Africa contributes only 3 percent to global passenger traffic, according to a report published by the International Air Transport Association (IATA). That means out of the estimated 1.1 billion population of the continent, less than 10 percent flies. This unveils a lacuna in the business model of African airlines which must be addressed, aviation pundits have observed.
Speaking at the just concluded 12th Akwaaba African Travel Market 2016 in Lagos, the experts noted that high cost of fuel prices and multiple taxes have prompted uncontrollable rise in ticket rates, making the air transport business unaffordable to majority of Africans.
They posed that survival of the airlines depends largely on patronage of the travelling public. According to former Managing Director of the Federal Airports Authority of Nigeria (FAAN), Mr. Richard Aisuebeogun, it was time to shift focus from harping on efficiency, sustainability and profitability of the airlines to affordability.
Of course, affordability of the airlines is key to attracting more Africans into flying. It only points to the fact that even if Africa has the best airports, best airlines and the best of aircraft, the airlines will continue to incur more loss if they don’t attract more people into flying.
Aisuebeogu observed that the growth is heavily constrained by the high industry costs, inadequate infrastructure at several airports, slow implementation of the Yamoussoukro Decision, lack of single rights negotiating body with respect to third parties like the EU.
However, he noted that even in the face of the mentioned challenges, demand for air transport has increased steadily over the past years with passenger numbers and freight traffic growing significantly.
Over the period 2010-2015, Africa will be one of the fastest growing regions in the world in terms of international traffic with an average growth rate of 6.1 percent compared to the global average of 5.8 percent. However, African aviation needs to grow at double-digit rates to be a significant player in the global industry.
Middle East and Asia-Pacific will however surpass Africa’s growth at 7.9 percent and 6.9 percent respectively Europe, Latin America and North America are projected to record lower international passenger growth of 5.0 percent , 5.8 percent and 4.9 percent , respectively.”
He continued that: “On the other hand for Africa, the positive growth trend is expected to continue in the coming years due to political stability, robust economic growth, demographic boom, increasing urbanization, and emergence of the middle class.”
Another panelist at the event, Chief Executive Officer of Ropeways Transport and former Managing Director of Virgin Nigeria Airlines, Captain Dapo Olumide, observed that lack of good corporate governance and ethics is the major problem why African Airlines fail in Nigeria and Africa.
Olumide pointed out that the ownership structures of the airlines is another factor where the owner appoints family members as directors instead of independent directors who are experienced in aviation business.
He stressed the need for airline operators to have the right aircraft in their operation to determine which aircraft type suits their operations and not just deploying big aircraft on a route that has fewer passengers.
According to him, it does not make economic sense in deploying big aircraft instead of a small one on a route with less passenger traffic. He observed that the business plans must be right, adding that in most cases the airlines business plans are always wrong.
Olumide also identified the problem of maintenance, where there are no maintenance facilities in the country to carry out major repairs and overhaul on aircraft as another problem facing the industry in the country. He stated that until all these are sorted out and corrected, the industry might be in a circle.
In her contribution, the former director of consumer protection of the Nigerian Civil Aviation Authority, Mrs Fatima Garbati identified the problems of aviation in Africa to include fear, altitude and refusal to obey international conventions.
She noted that some African countries are afraid that countries like Nigeria with its big population and potential will dominate them.
Mrs Garbati observed that this is responsible for why the Yamoussoukro Declaration of 1988 on open skies for Africa has not been implemented till today.
She stated that Africa needs to wake up to their responsibilities to make aviation work.
Garbati noted that even the Customs Service at the gateways like airports and seaports are totally indifferent to issue of clearance of airlines equipment and others.
In the same vein, former Kenyan Airways, Virgin Nigeria and now Rwandair senior executive, who is from Kenya, Dorcas Aketch maintained that African Airlines consider themselves as competitors instead of partners.
She said if fear among the operators in African aviation can be removed, it will help the industry to grow.
Mrs Aketch noted that there is need for the airlines to interline, adding that it will be better for the domestic airlines to interline with the foreign airlines.
According to her, working as partners and not competitors will make the airlines grow in Africa.
Speaking also, the former managing director of Skyway Aviation Handling Company Limited, SAHCOL and the Vice Chairman of the company, Mr. Chike Ogeah stated that it is better for Nigerian airports to concessioned so that they will be operated professionally.
He appealed to the aviation unions to see reasons with the government on why the airports must be concessioned.
He advised that the concession should be done in a very transparent manner, stressing that concession of the airports is the best way to go.
He cited the example of how SAHCOL was repositioned from a struggling company to one of the leaders in the industry in the area of aviation ground handling business after privatisation.
In his contribution, Edmund Yomi Jones, former MD of Nigeria Airways noted that the problem of aviation in Nigeria is that of corruption.
He emphasised that the Nigerian Airways model was a goldmine which was mismanaged.
He stressed the need for transparency in the aviation industry so as to eliminate the problem of corruption in the industry, adding that without this the industry cannot move forward. He lamented how Nigerian Airways properties were sold with out due process by those in charge.
In his remarks also, former general manager public affairs of Nigerian Airways and managing partner of Belujane Konsult, Chris Aligbe stated that the FAAN system is what is incompetent and not the staff.
He said the FAAN staff are very intelligent people who are working in an incompetent system. According to him, the concession of Nigerian airports is very imperative as there is no alternative to it.
He however urged the government to carry the FAAN staff along in the process of concession of the airports.
Aligbe stressed the need to get the right people to manage the country’s airports and the need to address the problem of the industry so as to move it forward.
Also, a search and Rescue expert, Capt Mike Omokore in his contribution identified the problem of finance as one of the major problem factor militating against the growth of airlines in Nigeria and aviation in Africa.
He said the high interest rate of 25 percent by the banks is what is killing the industry.
According to him, any business that started borrowing money at 25 percent interest rate will never succeed.
Also speaking, captain Samuel Thompson of African World Airlines, AWA and Ghanian stressed the need for the airlines, the industry to do things differently.
He advised the airlines to have their own unique business plans which should be totally different from others to succeed where others fail.
This Managing Director of SAHCOL, Mr. Rizwan Kadri, an Indian gave reasons why airlines fail in Africa, ranging from high cost of aviation fuel, to poor management skills among others.