As More Airlines Enter Aviation Industry
Chinedu Eze writes on the implication of the entrance of United Nigeria and two more airlines that billed to join the domestic air travel market this year
There are key facts that could be confirmed by the Nigerian Civil Aviation Authority (NCAA) and industry analysts.
The first is that Nigeria needs more operating aircraft and secondly is that with the current economic situation, not many can afford to travel by air and thirdly is that despite the low purchasing power, air travel remains the safest choice of movement in the country because of insecurity and poor road infrastructure.
Figures emanating from the Federal Airports Authority of Nigeria (FAAN) indicate that since the reopening of flights after the COVID-19 lockdown last year, there has been progressive increase in passenger traffic on the domestic routes. It is also projected that passenger traffic would continue to rise as more people prefer to travel by air and availability of more aircraft will eventually knock down the fares and make air travel affordable to more Nigerians.
Since 2017 domestic airlines have experienced depletion of operating aircraft, which has contributed to high fares, as fewer aircraft struggle to meet the demand of travellers. It has also given rise to flight delays and cancellations, as airlines operate tight rotation because one aircraft operates more flights and when there is AOG (aircraft on ground), airlines find it difficult to meet their advertised schedule. This causes delays and flight cancellation.
The Chairman of United Nigeria Airlines, Dr. Obiora Okonkwo ,said paucity of operating aircraft in Nigeria, among other reasons, prompted him to establish the new airline.
He said the airline would be based in Enugu, just like the defunct Sosoliso, which recorded very successful and profitable operation till the tragic accident that swept it off the airspace.
Okonkwo, who spoke to journalists during the inauguration flight of the airline from Lagos to Enugu, said the airline would do well because there still exists a vacuum in the market, as he was optimistic that more Nigerians would choose to travel by air.
“Well, we can see that there is a gap in this industry and we have not made any mistake to make Enugu aviation hub. Enugu state government will give us encouragement. We have been driven by service; service in to the industry; service to mankind.
“Our short-term plan is to consolidate. You can see we have a base in Enugu. And we have to consolidate, establish all our routes and then work about expanding. It might surprise you to know that we have full load in all the routes we have operated this morning. Today is the first day of our service so that is good and it shows what will happen,” he said.
Another airline that is processing its Air Operator Certificate (AON) and which is believed would start operation this year, is NG Eagle.
The new airline, which last week brought in new aircraft painted on its livery (it has been confirmed that the two aircraft were taken from Arik Air fleet, two Boeing 737-700 by Asset Management Corporation of Nigeria), wants to join the market to create jobs and increase the aircraft fleet in the country.
Reacting to this development an insider told THISDAY, “One of the major objectives of establishing this new airline is that we want to rescue jobs, we don’t want the aircraft (in Arik Air fleet) to be wasted.
“These are new generation aircraft. So we have to rehabilitate them and create a new airline. This airline will employ at least 500 Nigerians. It will engage at least 60 pilots; it will engage engineers and other Nigerians.
“So we need to establish the airline in order to add to the industry. The industry needs more aircraft, it needs to create more jobs and there is indication that 2021 will be a great year for aviation because more people will travel by air.”
Another airline that many industry observers are expecting to obtain AOC this year is Green Africa Airways. Green Africa Airways Ltd is a Nigerian start-up based in Lagos, Nigeria, which was founded in 2015, and has yet to commence flights as of 2021.
The Founder and CEO of Green Africa, Babawande Afolabi, has expressed optimism that soon the airline would start operation.
But industry analysts have observed that the airline had stayed too long in the process of obtaining its AOC.
This year will make it six years it has been in that process. Although its activities have been published widely in the media, which heightened expectations.
But beyond the media coverage, there have not been many milestones about the airline, except the recent introduction of its cabin crew uniform.
It was Green Africa Airways that advertised order of 100 Boeing 737 MAX and after the two tragic accidents involving the aircraft type and its subsequent suspension of operations, the airline indicated that it would acquire other aircraft types.
THISDAY however learnt that the airline since 2015 had indicated interest to operate with B737 NG, later it opted for B737 MAX, later it contemplated operating with Airbus A220 and recently it is romancing with the idea of operating with ATR aircraft.
An insider told THISDAY that the airline has names of global industry players, but it needs local representative with deep home touch if it wants to succeed in Nigeria.
“The problem they may have is governance structure. They need strong corporate governance. They also need somebody with local knowledge. I was glad when I heard they employed industry veteran as head of training. That is very good. They need to have such local experience,” the insider told THISDAY.
But there is unconfirmed report that Green Africa, which raised most of its capital from hedge fund, may be moving to Ghana. This is because the investors believe that Nigeria is inclement to investment due to frequent change in policies, lack of rule of law and unpredictability. But a source close to the airline in Nigeria said the airline “is not moving anywhere;” that it is rooted in Nigeria.
Many industry stakeholders said that if the airlines have good plan they will survive, noting that there will be stiff competition, which will drive down airfares and when airfares to the benefit of customers.
They noted that the airlines are facing myriads of challenges beyond their control. Chief among these challenges include the high exchange rate, high cost of aviation fuel and inadequate airport infrastructure like the airfield lighting, which forces out airlines from many airports in the country from 6:30 PM.
But justifying new airlines coming to join the market, the Managing Director, Flight and Logistics Solutions Limited, Amos Akpan said new airlines coming on board was a sign that investors are seeing the potential offered by the aviation sector.
“Before you analyse whether there is growth in passenger traffic, you need to offer flights to existing traffic waiting to be served. Note the direction of the schedule the new airlines are offering. They are filling a gap. Nigerians want to travel direct between cities within the country without coming to transit in Lagos or Abuja; to change aircraft and incur long waits.
“Shuttle flight services and hub and spoke seem to be getting revived. Suitable aircraft types are deployed. With 30 passengers you break even operating a direct flight from Enugu to Kano with ATR-42, which is comfortable and modern with good speed.
“Traders, students and corporate flyers have been waiting to be served on these routes instead of going to Lagos and Abuja to wait for 24 hours. There are 40 to 70-seater modern aircraft that are suitable for these movements. The airlines do not need to buy a lot of fuel per trip as these aircraft burn low fuel per trip. Less number of cabin crew, quick turnaround time from stations because it’s simple to dispatch,” Akpan said.
He noted that for those airlines still insisting on operating with 148-seater aircraft that burns approximately 3200 liters of fuel per hour on a 25 or 45 minutes flight, they have to reconsider their modules.
“Stay trim in budget, reduce cost, offer regular, frequently available schedule. Keep to time, be polite, get the maintenance team that understands that you are a flying company not maintenance and repair company.
“Air travel within Nigeria has not been fully exploited; there are rooms for more airlines depending on your business model. Finally, operators are beginning to realise that the type of aircraft they deploy on specific routes matters to their company’s financial results,” he added.
The Chief Executive Officer of Mainstream Cargo Limited, Seyi Adewale said in business there are low seasons and airlines must strengthen their sales and marketing initiatives and campaigns aggressively.
“It’s at this time this strategic business unit (SBU) can pull their weight and prove to the operations and engineering SBU of their positive impact to the overall business. It’s more like a challenge! I expect this SBU to develop special products, promos etc in support of capital and cash flow.
“If well crafted, the airline load factor will surely improve during this off peak period and could evoke customer loyalty during peak season. Lastly, I believe that airlines in Nigeria need to partner with hotels more, whereby their flight schedules are placed at their Reception Desk with seamless connectivity to the airline for ticket purchase, hotel pickup, flight change and this could be easily done through ICT capability enhancement.
Travel expert and organiser of Akwaaba African Travel Market, Ikechi Uko, told THISDAY that there is discernible passenger growth in the domestic market, remarking that flights to South South destinations like Uyo, Calabar, Port Harcourt and Asaba record high load factor at least in the past five months and it is the same with flights to South East destination of Owerri and Enugu.
This is corroborated by the Airport Manager of the Sam Mbakwe International Cargo Airport, Owerri, Mrs. Rejoice Ndudinachi who told THISDAY that since the heavy Christmas season passenger traffic to the airport has remained high, disclosing that the Owerri airport records the highest domestic passenger traffic in the country currently. She said that the airport serves Abia state, Imo, Anambra, part of Rivers and part of Ebonyi states.
“We are the highest in domestic passenger traffic in Nigeria. The traffic has been stable since after Christmas and we enjoy a lot of advantages because of the location of the airport and its clement weather, even during the harmattan season,” she said.
Also the Airport Manager of Akanu Ibiam International Airport, Enugu, Mrs. Cecilia Oguama, said that there is rise in passenger traffic at the airport, from 1000 passengers a week in 2019 to 6000 to 7000 passengers a week in 2021, adding that six flights operate to the airport daily.
So for the airlines to survive they must find ways to make more Nigerians to travel by air and also they must review their fares and make their in-flight service more satisfying.