for 10.09 million passengers, leaving carriers on international routes with 4.08 million passengers.
This record, stakeholders said, represent the impressive exploits of local operators irrespective of the harsh and unfriendly business climate they are operating in. These figures gives the NCAA Director-General, Captain Mukthar Usman, the confidence to say that though the operating environment may be harsh, the increase in passenger traffic could be described as a good return on investment for committed local operators.
Interventions in the midst of challenges
Despite interventions by the government to assist indigenous carriers come out of the woods, the sector has drawn global attention in the last decade following unsavoury developments involving airlines.
Some indigenous carriers, including Medview Airlines,which shown signs of great potential in the acquisition of modern aircraft- Boeing 777, with support from FirstBank of Nigeria Limited and foreign partners for its Hajj operation as well as revival of its truncated London and Dubai operations continue to slide.
The airline has, however, swallowed the bitter pills of the choking effects of the operating environment, forcing it to scale down its operations and workforce.
Besides Medview Airlines, other carriers, including Aero Contractors and Arik Air, continue to undergo surgery through intervention from the Asset Management Corporation of Nigeria (AMCON) to keep them afloat after take over.
The two carriers have witnessed depletion of their fleet and scaling down of operations on some of their routes.
Arik Air, on its part, following its take-over by the AMCON in February 2017 and injection of N1 billion, is showing signs of stability, but not recovery. Besides paying salaries and meeting basic obligations, about nine out of the 30 aircraft owned by Arik returned to operation, sustaining both local and regional operations.
Air Peace, however, remains the most stable of the airlines and it is not by accident that the airline accounts for about 40 per cent of the last year’s total passengers on the local front.
Indeed, the airline led the way with an unprecedented investment in aircraft in its bid to make a strong case for Nigerian flag carriers on regional and international skies, even as “no city is left behind” on the home front.
To this effect, the airline recently placed an order for 10 brand new Embraer 195-E2 aircraft.The order comprises purchase rights for another 20 E195-E2 jets. Also, 124-seater jet in dual class and 146-seater jet in single class configurations. With all purchase rights exercised, the contract is worth N640.5 billion ($2.12 billion) based on list prices.
The carrier also set a regional record last September, when it ordered 10 brand new aircraft from Boeing, increasing its fleet size then to about 37 aircraft. With the new order, Air Peace’s fleet size has increased to 67 aircraft.
Air Peace had earlier set a domestic record as the first Nigerian airline to acquire and register the Boeing 777 aircraft in the country. Three of the four wide-body aircraft it acquired for its long-haul to Dubai, Sharjah, Johannesburg, London, Houston, Guangzhou and Mumbai have so far been delivered.
Industry stakeholders, though marveled at the unparalleled investment in capacity, are optimistic that the 14 million passenger record may as well double in a year, when at least half of Air Peace new orders join the operating fleet. But, the worry is the systemic hurdles that will shackle the enormous potential and attendant benefit.
Multiple taxes and charges
According to the airlines, sundry charges, under the guise of taxes and levies at airports nationwide, account for at least 65 per cent of revenue accruing to them. Besides the five per cent charge on every ticket bought by passengers, which goes to all the five regulatory agencies, there are other “illegal” charges on the operators.
They include the second popular five per cent Cargo Sales Charge, five per cent Value Added Tax (VAT), Passenger Service Charge of N1, 000 per ticket on local route, Charter Sales Charge, Aircraft Inspection Fees, Simulator Inspection Fees, Landing Charges, Parking Charges and Terminal Navigational Charge. Others are Enroute Charge, Fuel Surcharge, Airport Space Rent, Electricity charges, Apron Pass, ODC, Registration Fee, Service Recovery Charge, Processing Fee, Avio Bridge, Aircraft Registration and Processing Fee.
The airlines also pay Toll Gate Fee, VIP Lounge, Trolley Service, Clearance Fee, Check-In Counter Charge, Courier/Tarmac/Pre-Release charges, Import Charge (Dom), Export Charge (Dom), Import Royalty, Export Royalty, Ports Charge, Exports Charge, Transhipment, and Concession Fee.
Together, these charges eat deep into earnings leaving the airlines with less than N10,000 on a passenger ticket sold at an average price of N30,000.
Air Peace Chief Executive Officer, Allen Onyema recently said if this regime of taxation is not removed, no airline will survive.
Onyema said though the charges had been in the system for long and some of them as fallouts of legislations, it was high time they were reviewed to ease the burden on commercial airlines.
He said: “Let even the government raise a consulting firm to go round the country to find out why airlines have been dropping off. Heavy taxation is part of it. We are suffering.
“Air Peace supports payment of taxes to government; no government runs without the citizens paying tax. Airlines must pay their taxes. What we are asking is for these taxes to be streamlined in such a way that it will help us to help the government and help the country.
“Commercial airlines are a catalyst to economic development in any country. That is why every country supports its airlines. We are not asking for any financial assistance but for an enabling environment that makes things work. It is not complimentary for us as a country that all our airlines are dying.”
Airlines Operators of Nigeria (AON) Chairman, Captain Nogie Meggison observed that over 50 indigenous airlines have existed in the country in the last 18 years, but only nine are flying at the moment.
“The mortality rate of airlines in Nigeria is high. The owners of the defunct airlines have all been success stories in other business endeavours except in aviation.
“Could all of them have been responsible for the failure of their airlines? The answer is no! Rather, the unfriendly policies and harsh operating environment have been the bane of aviation sector’s growth in Nigeria.
“We are mindful that if these issues and policies are not addressed urgently, the remaining airlines run the risk of becoming defunct in no time,” Meggison said.
Regulate to safety, survival not extinction
Aviation rules and regulations are binding, and it must be implemented to the letter. But making it antagonistic by tightening the noose for the sake of it will not help anyone, but erode confidence and hurt the industry.
National Association of Nigerian Travel Agencies (NANTA) President Bernard Bankole said the airlines and other stakeholders have a lot to gain working in harmony and with a policy direction for growth and mutual benefit.
Bankole said Nigeria should take a cue from countries, such as Ghana, that are creating the enabling environment for aviation to thrive.
He said: “Today, a lot of airlines still prefer to go to Ghana for fuelling or to make repairs. Why? Because they have made available the processes and infrastructure for the comfort of any airline that is coming to their country.
“I can say to you categorically that it is not possible for Airbus A380 aircraft to land in Nigeria. Even if they want to, we don’t have the infrastructure. That is one of the biggest aircraft in the world. But this same aircraft landed in Ghana.
“”What makes Ghana better of than us? This is not about politics; it is about doing the right thing. We have the capacity to do the right things; we just choose not to do them.
“There are a lot of things we can tap into. If the plan is to have Nigeria Air as our national carrier and it is not working out yet, are we saying there are no alternative plans to improve the sector?
“In what way have we supported the local airlines? Because the same problems facing the local airlines also lie in wait for the Nigeria Air and it will kill it within a short period. So, it will be just another white elephant project. It is high time we wake up from our sleep and understand that the aviation industry is a sensitive one that requires the government’s full attention.
“Because it is the fastest and safest means of moving from point A to point B. More so, when foreigners come into your country that is the first port of entry that showcases your worth as a nation.”
A call to mutual benefit
It is in this light that airlines like Air Peace are quite central both to the industry and the economy at large. They need the support to remain in operations and succeed.
With about 30 aircraft in its fleet, Air Peace alone has staff of over 4000 workers – which more than triple the entire Nigeria-based employees of all 35 foreign carriers plying the Nigerian route.
Gradual expansion of its fleet with the arrival of new aircraft will also expand the workforce to about 10,000 direct staffers and more than 50,000 in the auxiliary category.
A more stifling operating environment will not only affect jobs, but connectivity of over 14 million passengers that currently travel the entire network in a year.
