Market News

BY  Chinedu Eze

Over the years, it has been taken for granted by policy makers and appointed political leaders who manage air transport in Nigeria that Nigerian airlines do not have capacity and therefore will not be encouraged to operate international destinations. 

An industry insider told THISDAY that when the former Minister of Aviation was chiding Nigerian carriers, telling them they do not have capacity and therefore should not even try operating international destinations, “it looked like a curse.”

But some stakeholders in the industry agree that if government wants to encourage Nigerian carriers to operate these international destinations, it could be achieved.

Some years ago, one of the stakeholders, Chris Aligbe lamented that every year, foreign airlines airlift about 4 million passengers from Nigeria; noting that in 2016, the total number of passengers that passed through the nation’s airports were 15. 2 million and about 4.2 million were airlifted by foreign carriers. In the principle of Bilateral Air Service Agreement (BASA) Nigeria signed with other countries, every airline that operates into the country should have a Nigerian airline operating into that airline’s country with the same number of frequencies.

Aligbe noted that in a situation where Nigeria does not have the capacity to provide strong airlines to respond to the number of frequencies, commercial agreement is reached between representatives of both countries whereby the airline that operates to Nigeria should have to pay royalty to the country for the number of frequencies which Nigerian airlines do not reciprocate and this is paid per passenger.

According to him, the exploitation of Nigeria by foreign airlines started after the demise of Nigeria Airways. But the fact that it is not these foreign airlines that should be blamed; “it is us that should be blamed. This is because nobody allows a vacuum; once there is a vacuum something comes to fill it. If you know the huge amount of money that these airlines repatriate every day you will see the need why we need a national carrier.”

However, it has been proven that having a national carrier is not the only way for Nigeria to reciprocate the BASA agreement by having indigenous airlines that would also operate to those countries, which airlines currently operate to Nigeria and even beyond.

The federal government can support Nigerian airlines which are flag carriers to also operate to such destinations. This is a policy that has been adopted by the current government. The Minister of Aviation and Aerospace Development, Festus Keyamo has made it clear that Nigerian airlines have to be empowered to take advantage of these bilateral agreements and also benefit from the huge revenue earned by foreign airlines from Nigeria.

At different fora, the minister has made it clear that unlike the past minister of aviation who concentrate on creating opportunities for foreign airlines to fully take charge of Nigeria’s international with diehard belief that Nigerian carriers do not have capacity, this administration believes that domestic carriers must be supported to increase their capacity and take advantage of these international routes.

The minster has taken time to review the BASA deals guided by emerging policies that dovetail with government’s agenda of fair negotiations, ensuring reciprocal rights for both Nigeria and other countries and fostering deeper aviation collaboration. 

The Tinubu administration has vowed to mobilise policies and resources to support local airlines. “And it’s very simple, and we are very unapologetic about this. Why do I say so? In the whole of Africa, I mean check, all the major airlines are either owned by government, subsidized by government or subsidized by government.

“Rwanda Air, South African Airways, Egypt Air, Air Maroc, name them. It is only in Nigeria that you have strong private sector participation, only in Nigeria, in the whole of Africa. 23 vibrant local airlines, incredible.

“And you know it is not a tea party to run an airline, governments must be involved. But the point really is that, if that is the case, when you have strong private sector participation, literally all the routes domestically are set by local airlines and some international routes. If you are Minister of Aviation and you are fighting them, you are not supporting them, what are you Ministering over?”

Few years ago, stakeholders in the aviation industry had called the government to quickly stem the unfavourable condition in which 100 per cent of international flight services were handled by foreign carriers which stifles attempts by Nigerian airlines to reciprocate by flying to their own routes.

The then President of Aviation Roundtable and Safety Initiative and currently President of Sabre Network Africa, Dr. Gabriel Olowo, said Nigeria needed stable legal and regulatory frameworks to grow the industry.

He said in 2015, the Aviation industry supported 254,500 jobs; contributed $940 million (N184.7 billion) to national GDP, noting that of this sum, 49 per cent (i.e. $462 million or N90.8 billion), was a direct output of the aviation sector (via airports, airlines and ground services) while 51 per cent constituted indirect jobs (via the supply chain).

The president also said there was additional job worth $464 million (N91.2 billion) derived from tourism, which raised the overall contribution to $1.4 billion (N275.9 billion).

Olowo said the Nigerian aviation market is however threatened daily by open skies for Africa, which Single African Air Transport Market (SAATM), member countries are not honest in implementing, growing competition from other international African carriers, as international airlines focus on Africa and the present economic downturn.

He decried the multiple entry points for foreign airlines, adding that it’s a “disastrous and deliberate annihilation of the domestic market.”

Olowo said a situation where some airlines fly to multiple airports in Nigeria without any Nigerian airline reciprocating is “a negative balance of trade.”

That request made few years ago is being answered by the Tinubu government, spearheaded by the Minister of Aviation, Festus Keyamo. 

Keyamo resurrected the Cape Town Convention and increased Nigeria’s rating, pushing the country to the point of reckoning and has made it possible for Nigerian airlines to easily do business with lessors and international financiers. Steadily the Minister is decapitating the old liabilities of distrust and doubt, rebuilding the goodwill of Nigeria and encouraging airlines that have good plans to engage in dry lease of aircraft for local and international operations.

“The environment was not good enough in the past. And I thought that was one of our problems.  The senate committee chairman talked about newer aircraft, access to newer aircraft and all that. Because of our our lack of ability to get our aircraft in, our lack of ability to service our international routes, even our domestic routes too, in a reciprocal manner, Air France comes here, we cannot go to Paris. Lufthansa comes, we cannot go to Germany. Delta comes, we cannot go to the U.S. KLM too, we cannot go to Amsterdam. These are routes that are serviced under our BASAs. And the BASA gives us the reciprocate rights to service those routes too. If you look at all that, and then the high cost of domestic tickets by local airlines, all of this boil down to one problem and we identified the problem: access to financing and dry leasing and we have done a lot towards achieving that,” he said.