Local airlines should not die
Which is the main domestic airline in Nigeria? The answer to this question changes by the day. Today it is Aero, tomorrow it is Arik, and then it is Air peace. In the past, we had Chanchangi, Sosoliso, Bellview, Oriental airlines and others that are no longer in operation. The rate of failure in the aviation industry in Nigeria is very disturbing considering the critical role airlines play in the economic development of every nation. Not only does it increase world trade activity by enabling faster and easier movement of passengers and goods, it also provides jobs to millions of people.
This is why we are worried by the recent revelation by the Airline Operators of Nigeria (AON) that over 50 local airlines have collapsed in the last 30 years. Alex Onyema, vice president of AON disclosed this on Thursday 10th December, 2020 when members of the association paid a courtesy call on Senate president Ahmed Lawan in his office. He further stated that the aviation industry has been constantly threatened by imposed taxes and charges.
Agreed, COVID- 19 has worsened the situation for airlines all over the world, but Nigeria’s problems started long before COVID 19. Many Nigerian airlines both alive and dead have a similar story. The struggles on both the cost and revenue side have made failure the norm. Government policies have not been friendly to the operators.
That over the last 30 years in Nigeria, over 50 airlines have gone down is not something to be happy about. Even when the owners of these airlines succeeded in other businesses, why did they fail in aviation? It could be traced to so many factors including corporate governance, but most importantly, policies. The policies have not been friendly to the growth of aviation industry. The waivers granted to the operators by both previous and present administrations for the importation of commercial aircrafts and spare parts were observed in breach by both government agencies and the operators.
Obtaining bank credit is another challenge. Many of the operators borrow money at high interest rates. Despite the fact that everything about aviation business is imported, most of the operators find it difficult to obtain Foreign Exchange to do their business. Multiple taxation, cumbersome visa procurement process and expensive aviation fuel are other challenges facing the industry.
The problems plaguing the aviation industry would be solved if government has the political will, commitment and vision to do so.
Nigeria can develop its aviation sector when it limits the operations of foreign airlines to create opportunity for local airlines to flourish and modernise the airports through public private partnership.
The International Air Transport Association (IATA) projects that enhanced intra Africa air connectivity and improved domestic services would generate about 17, 400 jobs and add about $128.2 million annually to Nigeria’s GDP. This cannot be realised with the present infrastructure decay at airports and hostile operating environment.
For Nigeria to grow and have strong flourishing, indigenous airlines, government must create opportunities for them to maximise the huge passenger market, which presently is exploited by international carriers. Every country protects its own indigenous airlines, provides them incentives and also protects their interests. But on the contrary, Nigerian governments over the years have given foreign airlines unlimited opportunity to airlift Nigerian passengers without any kind of partnership with local carriers and government does not have any policy that encourages foreign airlines to invest in the country, help train Nigerian personnel or even give Nigerians job opportunities in their international operations. We condemn a situation whereby one foreign carrier is given the opportunity to operate to more than one airport in the country, hop from one airport to another and contribute nothing to aviation development in the country.
Airline is the backbone of aviation anywhere in the world. The aviation industry is largely dollar denominated and the non-availability of foreign exchange is not helping the situation for Nigerian carriers. They carry out maintenance at the Maintenance, Repair and Overhaul agencies overseas. The minimum cost of D-check is about $2 million.
Not only that, most of the Nigerian airports lack basic facilities including Instrument landing Systems. Meanwhile, the Federal Government is in the process of concessioning some of the major airport facilities. Although, if done transparently it is going to take a relatively long time to finish the process, but it is the responsibility of government to provide safety critical equipment at the airports, including ILS and airfield lighting.
Going forward, an enabling environment must be created for local airlines to thrive. Suffice to say that when people know they can travel at any time without hitches, the business environment would be galvanized.