Sustaining Domestic Flight Operations

Chinedu Eze writes on the need for the federal government to support domestic airlines in the acquisition of more aircraft, to boost air travel.

Operating aircraft in Nigeria went down since the last five years, from over 90 to about 50 as of December 2019. This also gave rise to higher airfares, as more passengers chase fewer aircraft seats.

The major challenge faced by airlines is that it is particularly difficult to acquire aircraft in Nigeria because lessors are extremely unwilling to lease aircraft to Nigerian operators because of the abuse of the Cape Town Convention by airlines that failed to return their aircraft at the negation of leasing contract conditions.
Nigeria was signatory to Cape Town Convention in 2008, which enhances airlines in member countries to lease aircraft but abide by the conditions agreed between the lessor and the airline.

Besides leasing, another option is outright purchase. Many Nigerian operators do not have the funds to purchase aircraft because indigenous banks are not willing to extend huge credit facility to airlines due to past failure of Nigerian carriers to repay their loans. So it has become difficult for Nigerian airlines to replenish their equipment. This is why it is becoming more difficult to travel by air.
During peak seasons the flights are fully booked and there are more delays and flight cancellations because fewer aircraft are made to operate the rounds from one airport to another, encumbered by obsolete and limited airport infrastructure.

Airfares have risen from the lowest bottom of N14, 000 in 2015 to N25, 000 in 2019 with exchange rate remaining stable in the parallel market of N36 per $1, from the undulating N40 per $1 in 2015/2016. So the present high fares are triggered by inadequate equipment.

Depleting Aircraft
The CEO of Aero Contractors, Captain Ado Sanusi acknowledged recently that Nigerian airlines are facing serious challenge acquiring new fleet. He said the situation would have been worse without the new acquisitions by Air Peace.

“If you look at the number of operating aircraft in the entire system, including all the airlines in the past 12 months or starting from January 1, 2019, till date, you will see that there is remarkable decrease in the inflow of aircraft into the country, there is definitely a significant decrease. If you also look at the inflow of leased and acquired aircraft, you will also notice that there is a decrease.

“The only airline that is bringing aircraft to operate in the country is Air Peace. So capacity of the airlines has not grown because Nigerian airlines are not able to lease aircraft that will operate in the country. Passenger demand has increased because after the election there was stability, which triggered the demand.

“More people travel since after the election and this is natural. But unfortunately we are not meeting the demand by making sure that we have a certain number of aircraft that are operating in the system to feed the market. It is quite unfortunate that Nigeria that is well blessed with a lot of natural resources and well respected in Africa, we still cannot boast of buying aircraft and bringing them into the country for operations,” Sanusi said.

The Aero CEO agreed that there is a big hitch in aircraft acquisition because a lot of leasing companies do not want to do business with Nigeria.

“So when Nigerian airlines make enquiries to lease aircraft the response they get from the leasing companies is that they are only willing to sell; that they are not in the position to lease. What is the reason to that? They said country risk. What is country risk? They don’t think that if there is default and they want to reposes their airplane they will have smooth repossession or at least, a hitch free repossession.

“They don’t also feel that at the time of returning the aircraft it would be returned based on the leasing conditions. They feel that the safety oversight is not strong enough to make sure that the aircraft are effectively maintained and when they are to be returned, they will be returned in good condition,” Sanusi said.

Air Peace Strives
An operator who is into charter services recently told THISDAY that the luck the aviation industry has is that whenever the sector seems to be going down, “somebody will come from nowhere and invest in the industry and be a rescuer. It happened when Arik Air joined the market. It is also happening now with Air Peace.”
Industry analysts believe that without Air Peace intervention airfares would be too high for travelers, adding that there would be far fewer number of seats available for domestic air passengers and that will obviously triple the fares.

Currently Air Peace has 26 aircraft: one Dornier, eight Embraer 145, three Boeing B777 and 14 B737 with a firm order of 23 new aircraft. According to the Nigerian Civil Aviation Authority (NCAA), Air Peace has about one-third of the domestic market, which is about 33 per cent of the market.

The airline provides the highest number of seats on domestic flights, it is the biggest employer of labour in the industry with over 3000 workers and it is the only airline that has kept Nigeria on the long haul international destination.

Aviation consultant, Amos Akpan identified three major contributions of Air Peace in air travel in Nigeria. He said the airline entered the market in the nick of time and provided the equipment when the overall aircraft fleet was depleting.

“One, timely entrance. As Arik and Aero were constricting on number of routes, available capacity, and manpower utilisation, Air Peace came in to cushion the impact. Two, it contributed to the aviation industry by employment, training, and infrastructure provision.

“The multiplier effect of Air Peace employing over 3000 Nigerians is huge as it spreads into education, health, shelter and food. Trade and integration is enhanced as people can now fly between Kano and Owerri, Lagos and Banjul etc.”

He said industry observers and other Nigerians are anxious to see Air Peace and other Nigerian carriers grow to take back substantial market share from international carriers on long haul destinations.

“There is a sense of pride in travelling on a Nigerian airline on the international route; especially when the service is comparable with renowned carriers worldwide. However, there is fear from historical experience. We do not wish our hopes raised and dashed again. “Nigerian carriers have to find a way to remain in sustainable operations. Jobs are lost, skills are redundant, infrastructures decay, and industry image is battered when thriving airline suddenly crumbles. All stakeholders must work together to stop this trend.

“My personal opinion is that the industry operates like the proverbial crab colony in a bucket. Throw the crabs in a bucket; don’t cover the bucket, none of the crab can climb out because they’ll keep pulling each other down,” Akpan said.

However, an industry operator told THISDAY that there is a prevailing sadism in the industry, “whereby stakeholders will be calling for investment in the industry and when somebody ventures to invest the sector, the same stakeholders will begin to undermine him and his business. It seems that some people want to continue to have a stultified industry that serves their narrow purpose.”

Expanding Destinations

Air Peace open new domestic routes, revived old ones that were abandoned and it is now pioneering new local destinations. The airline will soon connect Ibadan to some destinations in northern part of the country. It has already connected Kano and Owerri and when Enugu is reopened, it would connect it to some other northern destinations. With this air connectivity, businesses are enhanced, according to industry stakeholders.

“We will like to develop new routes to enhance the nation’s economy. We will like to connect Owerri to Kano, Benin to Port Harcourt, Ibadan to some destinations in the northern part of the country. We will also like to connect Sokoto to Maiduguri, Lagos to Gombe. We would connect these cities without stops in Lagos or Abuja.
“We will use our 50-seater Embraer ERJ 145 jets, which we acquired for this purpose. We have just added two of the brand to our existing six, making it eight aircraft. We are utilising the 50-seater jets to connect every city in the country,” Chief Operating Officer of Air Peace, Mrs. Toyin Olajide said.

Stakeholders’ Support
For Air Peace to succeed it needs the support of government and industry stakeholders. Industry operators have reiterated that government through the relevant ministries and agencies allegedly hinder the growth of domestic airlines that actually create jobs. They said these agencies promote policies that tend to encourage foreign carriers that operate into the country.

They noted that despite the fact that government knows that domestic airlines will not grow if foreign airlines are encouraged to operate unhindered into the country, government has not taken any concrete step to show support to local carriers, like insisting that foreign airlines code-share with them if they want to operate to more one airports in the country.

The President of Sabre Network, Africa and also the President of industry think-tank body, Aviation Round Table (ART), Dr Gbenga Olowo, recently told THISDAY that Nigeria needs the foreign airlines but efforts should be made by the country to balance the trade by empowering local carriers to compete with the international airlines.
He said that it is easy for government to insist that international airlines must code-share with domestic airlines for designation into more airports in the country.

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