Despite the global economic hardship recorded in 2018 which did not exempt the country’s domestic airline business, one cheerful piece of news is that airline business in Nigeria within the period recorded 20.8 per cent upsurge in traffic as a return on investment for committed local operators.
Confirming this, the Consumer Protection Directorate of the Nigerian Civil Aviation Authority (NCAA) through an analysis recently released on how airlines fared in 2018, indicated that within the period, no fewer than 14.2 million passengers traveled through the country’s airports.
The traffic represented an improvement of 20.8 per cent in passengers traffic compared to 2017 with an estimated record of 11.2 million.
According to the figure released by the NCAA, while 34 airlines on the international routes flew 4.08 million passengers, nine domestic airlines collectively recorded the 10.09 million passengers mark in 2018.
The record which represented significant leap after a very long time of low performance in the history of airline traffic in the country shows how Nigerian carriers can do well if given a more business-friendly environment.
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Air Peace, a local airline still standing
The status of the airlines says much about the environment and the potential that abound too. Med-View Airlines, a Nigerian airline with the support of First Bank Plc and foreign partners was able to acquire a B777 aircraft for its Hajj operations and revived the truncated London and Dubai operations. Painfully, the airline has, however, continued to gasp for air after downsizing its operations and staffers lately.
Arik Air is another airline that has its own share of the challenges. Following its takeover by the Asset Management Corporation of Nigeria (AMCON) in February 2017 and with the injection of N1 billion, the airline though showed a sign of stability, but was far from total recovery. Besides paying salaries and meeting basic obligations, only nine out of the 30 aircraft owned by Arik which returned to operation have been sustaining both local and regional operations.
Amidst the torrent of challenges tearing the domestic airlines down, Air Peace, to many key players, has become the most stable of the airlines controlling about 40 per cent of the total passengers on the local front in 2018.
The airline’s style of governance has given room to professionalism in line with the rules of the game, coupled with the efforts of the airline owner to avoid running the airline as a one man show. With the airline’s resolve to invest massively in the acquisition of sophisticated aircraft that can compete favourably with the mega carriers of this world, the four-year-old airline has been able to prove to the world that if given a level playing field, Nigerian airlines can do better. With its performance, Air Peace has succeeded in becoming a pacesetter by making a strong case for Nigerian flag carriers on regional and international skies, even as “no city is left behind” on the home front.
To this effect, the airline recently placed a firm order for 10 brand new Embraer 195-E2 aircraft. The order comprises purchase rights for another 20 E195-E2 jets. Also, it expects a 124-seater jet in dual class and 146-seater jet in single class configurations respectively. With all purchase rights exercised, the contract is valued at N640.5 billion ($2.12 billion) based on current list prices.
The carrier also set a regional record in September 2018 when it ordered 10 brand new aircraft from Boeing, increasing its fleet size then to about 37 aircraft. With the new order, Air Peace’s fleet size has increased to 67 aircraft.
Air Peace had earlier set a domestic record as the first Nigerian airline to acquire and register the Boeing 777 aircraft in the country. Three of the four wide-body aircraft it acquired for its long-haul operations to Dubai, Sharjah, Johannesburg, London, Houston, Guangzhou and Mumbai have so far been delivered.
While key players in the sector marvelled at the unparalleled investment in capacity, they are however optimistic that the 14 million passengers’ record may as well double in a year, when at least half of Air Peace new orders join the current operating fleet. But, the worry is the systemic hurdles that will shackle the enormous potentials and attendant benefits.
Multiple taxes and charges
Prior to now many of the airlines had cried blue murder over the number of taxes put at 32, which they are being subjected to by the government agencies. The airlines said taxes and levies at airports nationwide account for at least 65 per cent of revenue accruing to them. Besides the five per cent charge on every ticket bought by passengers, which goes to all the five regulatory agencies, there are other “illegal” charges on the operators.
Such multiple charges include: a second popular five per cent Cargo Sales charge, five per cent Value Added Tax (VAT), Passenger Service Charge of N1000 per ticket on local routes, Charter Sales Charge, Aircraft Inspection Fees, Simulator Inspection Fees, Landing Charges, Parking Charges and Terminal Navigational Charge. Others are Enroute Charge, Fuel Surcharge, Airport Space Rent, Electricity charges, Apron Pass, ODC, Registration Fee, Service Recovery Charge, Processing Fee, Avio Bridge, Aircraft Registration and Processing Fee.
The airlines also pay: toll gate fee, vip lounge, trolley service, clearance fee, check-in counter charge, courier/tarmac/pre-release charges, import charge (Dom), export charge (Dom), import royalty, export royalty, ports charge, exports charge, transhipment, and concession fee.
Together, these charges eat deep into earnings of the airlines leaving them with less than N10,000 on a passenger ticket sold at an average price of N30,000.
Speaking on this recently, the Chief Executive Officer of Air Peace, Allen Onyema, said if this current regime of taxation was not removed that no airline will survive.
Onyema said that though the charges had been in the system for long and some of them as fallouts of legislations, he however said it was high time they were reviewed to ease the burden on commercial airlines.
“Let even the government raise a consulting firm to go round the country to find out why airlines have been dropping off. Heavy taxation is part of it. We are suffering. Air Peace supports payment of taxes to government; no government runs without the citizens paying tax. Airlines must pay their taxes. What we are asking is for these taxes to be streamlined in such a way that it will help us to help the government and help the country.
“Commercial airlines are a catalyst to economic development in any country. That is why every country supports its airlines. We are not asking for any financial assistance but for an enabling environment that makes things work. It is not complimentary for us as a country that all our airlines are dying,” Onyema said.
AON reacts
Speaking recently, Chairman of the Airlines Operators of Nigeria (AON), Captain Nogie Meggison, observed that out of the over 50 indigenous airlines that had existed in the country in the last 18 years, only nine are still flying.
According to Meggison, while mortality rate of airlines in Nigeria is high, the contradiction is that the owners of the defunct airlines have been successful in other business endeavours except in aviation.
“Could all of them have been responsible for the failure of their airlines? The answer is no! Rather, the unfriendly policies and harsh operating environment have been the bane of aviation sector’s growth in Nigeria. We are mindful of the fact that if these issues and policies are not addressed urgently, the remaining airlines run the risk of becoming defunct in no time.”
Reviewing unfriendly policies
Though, aviation rules and regulations are binding and must be implemented to the letters, stakeholders have, however, cautioned that making the regulations antagonistic by tightening the noose just for the sake of it will not help anyone, but erode confidence and hurt the entire sector.
In line with this, President of the National Association of Nigerian Travel Agencies (NANTA), Bernard Bankole, said the airlines, as well as other stakeholders, have a lot to gain working in harmony than in silos and with a policy direction for growth and mutual benefit.
Bankole said Nigeria should take a cue from countries like Ghana that are creating the enabling environment for aviation to thrive.
“Today, a lot of airlines still prefer to go to Ghana to fuel up or to make repairs. Why? Because they have made available the processes and infrastructure for the comfort of any airline that is coming to their country.
“I can say to you categorically that it is not possible for Airbus A380 aircraft to land in Nigeria. Even if they want to, we don’t have the infrastructure. That is one of the biggest aircraft in the world. But this same aircraft landed in Ghana.
“What makes Ghana better off than us? This is not about politics; it is about doing the right thing. We have the capacity to do the right things, but we just choose not to do them.
“There are a lot of things we can tap into. If the plan is to have Nigeria Air as our national carrier and it is not working out yet, are we saying there are no alternative plans to improve the sector?
“In what way have we supported the local airlines? Because the same problems facing the local airlines also lie in wait for Nigeria Air and it will kill it within a short period. So, it will be just another white elephant project. It is high time we woke up from our sleep and understand that the aviation industry is a sensitive one that requires the government’s full attention.
“Because it is the fastest and safest means of moving from point A to point B. More so, when foreigners come into your country that is the first port of entry that showcases your worth as a nation.”
Why FG must protect local airlines
It is in this light that airlines like Air Peace are quite central both to the industry and the economy at large.
With about 30 aircraft in its fleet, Air Peace alone has staff strength of over 4,000 workers – which is more than triple the entire Nigeria-based employees of all 34 foreign carriers plying the Nigerian route.
A more stifling operating environment will not only affect jobs, but connectivity of over 14 million passengers that currently travel the entire network in a year. The Federal Government really needs to engage in international aero politics for the survival and sustainability of the indigenous carriers like e Air Peace.
and then