A state of emergency looms in the aviation sector as the Aviation Round Table (ART) called for a regulated merger and acquisition of local airlines following a 57 per cent drop in the fleet of aircraft.
Raising the alarm over the weekend, the ART President, Mr. Gabriel Olowo, said the crisis in the Nigerian aviation sector had taken a big toll on the local airlines and that the total aircraft in the fleet of local carriers was insufficient to cater for the needs of the flying public.
Olowo said the combined aircraft fleet of Nigeria’s domestic airlines at present stood at 41, a figure he described as abysmal considering the population of about 180million and the need to meet the increasing demand for domestic and international air transport by Nigerians while also growing revenues from the sector to the national coffers. Aviation currently contributes about 0.4 per cent to the Nigerian GDP and analysts have pointed out that efforts to grow that figure to 13 per cent would remain a mirage as Nigeria lacks the vibrant domestic airlines with the right fleet to raise the sector’s contributions to the economy. World over, the strength of any aviation industry and its contribution to the economy is a direct product of the number of aircraft doing business in the airports of those countries.
About 14 years ago, the combined aircraft fleet of Nigeria’s domestic carriers stood at over 90. And this ensured a greater contribution to the economy, employment and training opportunities for Nigerian aviators, and minimal flight cancellations and delays at airports across the country. During that period, airlines like Bellview, Air Nigeria and Arik Air were also flying into international routes like New York (USA), Mumbai (India), Dubai (UAE), Johannesburg (South Africa) and London (United Kingdom), raking in foreign exchange (forex) earnings for the country and creating numerous employment opportunities for Nigerian pilots, engineers, cabin crew, catering firms, travel agents, among others. That has, however, changed in recent years.
“It is so sad, that at present, all our airlines in terms of their fleet size, can only boast of 41 aircraft which is not up to half the fleet of Ethiopian Airlines,” said Olowo.
“If we understand the fact that everything that has to do with the aviation industry (revenues to airports, regulatory agencies, air traffic controllers, travel agents, catering services, pilots, cabin crew, etc) revolves around the airline, we will appreciate the fact that what is happening with our local airline fleet numbers is not a very good story to tell in a country regarded as the giant of Africa,” Olowo added.
Impact
At present, the shortage of requisite aircraft in the fleet of local airlines has resulted in several flight cancellations and delays and a rise in physical assaults of airline ground staff by aggrieved passengers whenever flights are cancelled. There have also been issues of massive revenue loss to the country and the unemployment of about 300 pilots and cabin crew. President of the Airline Operators of Nigeria (AON), Capt. Nogie Meggison, told Daily Sun that the situation is so bad that the piloting profession is severely threatened in the country. Meggison said cadet pilots coming out of aviation colleges whether, within or outside the country, are finding it an Herculean task getting aircraft to fly to build their flight hours and gain the requisite experience.
“The industry has shrunk by about 50 per cent. We had almost 500 unemployed pilots earlier, but with the shrinking, we are adding another 200 to the labour market,” said Meggison.
“But those that have the experience are not really my concern. I am more disturbed by those who are just coming out of aviation school and they don’t have the experience at all because no one will employ a pilot that finished school two to three to five years ago and has not had the opportunity to fly,” Meggison added.
Aviation analyst, Capt. Dele Ore, who corroborated Meggison on the unemployment crisis among Nigerian pilots, said in the next 10 years, the nation may run out of seasoned pilots, due to the non-availability of the opportunity for the younger pilots to learn, grow from the rank to the commander status.
“I am worried that it will be much more difficult to get Nigerian flight commanders in the next 10 years if we continue in this way because we now have a lot of young pilots roaming the streets, looking for jobs and they are not finding the space in the country,” Ore said.
In the last four years, local airlines have been very critical of Nigeria’s Bilateral Air Service Agreements (BASA) with 78 countries, with no airline to reciprocate. Analysts estimate that the BASA which appears skewed in favour of foreign airlines is responsible for an annual loss of over $3billion in the last five years. So much blame has gone the way of the government. For instance, they don’t carry local airlines along in negotiating the BASAs. And then, the problem of multiple designation of routes to the foreign airlines which robs the local airlines of any opportunity to earn more revenue through code-sharing, alliances or any form of deal that ensures they pick up passengers from one local airport and feed the foreign airlines at another airport.
But a source within the Ministry of Aviation explained to Daily Sun that the actual blame should go to the local airlines, which have not put in place good corporate governance practices and transparency to attract offshore capital to acquire the right aircraft and also to enter alliances with foreign airlines.
The official cited the recent exit of Arik Air from the lucrative London, Johannesburg, Dubai and New York routes as an example of the failure of Nigerian airlines to manage their business properly. He also said the only airline plying an international route – MedView Airline – recently had problems with the aircraft it deployed on the Lagos-London route and had to suspend its operation temporary.
“When local airlines complain of not benefitting from Nigeria’s BASAs, it is important for them to also note that at various stages, we have given them the opportunity and that they failed,” said the official who won’t want to be named.
“It is the inability of local airlines to get the aircraft to reciprocate these BASAs that creates an extra loan problem on some routes for the foreign airlines. And when they come back and demand for additional frequencies and multiple routes, we can’t resist them, because there is a problem already and we know that they have the capacity to fix that problem for us. That is why you find Ethiopian Airlines flying from Enugu, Lagos, Kaduna, and Abuja,” added the official.
Way forward
The Aviation Round Table is calling for “an urgent regulatory consolidation process that increases the minimum fleet for an Air Operating Certificate (AOC) from two to 20 aircraft.”
“Since there is no legislation in place which allows forceful mergers in the industry, we are of the opinion that if a regulation can move the number of aircraft that an operator can own from one to two and three, then with the existing 41 aircraft, we need the government to carry out a regulated consolidation,” said Olowo.
“It has to be regulated because if you want to ask the airlines to do merger and acquisition on their own, they will not agree to do it. So what is best for the industry is that regulations have to bring about the consolidation so that, at least, at the end we can have one or two strong local airlines in Nigeria. If Nigeria’s existing aircraft are pulled into one airline, then we already have what it takes to float a very big and vibrant local airline,” Olowo added.
Good old days
Checks by Daily Sun reveals that some 12 years ago, Nigeria had the following local carriers with the attached aircraft numbers, namely: Dana Airline (six aircraft); IRS (five aircraft); Chanchangi (two aircraft); Associated Airline (four aircraft); ADC Airlines (three aircraft); Sosoliso Airlines (six aircraft); EAS Airline (11 Aircraft); Aero Contractors (12 aircraft); Belview Airlines (13 aircraft); Arik Air (27 aircraft); Air Nigeria (nine); Overland (five aircraft – all totaling 98 airplanes. However, between 2012 and 2014, Nigeria had three new entrants: Medview Airlines (seven aircraft) and Air Peace (20 aircraft); Azman Air (with five aircraft) bringing the figure to 32.
However between 2006 and 2013 some of the above listed airlines like ADC, EAS, Sosoliso and Bellview Airlines were involved in tragic crashes that forced them to shut down their operations owing to problems with regulatory agencies and inability to settle insurance indemnity to bereaved families. And what followed their closure was the disappearance of their fleet from the Nigerian sky. However, airlines like Chanchangi, IRS, Air Nigeria during the same period also shut down their operations due to reasons linked to alleged graft and inefficient management which led to debts, service provider and regulatory institutions. These airlines also became financially distressed and were unable to get funds to sustain the routine or mandatory maintenance of their fleet. It is the same story of graft and mismanagement with Arik Air and Aero Contractors that are currently under the management of the Asset Management Corporation of Nigeria (AMCON). The two airlines have lost a substantial number of their aircraft abandoned at various maintenance hangers abroad and at home due to their huge debts to creditors, an ugly trend that mars the routine maintenance of their aircraft.
A senior official at the Nigerian Civil Aviation Authority (NCAA) told Daily Sun that “in real practical terms, we can say that as a country we have witnessed a drop from 90 to 41 aircraft in the combined fleet of our domestic airlines in the last 12 years.”
“That is the current reality and it is not a very good testimony considering the size of the Nigerian market and the fact that what we have is not even up to half of the 94 aircraft which a single airline like Ethiopian Airline has. At present, South Africa Airways has about 55 aircraft, and Kenya Airways has 34 aircraft, and these are just single airlines in countries that are smaller than Nigeria,” added the official who would not want his named mentioned.
