Nigeria’s aviation sector in a precarious state

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3 years ago

For some time now, the entire length and breadth of Nigeria, particularly its aviation sector, has been enmeshed in different controversial issues that have called to question the integrity of doing business in Nigeria.

On the local scene, domestic airlines are almost being swallowed up by the myriad of challenges threatening their continuous existence with no solution in sight.

Among such challenges are the astronomical increase in the price of aviation fuel which used to be sold at N200 as at February this year but has now risen to N780 and the unavailability of foreign exchange for them to conduct their transactions.

The crisis and the failure of the government to act promptly has started taking its negative toll on the local airlines with the oldest of the airlines, Aero Contractors, announcing its decision to temporarily shut down its scheduled operations.

Besides Aero, information is flying around that some other airlines are on the verge of parking up due to the lackadaisical attitude of the government towards addressing pressing issues.

The airlines, while speaking through their umbrella body, the Airline Operators of Nigeria (AON), have called for a review of many unpopular policies of the government or they may be forced to shut down operations.

As the drama continues on the local scene, the same story abounds with the business relationship the country has with the over 30 foreign airlines operating the country.

It is globally known that Nigeria has been indebted to the foreign carriers to the tune of $450 million being accrued funds generated by them through the services rendered to the Nigerian flying public but trapped in the Central Bank of Nigeria (CBN) for years.

All efforts made by the airlines and even the International Air Transport Association (IATA), the clearing house for over 300 airlines across the world, to make the Nigerian government pay this statutory fund failed with nothing tangible coming from the government.

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It is again on record that the failure of the government to release this huge fund, which has portrayed Nigeria as a place dangerous to do business, has however, started having negative impacts on the Nigerian travellers who now suffer through the prohibitive fares they pay to the foreign carriers.

Presently and as expected from a good business point of view, the airlines, in other to survive the hardship Nigeria has thrown at them by withholding their funds and preventing them from repatriating such funds to their home countries, have decided to stop the sale of lower fare tickets to Nigerians while the cheap tickets category is available in other parts of the world.

Just as travelling Nigerians are made to pay for the negligence of the Federal Government, even the Nigerian travel agents who hitherto used to survive on ticket sales for the foreign carriers, have suddenly been thrown under the bus as the decision of the foreign carriers to stop them from accessing cheaper ticket sales have negatively impacted their business.

While the government may escape from its negligence of handling issues affecting its domestic airlines with levity, this may not be possible with the foreign carriers in view of the international best practices guiding principles of honouring business agreements.

Government cannot foot-drag on the payment of foreign carriers for too long as any attempt to do so may boomerang on the entire aviation sector.

While it is agreed that the global business, particularly airlines, are grappling with the issue of expensive aviation fuel, the Nigerian government must have been caught up in some unpopular policies it previously took like the bad decision to suspend the collection of the royalties and other Bilateral Air Service Agreements (BASA) funds originally paid by foreign carriers.

The government took the decision then without due consultation with experts in the sector and subsequently denied the sector of what would have been an alternative avenue for raising funds to tackle emergency issues like the trapped funds.

Had the government not messed with the issue of the BASA account which was domiciled in foreign currencies, perhaps the account and the royalties would have, to an extent, taken care of the foreign airlines trapped funds.

It is obvious that the government is getting overwhelmed with many issues confronting it from all angles. There is however, an urgent need for it to think out of the box and find a way of offsetting the foreign carriers’ money in other not to further damage the image of the country before the world just as it becomes pertinent to review some of its policies as they affect domestic airline business. Failure to act on these critical issues may spell doom for the entire sector and its domestic airline business.