In the last 4 weeks, stakeholders in the Nigerian aviation sector, particularly Nigerian Airlines, have been celebrating milestones of achievements; from the celebration of the 10years anniversary of the startup and operations of Air Peace Airline with the expectation of more new aircraft in the coming weeks to add to its growing fleet, to the receipt and commissioning of two Bombardier CRJ-900 net generation aircraft by Ibom Air, with 9 remaining Airbus A220-300S from airbus in the next 3 years – for domestic and startup of regional flights that will be taking-off from Uyo International Airport; United Nigeria Airlines took delivery of its first Embraer 190 aircraft to grow their fleets, XEJet Airline, a new Airline also commenced operations with its maiden scheduled flight from Abuja and Lagos, etc. This is cheery news for the Aviation industry and Nigeria because this signifies growth in an industry that has been resilient despite the challenges it has been facing pre, during, and post-COVID-19 pandemic.
Therefore, I give kudos to the owners and leaders of Air Peace, Ibom Air, United Nigeria Airlines, and XEJet for their vision and determination in the face of harsh economic realities and tough operating environment.
I also commend the Honorable Minister of Aviation and Aerospace Development, of the Federal Republic of Nigeria, Mr. Festus Keyamo SAN, for his consistent support of Nigerian Airlines and the Aviation sector in general, through policies, domestic and international stakeholder engagements, enforcement if regulations, and pushing for better opportunities for Nigeria Airlines and other operators in the aviation sector. The Honorable Minister has been very visible, vocal, and impactful in the past 1 year since he came into office. I look forward to the deepening, expansion, and sustained efforts by the Honorable Minister, and his team to ensure success. I also urge all industry practitioners to continue the good work of supporting the industry.
However, in my view, one of the best supports that Minister Keyamo will give Nigerian Airlines is to come up with an all-inclusive approach to restructure, re-capitalize, and re-position Nigerian Airlines for better performance, resilience, and sustainability. This can only be achieved by crafting a proper strategy based on which new/ additional coherent policies that will support the strategy will ensure a re-solidified foundation, more capacity, better credibility, success, and sustainability. With profound respect, we can’t throw policies at all problems.
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The sectoral overhaul has become necessary, in my view, due to the declining number of operational aircraft, high mortality rates of airlines in the past 25 years, and rising cost of tickets, which is sometimes a subset of rising cost of operations like the aviation fuel, due to global and national economic headwinds like inflation and multiple taxation, harsh operating environments, etc. The Honorable Minister was very clear in his statistics with regards to the rate of the death of the airlines, the numbers of the airlines that are not able to take up to the skies anymore and had to shut down over the years, while others are facing regulatory compliance issues. Additionally, others are struggling to turn around the maintenance of their aircraft, etc. Scale and scalability are critical success factors in the airline business
Accordingly, it is time for us to have some forward-thinking conversations about why or how we can save this very important and value-adding player in the socioeconomic development of this country. How do we save the ailing airlines (if possible) to recover from the current situation? How do we put policies, processes, and systems in place to safeguard this type of “one step forward four steps backward”, trajectory of Nigerian airlines? Unless those questions are adequately addressed, we run the risk of having to face a reality we don’t want to face, which is; in the mid to long term, foreigners coming to invest and taking control and majority stake in the aviation industry just like it is happening in a lot of other sectors in Nigeria’s economy. For instance, it is so bad that we are not able to develop a capable competition with DSTV, MTN, etc.
On the one hand, we need to support those very good Nigerians who are currently operating, albeit struggling to weather the strong socio-economic headwinds. Without prejudice to any airline in Nigeria, I use three Nigerian airlines as case studies in this conversation, and they are; Overland Airways, Air Peace Airline, and Ibom Air. These are 3 airlines that have come at different times, under different circumstances are adding critical values, interestingly, within very interesting niches. In my view, Overland Airways is the currently most sustainable airline, having been operating smoothly, and efficiently in the niche. Captain Edward Boyo, The CEO of Overland Airways; a veteran in the industry who had been efficiently running that airline for over 20 years. The Airline has demonstrated consistency for over 20 decades with a very good track record of safety. Captain Boyo has also demonstrated prudence, and excellent leadership in running the Airline.
I congratulate Air Peace for celebrating 10 years of efficient, growing, and value-adding operations. Dr. Alan Onyema, the Chairman, and CEO, has added value to the industry in ways and means that have not been done before in the recent history of aviation in Nigeria. Dr. Onyema has gone beyond just operating in the industry to even adding value in philanthropy and where Nigerians need help outside this country, he has gone far and beyond to deliver those support services for Nigerians free of charge
In the case of Ibom Air, here is the state government-owned airline, and the second government-owned airline after Nigeria Airways; that has been successful from startup. The Akwa Ibom State Government under the visionary leadership of the immediate past Governor, His Excellency, Mr. Emmanuel Udom was able to deliver this excellent project where even federal governments have failed. This is so, especially when the current Governor, His Excellency, Pastor Umo Eno has continued the good work by consolidating the position of Ibom Air and guiding the execution of the Strategic blueprint. The success of Ibom Air is basically because the Government entrusts the leadership of Ibom Air under the leadership of Captain Mfon Udom as Chief Executive Officer, and Captain George Uriesi, as the Chief Operating Officer. These two aviation experts and leaders are indeed a classic case of “round pegs in round holes”.
For the longevity, profitability, and sustainability of Nigerian airlines, we must deal with strategy, corporate governance, minimum acceptable standards in terms of leadership and management structure, Financial capacity, risk management, prudence, operational model/ excellence, etc.
Therefore, the government needs to come from a strategic and policy point of view to recapitalize this industry and set standards such that people have to come together to form alliances and strategic partnerships to build strong airlines as institutions and bring the requisite capacities and competencies to run the airlines in ways and manners that will not just be operational, but they will be profitable, they will be value adding to the economy sustainable. This is a very important panacea for the turnaround of the Nigerian airline industry.
Based on the aforementioned points, the Ministry of Aviation and Aerospace Development needs to have a new or to fine-tune the existing aviation reform strategy. This will ensure that we have a strategy that fits into the international realities to grow our domestic airline business, and to make our domestic airline more robust and competitive in the domestic and international market.
Just like what happened in the banking industry some years ago, based on which he banking industry is undergoing a third phase of recapitalization, Nigerian Airlines must also be restructured, recapitalized, and repositioned as such. With all due respect to the Airline owners; They can only guarantee the sustainability of their airlines if they consider and adopt strategic partnerships and collaborations. So, we would like to see synergies between the players. This can be achieved by the Airlines themselves for the federal government to make that happen or for the airlines. The Airline owners and leadership should review the situation from the strategic and profitability point of view or survival point of view; to realize that they are better off as partners or getting new partners to grow to have more a fleet of aircraft to have economic off-scale to grow but where you have individuals put in their funds The only thing that will happen maybe short, mid to long time is reality will hit us. Foreign investors will come, put in the money, and start eating into the domestic market, killing our own brothers and sisters who are invested.
Moreover, they need partnerships local and international to grow. And for the government to bring in a regulatory fiat or regulatory framework to ensure that we have what I call “a recalibration” or “remodeling of the sub-sector for sustainability. I hope and pray that this reform will happen for the good of the industry and the Nigerian economy in general.
In subsequent episodes, I will continue expounding on this important topic, including the economics of the reform, infrastructure, some prudential guidelines to ensure product quality, and quantity, regulatory shortfalls, some prudential guidelines, etc. Thank you.