Stakeholders in the aviation industry have charged government to consider stimulus packages to support airlines towards aiding their smooth operations.
This they said, is necessary, in view of the slow recovery of the aviation sector from the COVID-19 pandemic and the socio-economic challenges plaguing the sector. Aside this, they also offered solutions to some of the challenges beclouding the aviation industry.
The guest speakers that spoke at the October breakfast meeting of the Nigeria South-Africa Chamber of Commerce (NSACC), sponsored by Phillips Consulting Limited to celebrate its 30th anniversary deliberated on the theme: Aviation in Nigeria: What Next?.The speakers are George Ureisi, COO, Ibom Air; His Excellency, Hadi Sirika, the Minister of Aviation; Ogbeni Rauf Aregbesola, Minister of Interior; Babatunde Adeniji, Aviation Management Consultant; Iyabo O. Sosina, Secretary General, African Civil Aviation Commission (AFCAC); Richard Aisebiogun, former Managing Director/CEO, Federal Airport Authority of Nigeria (FAAN).
Government should consider establishing a local aircraft lessor/financing vehicle that would allow for the domiciling of aircraft payments in local currency. This would make a huge difference to the Nigerian domestic airline business. We had a very good start, a very good one, if we go by the words of George Uriesi, the chief operating officer, Ibom Air.
Telling what he called Nigerian Aviation ‘little history” he called it a befuddling ‘irony’ because… “Nigeria started to play in this industry as early as its peers on the continent (“first aircraft into Nigeria 1922 and first commercial flight in 1936).
He said “Nigeria Airways was a well-established national carrier with a solid international reputation as far back as the early 1970s and totally professionally run! Nigeria Airways was the “first to land an aircraft (B707) in JFK with an all black cockpit crew in the early 1970s. Nigeria Airways was launch customer of the Airbus A310 in 1984.
“The airline was a repository of world class technical ‘know how’ that laid the foundations for the privately owned carriers that succeeded Nigeria Airways in the domestic airspace. That ‘know how’ itself was garnered from the world class Aviation Training College, Zaria, which trained most of the 1970s, 1980s and even 1990s classes of African aviation professionals across the continent.
“So, what happened?” he asked. “Don’t wait for me to tell you, because I don’t know for sure! But what do you think?” he asked.
Then he reeled out a list: A very faulty foundation! Institutional agencies: *Struggling to recover basic, international standard services, Sub-optimal domestic airlines: *Lacking investment *Struggling to meet critical forex obligations *Struggling to offer sustainable, reliable services; Government policy framework:,*More often than not missing the target (or the point).
According to George Uriesi, the Nigerian Aviation industry today is Frazzled…Disappointed… Frustrated…Unhappy…
But for him too, Nigeria’s ‘potential’ in aviation… reads: Largest domestic market by far on the continent, largest international market by far on the continent – a lucrative market with highly elastic demand that “fills up aircraft from the front”. The market is “first and foremost made up of Nigerians themselves; but everybody else other than Nigerian carriers are the beneficiaries of this unique, lucrative market…
Urieisi asked how can we change the narrative? Change the picture from this? They are really not rocket science!!! Let us just do what the rest of the world does!!! Take a look at the institutional agencies… Return to the basics – you cannot talk your way out of a situation that you have behaved yourself into! You will have to behave yourself out of it! We have to behave ourselves out of this!
For him, whatever we do about the agencies, what is needed is to “begin to provide reliable world class airport and airspace infrastructure and services. Stop arbitrariness! Encode Airport Master Plans into law! ILLEGALIZE non-adherence to Airport Master Plans.
Government policy framework…
• Government should consider establishing a local aircraft lessor / “financing vehicle that would allow for the domiciling of aircraft payments in local currency. This would make a huge difference to the Nigerian domestic airline business!”
• Give domestic airlines access to foreign exchange at the official exchange rate. (Airlines are a critical enabler of the engine of the economy).
• Support the interests of domestic airlines that want market access rights to foreign countries with which we have BASAs and be guided by the interests of domestic airlines in granting market access rights to foreign carriers
For George Uriesi, we need a foundation upon which to build the industry we all desire; we need a state of aviation in Nigeria:
• Where airports and air traffic control infrastructure and services are reliably world class and top notch.
• Where Nigerian airlines are succeeding, able to grow over a number of years and thrive, progressing and gaining major domestic, regional and international credibility.
There is need to chart a ‘creative’ means of accessing capital are necessary to help domestic airlines invest in modern equipment, so that they can grow to compete favorably and achieve the economies of scale needed to make the transition from ‘wannabe’, ‘shaky’ scheduled carriers, to successful, sustainable airlines!
The domestic airlines themselves (ok… ourselves), need to ‘professionalize’- Build the requisite organizational capability required to successfully run an airline.
Establish strong corporate governance regimes. Separate the airlines
from their owners.
Where government policy is consistent and reliably in tandem with the legitimate needs of the local industry.
• Where personnel are well trained, globally competitive professionals across the board.
And because of all of the above, the industry will thrive and Nigeria’s economic interests will be properly promoted, he said.
He argued that if do what the rest of the world is doing, “we can change the game in Nigeria if and when we really want to…” “It’s about having the will. If and when we eventually do have the will, we will make the way!”
Also in another vein, the Minister of Aviation, Hadi Sirika , pushed back on local airlines’ claims that they were fenced out of the bid for the new nation carrier, to favour Ethiopian Airlines.
Sirika said he had urged the local operators to acquire equities in the new carrier, but they refused.
The local operators and other stakeholders have been critical of the choice of Ethiopian Airline owning 49 per cent stake in the new national carrier.
Sirika, who spoke virtually, said he held six meetings with the local carriers on the need to buy shares in the new carrier but his overtures were rebuffed, wondering what the indigenous airlines really want.
He explained that the national carrier project came as a result of lots of gaps in the industry, “talk of the failure of the indigenous airlines in the past, and the one-man-show attitude of the carriers”.
The minister hinted that the creation of Nigeria Air, where the government holds only five per cent, was deliberate, adding that the five per cent equity would be sold to the general public.
He said: “The airlines, under the Airline Operators of Nigeria (AON), are scared that the new airline would lower fares and not allow a level playing field. But, any decrease or increase in fares would have to go through the Nigerian Civil Aviation Authority (NCAA) and stakeholders. These fears are unfounded. I told them this airline would not be given preferential treatment”.
Sirika added that he had been fair to local operators and supported their businesses. “None of them can complain that I turned down their requests. We are ever ready to support Nigerian airlines to Dubai, London, United States, and so many other places.
“They just need to organise themselves to take advantage of the burgeoning Nigerian and the African aviation market, which remains largely untapped.”
The minister also took a swipe at Nigerian airlines that had turned aviation into a philanthropic project, offering free services rather than seeing airline operations purely from a business angle.
There is nothing bad in helping to bring stranded Nigerians back to the country or offer humanitarian support to bring people home but it should not be done at the expense of the profit that should accrue to the airline. Airlines’ profits are very marginal. We have seen how airlines like Kabo and Okada Air went under. Airline business is a serious business,Sirika said.
Babatunde Adeniji, Aviation Management Consultant said that Aviation is an ecosystem that will fulfil its potentials as a tremendous force for good, if and only if, all its players and parts cooperate fully, while operating efficiently and effectively in their individual roles. The underlying poor economic structure of the industry must receive urgent care and attention from every relevant sector of the economy.
He added that the legal framework and governance, National and International economic policies, self-interest agenda, as well as our financial sector. We must centrally orchestrate these multifarious inputs to ensure its progress.
Moreso, former Secretary-General of the African Civil Aviation Commission (AFCAC), Ms. Iyabo Sosina at the said that Africa has a huge population of over 1 billion people, adding that in terms of global traffic, Africa accounts for just 3 percent of traffic.
According to her, “We have poor air connectivity, and we have low traffic because on some routes, the fares are just too high and so, there isn’t enough traffic. The cost of the ticket is prohibitive; a lot of people would want to travel to go see places, to go see people they cannot do it. The cost of tickets is high because the cost to the airlines is also high. There are various taxes and charges, and we have restrictive visa policies because, in Africa, everybody is afraid that they are coming to steal ideas, to dump people forgetting that Africa is not where people want to go but all the same, they keep protecting their own market.”
“African leaders sat down and said to themselves what can we do? They tried it years before and they thought let us give it a try again and see how they can help their airlines, how they can help their people, and how they can integrate Africa and they came up with the Single Africa Air Transport Market (SAATM). Why is it not working?”
The former AFCAC scribe explained that the African air transport initiative was not working because a lot of people do not fully understand the relationship between starting a single African air transport market and the Yamoussoukro Decision (YD) which she said was an initiative that was endorsed by the Heads of State in 1999.
“I dare say that it failed mainly because of the airlines because the airlines are not willing to venture out. They were afraid they were going to die and convinced their principals that if they open up they will die and that is why it has not worked. It still holds true for certain that once the airlines, powers, and shakers convince their governments not to open up, Africa will continue to suffer, and Africa will not become the giant that you have in the rest of the global space.”
“We also have high operating costs and that is one of the reasons it is not working, limited access to funding for airlines, and financing is difficult for them. I agree with George on that. The initiative that we put in to make it easy for airlines to access funds and improve their fleet and modernize their fleet these have not been utilized by a lot of our airlines.
Moreover, the head of research and intelligence, Phillips Consulting Limited (pcl), Samuel Bamidele said, Nigeria’s aviation industry is growing and recovering faster from the pandemic than global projection. He stated further that, while there are several pressure points or challenges facing operators in the industry, pcl expects the industry to continue on a positive trajectory.
To him, “one of the highlights of the Phillips Consulting (pcl.) Aviation survey report is the low capacity in the industry, which we infer from challenges passengers face with securing urgent tickets and increased costs for late bookings. In addition, we found that 16.24 % of survey respondents do not prefer any airline, indicating that existing competition and potential new entrants are strong challengers for market share.”
Senior partner, PCL, Paul Ayim, on his part, said the firm launched the aviation Center of Excellence (CoE) as a vehicle to research and disseminate best practices in the sector, while facilitating alignment of structure, processes, people and metrics to strategy.
Meanwhile, commercial partner, PCL, Dele Phillips, said the firm will continue to serve as a hub for excellence towards achieving its growth trajectory as a people and for the nation.
“This great place to work is much more than an organisation but also a haven for over 200 Alumni members who have passed through and given pcl, their utmost best. We thank everybody that has been a part of our success story and look forward to a bold future of transforming possibilities with you,” Philips said.
Particularly with the 787, there remains a lack of certainty around production. However, the supply chain bottlenecks cascade throughout the aerospace industry hitting companies such single-engine light aircraft manufacturers such as Cirrus-Aircraft.”
The Nigerian aviation sector has spent $192bn in 2022 on aviation fuel alone, a report by Philips Consulting Limited said.
According to the report titled, ‘Nigeria’s Aviation Industry Customer Satisfactory Survey Report 2022’, obtained by in the first six months of 2022, the jet fuel price rose to 70 per cent.
The report noted that the figure indicated one of the steepest jump in jet fuel since 2022.
It also said that the increased jet fuel price now represented a significant challenge for the airlines in the first six months of 2022.
“Fuel is the industry’s largest cost item with $192bn in 2022. The ongoing war in Ukraine, which keeps prices for Brent Oil high, continues exacerbating the situation. The increased jet fuel price now represents a significant challenge for airlines in the first six months of 2022. Jet fuel price rose more than 70percent indicating one of the steepest jumps in jet fuel price since 2022.
The rise in jet fuel is driven by the soaring crude oil price following Russia invasion of Ukraine in February 2022 when the Brent crude oil price rose by 11percent.”
The report said that Airbus was facing challenges in improving its production rate of A320 family to 65 per cent in mid-2023.
It added that Boeing had a massive overhang of already built parts in inventory.
“Particularly with the 787, there remains a lack of certainly around production. However, the supply chain bottlenecks cascade throughout the aerospace industry hitting companies such single-engine light aircraft manufacturers such as Cirrus-Aircraft.”
In the report, PCL lamented high marker exit by both domestic and foreign operators.
“It’s traceable to mismanagement of fund, poor safety compliance, limited infrastructure and stifling regulatory policies.”
The chairman, NSACC, Osayaba Giwa-Osagie (SAN), who championed the call for stimulus packages to airliners, said, there is a need for the government to implement policies and develop infrastructures that will strengthen the sector.
Stressing that stakeholders should constantly engage government on ways to reposition the sector to be profitable and competitive, he urged air line operators to adopt creative initiatives to help manage cost and build efficiencies.
The aviation industry, he said, is a veritable tool for income generation and economic development in Nigeria, adding that, “the Nigeria Aviation industry has grown in size, capital, investment, safety and quality management system. The sector is fundamental in facilitating trade, investment and tourism.”