Exit of global carriers: How Nigerian airlines can fill void

The ongoing recession in Nigeria appear to have taken a huge toll on the nation’s aviation sector with some foreign airlines pulling out of the country, while others have scaled down their flight frequencies into the nation’s airports.
A changing tide.

By Daniel.

Indeed, a combination of factors including scarcity of aviation fuel as well as  CBN forex policy that has denied operators the repatriation of about $600million of foreign airlines funds), had got some of the foreign carriers angry and frustrated. While Iberia and United Airlines pulled out completely from Nigeria, other international airlines like Emirates and Kenya Airways have cut down on their flight frequencies into Nigerian airports. Also, the international airlines which find it hard to refuel in Ghana at a far more cheaper cost, have resorted to the use of smaller fuel efficient aircraft for their Nigerian flights in order to cut fuel costs.

The exit and reduction in number of foreign airlines flying into Nigeria has however come at a huge cost to the country.
Not only have there been some job losses by the Nigerians working in such airlines, but there have also been loss of revenue by government agencies like the Federal Airports Authority of Nigeria (FAAN), Nigerian Airspace Management Agency (NAMA), Nigerian Meteorology Agency (NIMET), and the Nigerian Civil Aviation Agencies (NCAA). Aside FAAN which benefits directly from the take-off and landing charges paid on each aircraft that operates from Nigeriaís international airports, other agencies all benefit from a five percent ticket sales tax paid on each ticket purchased by passengers to the NCAA and shared to the other agencies. Although no one can really estimate the losses, many believe they certainly run into millions of naira on a monthly basis. It is against this background that some stakeholders have been demanding that the Federal Government can turn the misfortunes of the foreign airlines into an advantage by taking some steps to empower local airlines to fill the void created by the exit of these foreign airlines.
Nigerians should think, Nigeria patronises Nigeria and fly Nigerian airlines. No foreigner can rebuild the aviation industry for Nigeria than Nigerians.

The foreign airlines that fly into Nigeria do so as part of the Bilateral Air Service Agreement (BASA) which requires a Nigerian carrier to reciprocate on a similar route. But that hardly happens as air fares have become too expensive, customer abuses have increased, and above all Nigerian passengers are left with little or no option.
Chris Aligbe, an industry analyst who frowned at the new wave of foreign dominance of Nigeria’s international routes described the loss to the nation as “incalculable”.

“What is happening is actually a big disgrace to us as a nation,” Aligbe said.
“We have the market in Africa in terms of passenger traffic. But what we are witnessing is that some foreign airlines like Ethiopian, Emirates, Qatar, Kenya, airlines now have either 46, 28, 21, 18 flight  frequencies weekly in Nigeria.  Nigerians have been turned into slaves because the foreign airlines now treat us as they wish in terms of airfares,” he noted.

Domestic airlines’ takeover
Despite the huge opportunity created by the exit of some foreign carriers, only Arik Air and Medview Airlines, two of Nigeria’s domestic carriers, were able to offer a semblance of challenge to the dominance of the foreign carriers. While Medview, for the last one year, has run successful commercial flight operations between the MMIA in Lagos and London Gatwick Airport, Arik Air on the other hand has managed to fly into London, New York, and some other African countries like South Africa, Ghana, Senegal, Cameroon, Liberia, etc. But that’s rather insufficient to call the bluff of the foreign airlines. The capacity of Nigerian airlines to compete in the international market has not been helped with the absence of a national carrier. Without a national carrier, the other option left for Nigeria according to analysts is for the government to work out modalities that will prop up strong domestic carriers.

National Association of Aircraft Pilots and Engineers (NAAPE) Mr. Issac  Balami,  who appeared to be so angry with the way the foreign airlines have treated Nigeria and passengers in the country recently  called on the Federal Government to take proactive steps to close the gap created by the exit of some foreign airlines by boosting the capacity and capabilities of local airlines. “

“Nigerian airlines must take advantage of the foreign airlines that are pulling out of the country by stepping up their game,” said Balami.

“The government must encourage strong local airlines to take over the slots of the foreign airlines so that before they come back we have already taken our shares. Let Arik Air and Medview and other local airlines that want to fly internationally be encouraged to bring in powerful machines such as Air Buses to compete. I see it as an opportunity for our airlines to come up,” Balami added.

But how should the vision or quest to get Nigerian carriers fill the slots left by the exit of the foreign airlines be achieved? It is agreed that Nigerians love traveling a lot and that even with the recession hundreds of Nigerians are still flying daily by air. And most of these travelers would prefer patronizing a local carrier if the option was made available to them. “Nigerian carriers give you a sense of belonging; the cabin crew, inflight entertainment and meals served are all local contents and that adds a lot of value and pleasure to the long hours spent on an international flight,” said Isaac Apam. “Very many Nigerians would prefer an indigenous carrier on an international route to foreign airlines,” added Apam, a traveler who spoke to Daily Sun at the Lagos airport.

Lease aircraft
Some stakeholders have suggested that the effort to boost local airlines capacity should be one devoid of any form of financial incentives or loans.

“Don’t give domestic airlines money if you want to help airlines fill the slots left by the exit of the foreign airlines,” said Balami. “Give them aircraft instead;, lease planes to them to compete with other world airlines. Let the airlines have access to good aircraft, spare parts,” he added.

Make fuels available
Local airlines are also battling the crisis of aviation fuel availability. So the government, if it wants to boost the capabilities of local airlines, should make aviation fuel available and affordable to them because even if the local airlines are given fifty brand new panes without the crisis in aviation fuel supply being resolved, they will still go down.
Take away some taxes

Most stakeholders in Nigeria’s aviation sector would readily agree that what airline operators need as bailout in the ‘immediate term’ is not really the injection of fresh funds into their business but taking away some of the multiple taxation by regulatory agencies.

“What most operators would appreciate  would be for the Federal Government to order an immediate stop on the payment of Value Added Tax (VAT) on air transportation, because air transport is the only transport service being made to pay VAT in Nigeria,” an airline official told Daily Sun.

Merger option
Some other stakeholders feel the recipe to boost the capability of Nigeria’s domestic airline industry to compete in the international market is for regulatory institutions to compel existing local carriers to merge and seek listing and greater capitalisation from the Nigerian Stock Exchange. According to analyst, Group Captain John Ojikutu, the government should encourage joint ownership of Airlines by Nigerians and foreigners alike.

“Private airline should be encouraged to be listed by the Nigerian Stock Exchange and on the basis of participatory ownership which should involve members of the public, by buying shares in such Airlines and by implication becoming shareholders and stakeholders in the Airline,” he said while profering a solution to boosting the capacity of domestic airlines to compete with foreign airlines.

On his part, the President, National Association of Aircraft Pilots and Engineers (NAAPE), Balami Isaac David, wants the government to legislate the mergers of the airlines.
“The Federal Ministry of Aviation should foster an arrangement through incentives that will bring about mergers of airlines, culminating in the emergence of one or two mega-carriers Which can become global players,” said Balami Isaac David,

“The government could through Bank of Industry (BOI) adopt a carrot and rod method. The carrot could be offering soft loans to merger carriers that achieve a certain level of capitalisation while the rod would withdrawing or suspend the Air Operator Certificate (AOC) of airlines that fail to meet prescribed capitalisation after a given time, or restrict them to particular hubs only,” David added.

Indeed, Nigerian carriers have the capacity to dominate the African airspace and also make a significant inroad into major European, Asian, and American cities, creating thousands of jobs for citizens, and contribute more to the GDP of the country, but that would only be achieved if the right support and environment is created for them to thrive by the federal government.