Africa: Chinet: Why our Aviation Industry Is Weak and Airlines fail in Nigeria – Fmr. MD FAAN

Airlines

High coast of Jet A1, charges, taxes, levies and high mortality rate of the Nigerian airlines have been attributed as some of the reasons the country’s aviation industry has remained weak despite its huge potential.

Mr. Richard Aisuebeogun, former Managing Director, Federal Airports Authority of Nigeria (FAAN), stated this in his presentation titled: ‘Viability of Airport in Nigeria – Why Airlines Fail,’ at the Chinet Aviation & Cargo Conference held recently in Lagos.

According to Aisuebeogun, absence of aircraft cemetery, under-developed aviation value chain like the Maintenance, Repair and Maintenance (MRO) facilities, simulator centres, fuel depot, unstable exchange rate, systemic corruption, policy somersaults, low propensity to fly and under-utilisation of the Bilateral Air Service Agreement (BASA) arrangements, also impeded negatively on the growth of the industry in Nigeria.

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Besides, he decried that low utilisation of aircraft by airline operators due to airports’ limited operating hours, lack of codeshare; foreign and domestic, weak air cabotage regimes and lack of adequate General Aviation had further compounded the woes of the sector in Nigeria.

Furthermore, he mentioned low capacity of Nigerian airports as another factor militating against the sector growth.
He said: “Higher capacity utilisation brings in profit and reduces cost of providing services, making a business more competitive and productive.

“Accordingly, businesses usually aim to operate as close to full capacity as possible. Due to high operating costs, less than 80 aircraft are operated by airlines in Nigeria in a market that could accommodate over 200 aircraft.

“Operation of commercial air transportation is guided by specifications for airworthiness, which entails Maintenance, Repair and Overhaul (MRO) services. However, desirable MROs for aircraft such as Boeing 737, Boeing 787s and Embraer ERJ-170/190s, which are largely used in Nigeria, are not available in the country.

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“An alternative could have been an Aircraft Leasing Companies (ALC), but they are also unavailable in Africa. Airlines in Nigeria patronise MROs abroad to carryout various levels of maintenance for their aircraft at high costs.”

Aisuebeogun in his presentation also identified multiple designation, competition empowered by African Continental Free Trade Area (AfCFTA) and the Single African Air Transport Market (SAATM) initiatives, unstable polity, epidemics, pandemics, terrorism, aging infrastructure, aging workforce and continuous currency depreciation as some major threats to profitable airline operations in Nigeria.

On the failure of Nigerian airlines and their short lifespan, Aisuebeogun mentioned mismanagement, corruption, high debt profile, legal suits, wrong business approach, suspension of Air Operators’ Certificates (AOCs), air crashes and incidents, unstable forex, refusal to restructure and consolidate, route depletion, regulatory policy and high fixed and variable costs.

In a bid to save the sector from total collapse, Aisuebeogun advocated for implementation of business rescue plans for ailing airlines, upgrade of airport infrastructure like the Instrument Landing System (ILS), Approach Lighting System (ALS) to international standards and the need to lobby the African Development Bank (AfDB) to prioritise and fund aviation sector initiatives in Nigeria.

Others according to him included boosting of tourism development initiatives, set up of aviation development fund to close all viability gaps, implementation for hybrid in Private – Public Partnership (PPP) in airport management and administration, optimisation of commercial revenue in non-performing airports, exploration of non-aeronautical revenue, increased government will in infrastructural development and implementation of the aviation sector road map.

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