Chinedu Eze
Some stakeholders in the aviation industry have said that harsh operating environment, including disincentive government policies, high cost of doing business and scarcity of aviation fuel are discouraging investors from the sector.
In the past four years there have been more commercial airlines that went under than the ones that came in and in the last two years it is only Air Peace that started schedule services and is still operating.
Many in the industry attribute the development to the disincentive government policies, high charges, high taxes, epileptic supply of aviation fuel and extremely very low profit margin.
The backbone of airport services is the airlines and without the growth of the airlines other business will not grow and investors may not be willing to invest in airports.
This is because airlines bring people and take people from the airports. They attract oil marketers, food vendors, restaurants, hotels, service providers, including handling companies and others.
THISDAY investigations from the commercial department of FAAN showed that there has been downward trend in investment at the airports, a situation that might have been aggravated by the current economic recession.
Recent airlines that have gone under in the last five years or have stopped operation include Chanchangi, Air Nigeria, Discovery, IRS Airlines, Afrijet and others.
Recently the CEO of Medview Airline, Alhaji Muneer Bankole, decried the hostile operational environment and the seeming government’s indifference to the welfare of the airlines and pointed out that there are critical things government must do to ensure that scheduled government policies continue in the country.
THISDAY learnt that there are some airlines that have been going through start up process with the Nigerian Civil Aviation Authority (NCAA) to obtain their Air Operator Certificate (AOC) but are yet to start operation because they may not have the needed funds and they would have to operate for sometime before they even begin to generate good revenue. There have also been airlines that got their operations licence long time ago but have been unable to start operation.
Industry consultant and CEO of BeluJane Konsult, Chris Aligbe said one of the factors forestalling the establishment of new airlines is economic downturn under the current recession, unfriendly government policies, forex problems, high taxation and high charges.
“Existing airlines are subjected to high taxation, high charges, government is pushing the agencies to increase revenue, so they put pressure on the airlines and these charges are threatening the existence of these airlines. These realities discourage others from coming in. Government is not helping the airlines. They see them as privately owned so they do not feel committed to them but they forget the economic role they play and do not realise the consequence of their going under,” Aligbe said.
He noted that it is the harsh operational environment that is pushing up air fares because government’s pressure on the aviation agencies to increase revenue has given rise to cost push factors and because there are limited aircraft seats for domestic passengers due to some of the airlines have gone under and new ones are not coming in, demand is over striping supply and this is raising the fares.
He added that the airports have become unfriendly due to high charges to travellers and other airport users, citing the cost of car park toll, which is N600 for SUVs and N400 for cars and noted that such cost is exorbitant and hostile, just because the Federal Airports Authority of Nigeria (FAAN) wants to increase revenues, adding that even the domestic terminal in Lagos (MMA2) built and is being operated by a private company charges less at its car park.
“Government should think out of the box. Until government stops seeing the airlines as privately own organisation but as catalysts to the nation’s economy, it will not evolve policies that will encourage the growth of domestic airlines. This situation may continue until a major airline goes under and the economic impact is felt before government will take action, so government is the major factor why there is no much investment going on in the aviation industry.
“There should be a mind shift on the side of government because the contribution of the airlines to the economy is very important. Most of the aviation agencies revenues come from international airlines, so government can slash the charges leveled on domestic carriers by the agencies by 20 percent for the next 10 years or government should give them tax holidays, government should remove VAT, which others in the transport industry do not pay, except the airlines,” Aligbe said.
