Aviation industry stakeholders are worried about the growth of the industry without the presence of profitable airlines in operation, stressing that the industry may not grow if urgent steps are not taken to remedy the situation.
Industry leaders that converged in Abuja on Tuesday for a two-day conference on African Aviation, were of the view that Nigeria airlines must operate profitably and buoy the sector to rapid growth, in order for Nigeria to grow to its potential in the air transport sector.
The stakeholders said the high interest rate on loans, high and multiple taxation and high airport charges were responsible for the failure of Nigerian airlines to operate profitably.
The Director General of the Nigeria Civil Aviation Authority (NCAA), Captain Musa Nuhu, in an interview, acknowledged the challenges Nigerian airlines face when he excoriated the high interest rate banks charge airlines on loans and regretted that it would be difficult for airlines to borrow money at that interest rate and be profitable.
He also noted that it would be difficult for the airlines to operate profitably when the nation’s economy is struggling because despite Nigeria’s huge population the number of people that travel by air is relatively low and this has to do with the citizens’ disposable income.
He however noted that many of the challenges leveled at the airlines, especially in the area of cargo were not aeronautical charges and felt exasperated that the service providers have failed to streamline the charges so that they could be reviewed downwards.
Airlines are the highest employers of labour in the aviation industry and other organisations in the sector exist to provide services to them; so they remain the bulwark of the industry and their failure defines the failure of the aviation sector.
The Regional Vice-President Africa and Middle East, International Air Transport Association (IATA), Kamil Alawadhi, in his speech at the conference, berated Nigeria for making it difficult for Nigerian airlines to operate profitably by using high airport charges to abort their growth.
He said government had always stifle the airlines with high charges, noting that at least, there are about 27 charges imposed on airlines by the Nigerian government.
According to him, research shows that Nigeria ranks highest in airport charges in Africa and disclosed that Abuja airport is the most expensive airport in Africa, closely followed by Lagos airport.
“In a recent research conducted, web discovered that the most expensive airport in Africa is Abuja airport, followed by Lagos airport, with all these exorbitant charges, Nigerian airlines can’t compete with their foreign counterparts.
“Africa has put itself in a a place where it cannot help its own, expensive fuel, excessive charges, leasing and insurance through the roof, the airlines need to be financially viable too. The airlines contribute to the country’s GDP but Nigeria needs to decide what to do for them to survive,” he said.
According to him, carriers based in Africa are expected to generate a moderate combined loss of around $484 million in 2023 because the continent remains a difficult market in which to operate an airline, with economic, infrastructure and connectivity challenges impacting the industry performance.
“However, despite the challenges, the industry continues to move towards profitability following the COVID disruption and could be in the black as soon as next year. Underpinning this is the robust demand for air travel. As we saw in the second quarter of 2023 – and for two consecutive quarters – African carriers had one of the world’s highest annual passenger traffic growth rates, second only to Asia Pacific.
“With total traffic up 38.9% compared to the same quarter in 2022, African carriers growth outperformed the industry-wide average for total and international traffic, even though the region has not fully recovered to pre-pandemic levels. Second quarter of 2023 RPK (Revenue Passenger Kilometer) were 9.2% below the same quarter in 2019. Despite this continued positive performance, the region still confronts economic challenges that severely limit the affordability of air travel, in addition to a range of infrastructure issues that curb capacity and hinder the development of consistent air service.
Looking further ahead, over the next 20 years, he said Africa’s passenger traffic will double, eclipsing 300 million passengers by 2040 at an annual average rate of 3.4%.
“As you can see, the continent stands out as the region with the greatest potential and opportunity for aviation. But this potential is limited by safety incidents, infrastructure constraints, blocked funds, high costs, lack of connectivity, regulatory impediments, slow adoption of global standards and skills shortages, among other factors.”, he said.
The Minister of Aviation, Festus Keyamo in a speech at the conference promised that the Nigerian government will do everything possible to encourage Nigerian airlines and the aviation industry to grow.
He observed that the recent global events, further exposed the immense contribution and importance of air transportation as a catalyst for economic development, vital engine of global socio-economic growth, one of the greatest contributors to the advancement of modern society and a key instrument for achieving the United Nations Sustainable Development Goals (SDGs).
These, he said, underscore why the world was greatly impacted, when international aviation was disrupted by the Covid-19 pandemic and other global occurrences.
“It is the Vision of this current administration to make Nigeria the Aviation hub of Africa. In order to attract foreign investors, the government is already looking at the following areas to improve aviation business in Nigeria: upgrading, which includes upgrading of the Cat 3 landing system, at major airports, construction of the second runway in Abuja, airport improvement programmes through concession and government willingness to partner with companies to turn major airports into Aerotropolis.
He said that government welcomes major players in aircraft leasing and urge lessors to invest in Nigeria airlines to provide state of the art aircraft. Government will ensure enforcement of contract agreement and the rights of investors and indeed all parties are protected; and Nigeria being a signatory to the Cape Town Convention will uphold international obligations,” he said.