As Nigeria Loses Its Air Traffic Hub Status

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As the most populous country in Africa, Nigeria has the highest passenger traffic in the West and Central African sub-regions. However, the country is losing its leading role as the hub of air traffic in these regions. Chinedu Eze writes on why this is happening

Few years ago, Ethiopia established its West African hub in Lome, Togo. From the tiny African country, it operates to Brazil, to New York in the US and other major destinations in the world, connecting its flight through its major hub in Addis Ababa. Many Nigerians have realised that it is cheaper, quicker and easier to travel to Brazil with Ethiopia Airlines through Lome than any other choice, as there is no direct flight from Nigeria to the South American country.

This year, South Africa Airways started direct flight from Accra to Washington in code-share with African World Airlines (AWA) and reports indicate that the airline is recording good number of passengers to that destination.

These airlines operate from locations very close to Nigeria. From Lagos to Accra is about 35 minutes and from Lagos to Lome is less than 20 minutes, so these airlines target Nigerian passengers but chose to attract and airlift them from neighbouring countries that provide conducive operating environment.
South Africa Airways and Ethiopia Airlines may not have any reason to invest in Ghana and Togo without the Nigerian passengers, but the question is why did they prefer to poach for Nigerian passengers from neigbouring countries?

Bungling Opportunities

There is fear in Nigeria that Ghana may be growing into a hub in West Africa, but travel expert, Ikechi Ukohas dismissed it, saying that Ghana lacks the passenger and the Katoka International Airport, Accra lacks the capacity to compete with Nigeria, but he noted that Nigeria has not been able to seize the opportunities at its behest to become the dominant air transport hub in the sub-region and one of the major hubs in the whole continent.

“I don’t see Ghana actually competing with Nigeria. They don’t have the capacity. It is Nigeria that is failing itself. Nigeria is failing its own ability to perform. Ghana does not have the capacity to compete with Nigeria. Nigeria was naturally given opportunities but she is failing itself. We have airport that has the capacity between five to 10 million passengers per annum; Ghana is at two to 2.5 million passengers per annum. Maximum Ghana airport can reach is four million, so it is not in any way a threat to Nigeria. It is just that we lack the ability to do what we are supposed to do normally. That is our own problem. We just bungle things,” Uko said.
So it is the failure of Nigeria to seize all the opportunities available to it as the most populous country in Africa with the highest number of indigenous people that desire to travel, growing between 15 to 20 million per annum, but AWA and Ethiopia Airlines are taking advantage of Nigeria’s failures to do the right thing.

“But the success of South Africa Airways from Accra to Washington and Ethiopian Airlines from Lome to New York means that it is easy for them to stay outside Nigeria and carry Nigerian passengers. Ethiopia Airlines is doing it successfully from Lome and South Africa Airways is doing it successfully from Accra. This will continue if we continue to bungle our opportunities,” Uko who is the organiser of Akwaaba African Travel Market warned.

Government Policies

Deputy Managing Director of Arik Air, Captain Ado Sanusi said that the way to stop the dominance of other airlines in West Africa at the expense of their Nigerian counterparts is for the Nigerian government to take certain actions aimed at repositioning the Nigerian carriers and make them competitive. He noted that most of the problem Nigerian airlines are having are external and government induced, including the harsh operational environment and the failure to obtain foreign exchange.

“The airlines are facing multiple challenges. These challenges include high cost of operation in the country, which is caused by high cost of aviation fuel, high cost of getting foreign exchange and multiple taxes from the parastatals. So if you are going to make the operating environment conducive for airlines, they must address these issues.

“They must look at how they can bring the high cost of Jet A1 to something comparable within the region. We can take the Ghana model. Katoka Airport, Accra, Ghana has announced they want to reduce the price of Jet A1 by 25 percent. They will cut some taxes and make it 25 percent cheaper within the region.

“Jet A1 is major component that increases the cost of operation so if you bring down the cost of the product, it will bring down the cost of operation. Then the cost of getting foreign exchange; now this is not the first time the federal government is looking at the industry and allocating foreign exchange according to industry needs,”

Sanusi noted that even during the military regimes they used to give consideration to those industries that were foreign exchange intensive and allocate them foreign exchange and this would stimulate the economy because it will allow the airlines to have access to foreign exchange.

“This will enable the airlines operate competitively at very good airfares. Then you have to look at multiple taxations by aviation paratatals and then even if you say temporarily, government should waive some charges so that the airlines can use this waiver to offset particular fees or services to reduce their cost of operation,” Sanusi added.

Favoured Foreign Airlines

Government’s policies and attitude, according to industry experts have played significant roles why other airlines are doing well while their Nigerian counterparts are not doing as well. From the obsolete airport facilities to lack of plan to grow indigenous carriers, government is alleged to be behind the failure of Nigerian airlines to be competitive among African airlines.

President of Aviation Round Table (ART) a think-tank body in the industry, GbengaOlowo also blamed government for lack of planning and lack of vision, which has left the country’s aviation sector in doldrums despite its invaluable opportunities.

“The aviation industry, to say the least, is still at infancy. This is a shame because we do not really know what we want to do with the aviation industry. Our decisions are haphazard, so we need concise, coordinated decisions. I look at aviation in the next 50 to 100 years in Nigeria. What we are doing now is haphazard. So many airlines, we have about three generations that have come and gone. Life span of Nigerian airlines is 10 years and the present ones are at the level of extinction, so we need to get serious,” Olowo said.

According to industry observers, government is responsible for the low performance of indigenous airlines and their failure to be competitive in the continent because government does not give domestic carriers incentives. It is said that there is no country in the world that does not give one kind of support or another to its airlines. Major countries with successful airlines and operational hubs are said to go the extra mile to protect their airlines, facilitate credit facility for them and even cancel their debts when necessary so that they would continue to thrive.

Government Indicted

The travel expert,Uko also blamed the government: “First, you find out why Nigerian airlines don’t make profit. Once you find out why they don’t make profit and these may include high cost of operation, aviation fuels, cost of spares, poor access to fund and high exchange rate. We can give the sector infant industry status, as Chris Aligbe had suggested. Government could say, don’t bother to pay us any tax for 10 years, don’t pay us any of these charges, just employ people; just employ people and grow skills. This is because once you are employing people it is good for the country. Aero that is dying has 1, 300 workers and those people are now going to be unemployed. So if it is possible to employ that number then government should ask itself, how do we enable these airlines to grow skills? These airlines are strategic to our economy so they should not be treated as one man business,” Uko said.

He emphasised that although these airlines are owned by individuals but the critical role they play in the nation’s economy is pivotal; therefore, they should be supported.

Uko argued: “They are owned by individuals, but individuals also owned the banks and government is giving banks foreign exchange to sell and the banks do round tripping and make money. Once you have been institutionalised you are supposed to make money. For me, government can do without the money they make from the airlines; instead they should encourage them to employ more people and government has to think more of these roles than their ownership.”

Uko added that why government seems to pay more attention to foreign airlines and respond to their needs more than the domestic airlines is because many decision makers in government seem to envy and jostle with the Nigerian airline owners.

“To the government officials, the foreign airlines are impersonal. The officials don’t know the owners, but they know the people behind the Nigerian airlines and the policy makers in government compare themselves with the airline owners in Nigeria. This is what I have learnt from my own personal experience. People see it as me; not the role I am playing, not the service I am rendering. In Arik, they see Joseph Arumemi-Ikhide, not what the airline is doing for the country. What is in their mind is that Arumemi-Ikhide is making money. So they are actually envious of the man. That is the daily problem in this country,” Uko stated.

This could be buttressed by the fact that there has not been any overt and selfless effort to help the airlines to survive, as noted by industry operatives who said that the intervention fund given at some time in the past were aimed at assuaging the banks and at other times to fill the pocket of those behind the funds, adding that Nigerian government would lose noting if it cuts down the charges leveled on domestic carriers.

The Nigerian government, from all indications has contributed in making Nigerian airlines uncompetitive.Also, because the airlines cannot speak with one voice seem to deteriorate their situation.