Stakeholders have warned that if the challenges faced by domestic airlines in 2016 persist this year, the industry would go under, writes Chinedu Eze
The year 2016 had many challenges for Nigerian airlines. Aviation fuel scarcity started from January that year till December. They faced the problem of accessing foreign exchange(fx) to take their aircraft for maintenance overseas, train their technical personnel and acquire aircraft spares.
Operators and others in the sector say that 2016 was one of the worst years for airline business in Nigeria. There was a reduction in number of air travelers. The high cost of the scarce aviation fuel raised fares and many airlines left their aircraft on Aircraft on Ground (AOG) because they could take them out for checks. Some of the airlines did not have money to pay for the maintenance of the aircraft already taken out for checks because it was difficult to obtain fx.
There was panic when Aero Contractors suspended operation. It is Nigeria’s foremost airline and the signal its withdrawal of service gave was that the industry was degenerating. The feeling was exacerbated when First Nation Airways, few days later, announced that it was also withdrawing service for two weeks. Luckily the two airlines came back to service. First Nation returned few weeks later while Aero Contractors returned three months. But airlines such as Discovery Air, which disappeared from the skies earlier in the year, never came back.
Forex
After a long outcry by the airlines to the federal government to give them access to fx, the Central Bank of Nigeria (CBN) created a window for them and manufacturing concerns to access fx. But the modalities were still cumbersome and the airlines could not withstand the long wait as airline business is critical about time. An aircraft engine that suffered bird strike cannot wait for three months before the engine could be replaced and for the aircraft to become airborne again. The airline would suffer heavy financial losses and may not be able to meet its flight schedules when one aircraft is on AOG.
The CEO of Medview Airline, Alhaji Muneer Bankole summed the CBN policy on fx to the airlines thus, “The CBN came out with a design which they call future, forward, spot; what it means is that you put your money for the next two months, three months, four months and you will be given allocation. In doing that you commit all your operational cash so everything has to cease until that two months; that is what it means. But we are hoping that things will improve. So when you look at the business of aviation it is all in dollars and I believe we are now looking at government to tell them what to do. Somebody right there needs to advise them to see aviation as a priority.”
Also the Chairman of Arik Air, Joseph Arumemi-Ikhide said: “I think there is need for us to understand that the currency in aviation is in dollars. Like I said earlier on Medview and ourselves, we are taking naira from Nigerians who buy tickets, yes, we can spend the naira here, pay salaries and other things but we still need some dollars to pay for spare parts, services and other requirements.”
So access to fx in 2017 will start a real turnaround for the airlines and would ensure that they would survive.
Aviation fuel
Inadequate supply of aviation fuel created uncertainty in flight scheduling. Passengers going to the airport to travel were not sure when and if the flight would operate.
Director of Consumer Protection, the Nigerian Civil Aviation Authority (NCAA), Adamu Abdullahi in reaction to the scarcity said,
“What is happening is that there is aviation fuel shortage in the country. Since government decided to deregulate the importation of fuel, it also affected the importation of Jet A1 and therefore the product is scarce. We don’t refine it locally. Kaduna and Warri refineries used to refine Jet A1 in this country and they don’t do so anymore. Now we depend solely on importation.
“So for oil markers to go to the black market and buy dollar at N380 (now N490) per dollar, it is very, very expensive and by the time you bring your product to the country it is no longer economically viable. As you know, aviation fuel constitutes about 70 to 75 per cent of cost of the ticket you buy. So by the time the cost of aviation is added to the ticket we are in trouble. So airlines are doing business at a very, very expensive rate because their major cost of operation, which is aviation fuel has gone up by over 150 percent,” Abdullahi explained.
He said that at about N280 per litre, aviation fuel is too expensive so oil marketers are not willing to import the product, adding that passengers are already paying fares, which have increased by over 50 percent and this would increase as Nigeria continues to import the product.
“So if you buy aviation fuel at N280 per litre to operate. It is too expensive. So what we are experiencing now is that marketer are not willing to go ahead and import fuel at that price. We are already paying about 50 percent more on our ticket prices. By the time it gets worse that we would pay N50, 000 for one hour flight in Nigeria that is when we are going to really experience difficulties,” he said.
By December last year, the oil marketers could no longer import and the Nigerian National Petroleum Corporation (NNPC) has to import the product from Ivory Coast, but the question is, how long would it take for Nigeria to get permanent solution to the aviation fuel scarcity.
Landing Aids and Airfield Lighting
Airlines and pilots said two major setbacks in flight operations in Nigeria are the lack of airfield lighting in most of the nation’s airports and the obsolete and lack of Instrument Landing System (ILS) and other navigational aids. According to some pilots, about three years ago some of these navigational aids were in good working condition but over time they continued to degenerate due to poor maintenance and lack of replacement.
The pilots are even demanding for the upgrade of ILS to Category two or three so that aircraft could land during the harmattan haze.
The Chairman of Airlines Operators of Nigeria (AON), Captain Nogie Meggison said most navigational aids at the airports are not working because they are obsolete and in Nigeria the airports have Category 1 Instrument Landing system, which means that flights cannot operate when the weather is below 800 meters visibility, depending on the airport.
He said that many of the airlines have grappled with suspension of operations due to the difficulty they go through and the failure of government to take action to rectify these problems.
“On December 27 visibility in Lagos was about 500 meters so most international and local flights had to be diverted to Cotonue (Tuesday night, December 27, 2016), which is rather unfortunate. The issue of the harmattan haze is a yearly seasonal occurrence as Nigeria has mainly raining (Thunderstorms) and dry seasons (Harmattan).
The Deputy Managing Director of Arik Air, Captain Ado Sanusi has therefore advised government to provide Category 3 equipment so that during Harmattan it will be deployed at the airports. He noted that although the equipment is expensive but it could be used during the period of adverse weather when Harmattan haze sets in, from December to January.
“It is expensive to maintain Category 3 A Instrument Landing System because of the maintenance of runway, provision of airfield lighting and maintenance of power because power supply is very, very important. You cannot afford to have power supply interruption when landing at low visibility. It could be expensive to maintain it for 12 months in a year. The critical time we need this equipment is in December, so why don’t we have the capacity to have that Category 2 or Category 3 ILS and we make sure the service is available in December and January and after we resort to Category 1 thereafter.”
High Charges
Many industry operatives and observers agree that the charges leveled on domestic airlines by aviation agencies are outrageously high, especially as government is not assisting the airlines in any other way as it is done in other countries. They noted that government ought to provide soft loans to these airlines to enable them come out of the current economic morass caused by recession and deficient infrastructure at the airports, which curb flight frequencies.
Chairman of Arik Air, Arumemi-Ikhide said: “Domestic airlines are given multiple charges, they are expensive and they are not actually necessary. The government itself has to contribute something to air travel in Nigeria. If you say you want to leave air transport to the private sector, then give the airport control, give everything to the local airlines; yes they need to do that. If you say you want to hands off aviation then don’t say you are concessioning the airport because you can’t concession and give the airports to others, while the real work is being done by the airlines.”
There have been calls for the reviews of these charges as one of the industry insiders say that aviation agencies like the Federal Airports Authority of Nigeria (FAAN), NAMA and NCAA generate their major revenues from the foreign airlines and noted that government could give the domestic airline waiver as palliative to make them operate profitably and also survive.
Going forward
Arik Air chairman said that the airlines must work together so that they could succeed in targeting collective interests and achieving collective objectives.
“I think everybody has its own strategy and the only way to come out of it is if the airlines, I mean the functioning airlines come together and talk. They mustn’t merge but I think it is lack of cooperation; lack of discussing strategies to tackle the problem is what is worrying us. I think confronting it alone will not help. We need the cooperation of Air Peace and Medview and Dana to work together and form a body to strategise. One person cannot strategise, so we need to strategise and look at it and actually get it done. If we don’t do that then I think we are not going to get anything done and that is the truth. The system is taking advantage of lack of corporation among us and again we should not allow armchair critics and armchair operators to meddle into what is not their business.”
Meview CEO also said: “The first thing is what the current government should do. Government needs to support its own. It should create the enabling environment to make the airlines survive. Airline is the only product that you have in your country in terms of building your economy that will market you and boost your image outside your shores.”
It is a consensus among stakeholders that the Nigerian government must step in and adopt a strategy to help save the airlines by creating a friendlier operational environment.
