How airlines, stakeholders can boost earnings in 2018: report

The year 2017 ended with Nigeria’s aviation sector failing – as with the previous years – to contribute significantly to the growth of the country’s economy, Sunnews report.

With the presence of very weak indigenous-owned airlines and the inability of the President Muhamadu Buhari’s led-government to float a national or flag carrier, 2017 proved to be another year where the dominance of foreign airlines on the Nigerian airspace continued unchallenged.

With local airports poorly equipped with navigational aids to allow local airlines maximise available fleet capacity (at night and under poor visibility conditions), thus cutting down revenue earnings for airlines, local airports and the government, Nigeria’s aviation sector contribution to national GDP remained at an abysmal 0.4 per cent. Not even the industry projection to grow GDP by 5 per cent in 2017 was realized.

Targets for 2018

So much has been said about the dormant potential of the Nigerian aviation sector which if effectively tapped could prove the second or third largest revenue earner for the country after crude oil.

Indeed, with 22 airports scattered across the country and a population estimated at over 180 million people who have a penchant to travel both locally and internationally, a huge market is already created for the country’s aviation sector. What is left is for the government to get its acts right and work out modalities that will stimulate further investments, allow investors access to affordable capital to harness the potential in the industry, grow existing infrastructure, and create jobs for Nigerians.

An aviation policy

The first thing that the government needs to put in place is an aviation policy that would serve as the cardinal anchorage for programmes in the industry. Such a policy must be nationalistic and geared at reducing foreign dominance and boosting greater local content inputs in the day-to-day operation of the Nigerian aviation industry.

According to the Chairman of the Airlines Operators of Nigeria (AON), Captain Noggie Megison, a strong aviation policy would help provide the financial regulations that could grow revenue for the government through the aviation industry.

“Putting in place a strong aviation policy would move the strategic air transport sector forward to a place where we should be a major contributor to Nigeria’s economic and GDP from the current 0.4 per cent to 10 per cent in the next two years,” said Meggison.

“A proactive policy will help us so much that we can create employment to our teaming youths and skilled pilots and engineers. We can actually create 5,000 skilled and 50,000 indirect and indirect jobs in the next two years,” he added.

A national carrier

Nigeria certainly needs a vibrant national carrier – one that has the backing and equity investment by the Federal Government. Since assuming leadership in 2015, President Buhari has kept assuring that he will float a national carrier to restore the pride of Nigerians and ease both local and international travel plans of Nigerians. For the past two and half years, that plan has failed to become a reality.

With estimated N9.5 billion monthly revenue lose to foreign airlines due to various unreciprocated Bilateral Air Service Agreements (BASA) by existing indigenous airlines, it is about time the government brings on board its proposed national carrier in 2018. The need for a national carrier cannot be overstated.

It will assist the aspiration of creating hubs out of the Abuja and Lagos airports, halt the capital flight to foreign airlines, ease travelers’ plight, create competition and reduce airfare cost; increase revenue to airports and the government and create jobs for citizens. There is no point continuing to procrastinate the establishment of a national carrier from 2018 to another year. The current losses are monumental.

A functional MRO

Without a functional Maintenance Repair and Overhaul (MRO) facility, efforts to grow the industry would remain a futile venture. 2017 saw Nigerian airlines repatriate over $2 billion to overseas MRO to maintain their aircraft. On the other hand, experts have estimated that it will cost about $37 million to establish an MRO in Nigeria, which is less than the capital flight taken out of Nigeria by local airlines.

Local airlines have repeatedly stated that the absence of an MRO has wreaked continuous havoc on their finances and that it is one factor responsible for the dearth of the local airline industry. In 2018, the government should consider it a matter of necessity to establish an MRO in Nigeria.

Aviation analyst, Captain Dele Ore told Daily Sun in an interview that “without a functional Maintenance Repair and Overhaul (MRO) facility in Nigeria, we are just day-dreaming.”

Continued Ore: “An MRO is very necessary in Nigeria because the airlines that we have in this country cannot survive without them. That is the truth.

The cost of taking aircraft abroad by airlines always for maintenance has taken a heavy toll on the airlines more than we can imagine. They do business in Nigeria and they charge passengers in naira. But whenever they have to go for maintenance it is usually in foreign currencies and we all know the cost of forex these days.”

Support for local airlines

The government should also take steps to assist existing local carriers to survive. Issues such as the skyrocketing price of aviation fuel; multiple tax regime by aviation authorities to domestic carriers; the removal of Value Added Tax ( VAT) on air transportation as obtainable in other modes of transportation; access to single digit loan by financial institutions; and improvement of service delivery by aeronautical agencies to allow night and low visibility flights should be provided by the government to ease the business of the local airlines.

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