The International Air Transport Organisation (IATA) has condemned the Federal Government over what it called excessive taxes and charges which it said have been hindering the growth and profitability of the indigenous carriers.
Speaking at the ongoing 7th Aviation Africa summit and exhibition in Abuja, Vice president, IATA, Africa and Middle East, Kamil Al Alwadhi, said research shows that Nigeria ranks highest in airport charges in Africa with Abuja airport becoming the most expensive airport in Africa followed closely followed by Lagos airport.
Presently, there are about 27 charges imposed on airlines by the Nigerian government.
The IATA VP lamented the stagnant growth in the region, especially Nigeria, urging the Nigerian government to create a conducive environment for airlines to thrive.
“In a recent research conducted, we discovered that the most expensive airport in Africa is Abuja airport, followed by Lagos airport, with all these exorbitant charges, Nigerian airlines can’t compete with their foreign counterparts.
“Africa has put itself in a a place where it cannot help its own, expensive fuel, excessive charges, leasing and insurance through the roof, the airlines need to be financially viable too. The airlines contribute to the country but Nigeria needs to decide what to do to them to survive.”
According to him, carriers based in Africa are expected to generate a moderate combined loss of around USD 484 million in 2023 because the continent remains a difficult market in which to operate an airline, with economic, infrastructure and connectivity challenges impacting the industry performance.
“However, despite the challenges, the industry continues to move towards profitability following the COVID-19 disruption which could be in the black as soon as next year.”
According to Al-Alwadhi, underpinning this is the robust demand for air travel. As we saw in the second quarter of 2023 – and for two consecutive quarters – African carriers had one of the world’s highest annual passenger traffic growth rates, second only to Asia Pacific.
“With total traffic up 38.9% compared to the same quarter in 2022, African carriers’ growth outperformed the industry-wide average for total and international traffic, even though the region has not fully recovered to pre-pandemic levels. Q2 2023 RPKs were 9.2% below the same quarter in 2019. Despite this continued positive performance, the region still confronts economic challenges that severely limit the affordability of air travel, in addition to a range of infrastructure issues that curb capacity and hinder the development of consistent air service.
Looking further ahead, over the next 20 years, he said Africa’s passenger traffic will double, eclipsing 300 million passengers by 2040 at an annual average rate of 3.4%.
“As you can see, the continent stands out as the region with the greatest potential and opportunity for aviation. But this potential is limited by safety incidents, infrastructure constraints, blocked funds, high costs, lack of connectivity, regulatory impediments, slow adoption of global standards and skills shortages, among other factors.
“The issues that have conspired to affect the continent’s carriers he said are high interest rates at over 25% which he further said are killing the carriers and one that has prevented them from competing with their counterparts in other parts of the world.
“Equally worrisome to him is aircraft lease rental rate which he said are three times higher than Europe, with charges he stated that are killing.
“Fuel is higher by 20 percent. The loans are horrendous. The continent needs to review these issues. If you want to see Gross Domestic Product (GDP) change, just fix your aviation industry. Doha, Dubai and the entire United Arab Emirates (UAE) grew from nothing.”
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