Nigeria among Africa’s top five private jet charter markets – Operator - PUNCH
The Managing Director of an aircraft management and charter flight company, Leading-Edge Aviation Company, Mr Victor Mgbachi, speaks with FUNMI FABUNMI on the prospects of business aviation and private jet charter sub-sector in Nigeria, among other key issues
What would you say are the factors driving business aviation and private jet charter in Nigeria?
I would say that the industry has never been very profitable. The sub-sector is not a robust one in Nigeria or in West Africa. However, in the African region, I would say Nigeria is among the top five. South Africa is far ahead of us, Kenya is catching up or exceeding our capacity already. I would say that what drove business aviation in recent times was the COVID-19 pandemic that happened in 2020. It was the period people saw the need for business aviation. Before now, it used to be for pleasure and class. But now, post-COVID, many people now have a business to do with it. With the recurring delays with the scheduled commercial flights, several people now want to have a tab on what time they want to arrive at their meetings in different locations. They also want to have a tab on the time they want to return back to base to continue their businesses. I recall that during the COVID, there was an increase in the passenger-sharing model of private jet ownership. So a few brokers came together and said, you know, we have people who want to go and do business in Abuja, Port-Harcourt and other locations, but they are not willing to pay as much as $7,000 per hour for an Embraer Legacy private jet charter, for instance. So, what do we do? So, these brokers started pulling individual clients together. They work together to pull seven people together who will pay $1,000 each. That way, you get seven people who will pay $7,000 to cover for a sector of the flight. And if it is meant to be a return sector, each passenger pays $2,000, for example, and that covers for both sectors; and all these passengers agree that they are going to return back to Lagos at a specific time. So, business continued even while the pandemic was still on but the lockdown was lifted, and people became a bit skeptical to sit next to someone who they were not sure of their health status as per COVID. So, we saw that but that has suddenly fizzled out because COVID is now over, and life has returned to normal. However, most people who enjoyed the private jet charter service have now seen that business aviation basically was not for luxury, but for ease of movement or ease of business, depending on where they want to go. So, it is picking up and I would say a whole lot of people are beginning to understand that this is basically for business. There are a few owners in Nigeria who own their private jets, specifically for private use-they don’t use it for charter. They are purely Part 91. But for those who are Part 1, 3 and 5, they keep their aircraft out and there is regular cleaning of the aircraft interior to ensure that the aircraft is sterile for flights.
How has rising inflation and volatile exchange rate affected private charter service pricing in Nigeria?
One of the parts of business aviation is charter. One of the challenges that business aviation has faced is basically the price of fuel pre-COVID and then post-COVID when everything went up. In the past 12 months, there has been an increase of over 200 per cent in the price of jet fuel. However, the advantage is that the price of jet fuel is in naira, so we can always manage it. Well, for business aviation and charter, the prices are always in the United States dollar, so it is left for the operators and the aircraft management company to assess their operating costs against their charter prices and fix a price for their clients. But for Leading-Edge Aviation Company, we are also into charter services and with the type of aircraft we manage, we have kept our prices very competitive compared to other operators; this one of the cutting-edge for us. So, we also look at the middleman between the end user and the charter company. We usually give rebates to the middleman; the middleman is called the broker in this business. This also gives us an opportunity to get more business from the end users. However, the price of fuel has not really affected business aviation because it is usually charged in USD. However, we have seen some operators that increased their prices just to accommodate the extra cost of operation.
Are there challenges with running a private charter with foreign-registered private jets?
It is always a bit difficult to run a charter business with foreign-registered airplanes, and that’s why the regulatory authorities would always encourage any investor in business aviation to deregister their aircraft and put it in Nigerian registration. This will help them to cut down on the cost of landing and en-route navigational charges. I will give you a very good example. If an aircraft is registered as Five-November (5N), the operator of such an aircraft will pay their charges at a particular index, which is over 90 per cent lower than what the operators of the foreign-registered aircraft will pay. However, there is also the fear that if an operator registers their aircraft in Five-November (5N), the aircraft will lose its value in the global market. Well, all that has changed over time. We now have more aircraft Maintenance Repairs and Overhaul (MROs) facilities and Aircraft Maintenance Organisations (AMOs), coming into the Nigerian market. We have the likes of ExecuJet, Air First, Seven Star Global and a whole lot of AMOs. They are giving first-world services to these airplanes as per maintenance. However, the fears are still there. Most insurance companies try to shy away from 5N-registered aircraft. Again, we also try to make our brokers smile because they are the ones who know the end users. They bring the end users to us, while we do the charter. They are often given a rebate of what the fee is. Basically, we are competitive and we can offer more services. We have had a few of our clients use our airplane and the feedback has been phenomenal. They say to us, “your in-flight service is off the roof.’’ We serve proper meals within the first 35 minutes of the flight.
Talking about elections, it is believed that politicians often fly private jets to attend campaigns and political meetings during electioneering. Is the sector not expected to record more sales during this period?
There is always an upsurge before every election, but this upsurge would always declines two to three weeks before the real election period and I will tell you why. Most private jets have their insurance cover, particularly foreign-registered aircraft which often have their insurance covered by foreign insurance companies. As a practice, private jet operators often get a red flag or an alert from the insurance company warning them against flying to certain states in Nigeria. They often state that aircraft operators can’t operate in some states because of unrest and the activities of insurgents in those areas. But generally, before an election, we always have an upsurge and increase in the demand for private jets. However, private jets are still limited in terms of number in Nigeria. We have a few individuals who always want to take advantage of that period to bring in an airplane, especially on a lease purchase, to operate within that period and then exit. But it has been very difficult doing that because you really cannot hold the market. You cannot tame the market. And part of the reason you cannot tame the market is that some of these airplanes can be due for maintenance within and around the election period, you can’t skip that. On the other hand, part of the issue may have to do with certain restrictions like crew duty hours. A few operators do not stick to this rule, and they often run into trouble with regulatory authorities like the Nigerian Civil Aviation Authority and the rest of them. For Part 91, which is the private jet part of business aviation, a pilot or a set of the crew are only expected to fly for eight hours; or between eight to 12 hours maximum; and they must have their minimum rest before the next flight. So, the restriction there is that the demand will be there but there are a lot of restrictions that have to do with aircraft maintenance, crew rest period, and other factors. Another downside could be the airport operating hours. For example, if a politician has an evening rally, there is always a restriction for most airports that do not operate for 24 hours. There are airports that operate sunrise and sunset-7:00AM to 6:00PM. So, there is a restriction of arriving and departing such airports within that period, otherwise the aircraft will be grounded. Alternatively, they may be asked to pay for an extension. So yes, there are increases in demand during election period but there are also limiting factors during an election period. While there is an increase in demand, the limiting factors must also be considered.