Reflections on the Nigerian aviation industry

Recently, President Muhammadu Buhari disclosed that Nigeria would deploy more investments aimed at the provision of infrastructure and facilities for safe, secure, environmentally friendly and sustainable civil aviation in the country.

He said Nigeria would support the ideals and aspirations of the International Civil Aviation Organisation (ICAO) and achievement of its strategic objectives, in collaboration with other member states of the Organisation.

According to Buhari, Nigeria became a member of ICAO Council in 1962, and since then, it has continued to make valuable contributions to the council’s work and activities.

“It is pertinent to also mention that Nigeria has been playing a key role in supporting the implementation of ICAO Policies and Programmes internationally, and particularly in the African region.

“To this end, Nigeria has ratified international air law instruments like the Montreal Protocol and amendments to some articles of the Chicago Convention. Nigeria is also championing the cause of Aviation safety, security and facilitation in Africa,’’ he said.

While there is a clear case to be made for this investment, especially with the recent security issues and attacks on the country’s airports, especially in the north, experts have raised concerns on the rationale behind investing in a sector where the country has almost zero stake.

It is often said ‘where your money is, there your mouth would be,’ but in the case of the country’s aviation sector, it is where it has no money, that its investments are tailored into.

It is sad and embarrassing to note that Nigeria is yet to own any huge revenue yielding investment in the nation’s aviation sector. We do not even have a national carrier to justify money being thrown into the sector.

Almost seven years into the life of this administration, the government has not delivered on its Aviation Development Roadmap unveiled in 2015, which is expected to create a better aviation industry in Nigeria.

It’s one year to the end of this administration, the roadmap, which looks good and promising on paper, is far from implementation.

On the roadmap unveiled in 2015 are the national carrier, airport concession, aviation leasing company, aircraft maintenance organisation, aerotropolis and an improved workforce.

The national carrier, which has missed take-off dates four times since its unveiling in 2018, is expected to take off this year but without clear directions on how the airline will run.

The airport concession, another prospective huge investment project, has also failed to kick-off as a result of divided interests and lack of confidence in the government’s model for the concession project.

The four airports selected for concession include the Lagos, Abuja, Kano and Port Harcourt airports.

Airport unions, under the auspices of Air Transport Senior Staff Association of Nigeria and National Union of Air Transport Employees (NUATE), have since said they would do everything legally possible to stop the planned concessions, stressing that the process is not run in a transparent manner.

Cracks in the plan to concession four international airports were obvious when the Federal Government late last year advertised an extension in the timeline for the submission of bids for their takeover.

Industry experts have however said the airport concession project may never see the light of day until the government stops being slow in addressing the pending debt crisis and rash of existing concessions around those airports, which is scaring away genuine investors.

Most bothersome was the yet unresolved fallout between the Federal Airports Authority of Nigeria (FAAN) and Bi-Courtney Aviation Services Limited (BASL) over concession of Murtala Muhammed Airport Terminal two (MMA2) – the first of such concessions in Nigerian aviation, which readily hangs a credibility dark clouds on the government.

Airport concession, if run well, is expected to reduce the need for public sector investment, provide access to larger commercial sector, and allow airports to diversify services without the fear of government control and interference.

Another project in the aviation roadmap, which has failed to kick-off, is an aircraft leasing company.

The absence of a leasing company is negatively affecting the fortunes of indigenous airlines as they leased aircraft at exorbitant exchange rates.

Over four domestic airlines have either leased or acquired aircraft from abroad in the last year, all running into billions of dollars.

Investigation shows that Nigeria loses over $2 billion annually to the absence of Aviation Leasing Company (ALC) for airlines. With high bank interest rate and foreign exchange rate, aircraft leasing outside the country has continued to erode the revenues of airlines.

In addition, the failure to set up a Maintenance and Repair Overhaul (MRO) in Nigeria has been one of the reasons airlines have a short life span in Nigeria.

Despite the upgrade of Aero Contractors maintenance facility to carry out maintenance on 737 aircraft in Nigeria, domestic airlines still spend about N7 billion maintaining their aircraft outside the country.

With nothing less than 23 Boeing aircraft operating in Nigeria, the ‘dying’ Aero Contractors has capacity to carry out just three C-checks on three aircraft in its facility annually, while over 20 aircraft are still being maintained outside.

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A C- check on a Boeing 737, which is conducted between 12 to 18 months costs an airline between $800,000 to $1 million. This amount does not include the cost of ferrying the aircraft abroad and other charges. On the other hand, carrying out a C-check in an Aero facility will cost between N50 million to N60 million on an aircraft.

The issue of Bilateral Air Service Agreement (BASA), founded on the principle of reciprocity, is a deal that enables a country’s airlines to enjoy equal leverage, in terms of flight operations, in countries with which their home country has an air agreement.

But Nigeria has continued to lose out on this huge revenue potential because it does not have a national carrier.

Domestic airlines operating in Nigeria have continued to lose out in revenue and flight frequencies, while foreign airlines are increasing and opening more routes in Nigeria after BASA with some countries.

The Single African Air Transport Market (SAATM), which is part of the BASA agreements, is a flagship project of AU Agenda 2063, which aspires to create a single unified air transport market in Africa, liberalise civil aviation in Africa, and motivate the continent’s economic integration agenda.

The agreement has seen more foreign airlines such as Sudanese Airlines, Ethiopian Airlines, RwandAir, Emirates, Qatar Airways open more routes and increase frequencies in Nigeria, while Nigeria airlines suspend operations into foreign countries.

Nigeria currently has over 10 foreign airlines operating in the country and most operate into Lagos, Abuja, Port Harcourt and Kano, while only one Nigerian carrier, Air Peace, currently flies into or from West African countries, UAE and South Africa.

With all these cracks causing stunted growth and eroding fortunes from the country’s aviation, it gets worrying when the government rather than involve the private sector in turning around the sector, has decided to pump in more money to a sector that is not yielding revenue for the country.