With the saga of Nigeria Air which awash the aviation sector, leaving many Nigerians unhappy with Hadi Sirika, the past minister of aviation, a breath of fresh air was needed in the sector.
It was with high expectation to correct wrongs by the past administration that Nigerians welcomed Festus Keyamo, the minister of aviation and aerospace development.
Within nine months of his appointment, Keyamo has been tasked with not just correcting the errors of the past, but also driving revenue in the sector.
Two weeks into his tenure, Keyamo successfully resolved the protracted land dispute with the settlers that had stalled the commencement of the construction of the Abuja Second Runway, despite an initial deposit made by the previous administration over a year before the current government assumed office. The contractors moved to site to commence the work.
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Within a month in office, the minister directed all international airlines to relocate to the new international terminal in Lagos, making it fully operational.
While this was criticised by some stakeholders as hasty and one with economic implications for contractors and concessionaires, Kayamo, however, found some solutions to the design flaws in the facility that had previously rendered the terminal unusable for many international flights.
In partnership with the immigration service, Keyamo expedited and supervised the remodeling of the Arrival Hall of Wing E at the Lagos International Airport into a brand new facility through a public-private partnership.
He also ensured the swift repair and reactivation of the Lagos Second Runway (18R), which had been out of service for about a year, thereby restricting the busiest airport in the country to only one runway.
Working closely with the Central Bank of Nigeria, (CBN), the minister ensured the clearance of backlog of trapped funds for foreign airlines, resolving an issue that had persisted for years.
Keyamo equally broke the longstanding monopoly of foreign airlines on the UK-Nigeria route by actively engaging with the UK authorities to grant Air Peace, a local airline, reciprocal operating rights under Nigeria’s Bilateral Air Service Agreement with the UK. This led to a significant reduction in international airfares, benefiting Nigerian travelers.
The minister also recently obtained the Federal Executive Council (FEC) approval to boost revenue and prevent losses at FAAN facilities nationwide by requiring VIPs to pay access fees at all airport tollgates, a departure from a tradition that existed for decades that gave VIPs exemptions at airports
Under the HMA’s watch, the United States-Nigeria Open Skies Air Transport Agreement entered into force, which counts as a huge step that will pave the way for local airlines to start operating the route in full.
Through the diplomatic effort of President Bola Ahmed Tinubu, the minister of aviation successfully coordinated with the United Arab Emirates (UAE) authorities, resulting in the resumption of Emirates flights by October 1, 2024.
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For years, the Nigeria aviation industry had faced numerous challenges, from operational inefficiencies to being blacklisted by global lessors due to certain factors and fraudulent activities of some aviators.
Setbacks
Amid the successes, there are setbacks the minister has failed to address, some of which are inflicted by the ministry of aviation.
In recent times, helicopter operators in Nigeria threatened to ground operations as a result of the newly increased landing fees by the Federal Government through the Ministry of Aviation.
Keyamo directed helicopter operators to pay landing fees at all Nigerian aerodromes, helipads, airstrips, floating production storage and offloading (FPSO) units, floating storage and offloading (FSO) units and other oil platforms.
The landing fees which would exclusively be collected by a private company, NAEBI Dynamic Concept Limited, is projected to squeeze operators and may force many to close shop.
Stakeholders say the focus on revenue generation by government agencies in the sector, without commensurate value or quality of services, is at variance with the objectives of establishing them, being not-for-profit.
BuisnessDay’s checks show that every domestic airline company in the country is exposed to a total of 13.5 percent in taxes, including five percent ticket (charter/cargo) sales charge, 7.5 percent value-added tax (VAT), one percent development tax, even before the applicable corporate taxes, PAYE, pension scheme, etc.
Meanwhile, every single flight is in turn exposed to other fees such as flight clearance, navigation, parking or landing, etc. Other personnel and equipment-specific charges such as licensing, training, aircraft certifications, insurance, etc., are also applicable.
These airlines still have to deal with operational expenses, including fuel, maintenance and depreciation, amongst others.
When all these are aggregated, airlines end up with taxes at about 32.7 percent of domestic airlines’ gross revenues. The world average of airline profitability is between 1.5 and 2.5 percent for major carriers with size and scope. Boeing determines that the effects of size and scope kicks into an airline’s operations when it operates a single fleet of a minimum of 50 aircraft.
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Under Festus Keyamo’s leadership, peculiar industry problems have continued to persist.
These challenges include scarcity of foreign exchange, high cost of aviation fuel, lack of adequate infrastructure, cost of capital and funding options, multiple and arbitrary imposition of taxes and fees, lack of local aircraft Maintenance Repair and Overhaul (MRO) facilities, cabotage operations by foreign airlines, Bilateral Air Service Agreements negotiations, lack of adequate and proper industry planning, human capital and recruitment and retention.
