NIGERIA: Nigerian Airlines Won't Survive If Government Has No Clear Economic Policy

Airline Operators of Nigerian (AON) has warned that more airlines would go under unless the federal government introduces clear economic policies aimed at buoying the airlines to profitability.

The Executive Chairman of AON, Captain Nogie Meggison stated this at a press conference on Wednesday.

Meggison expressed concern that while Nigeria has all the potential to become the hub for West and Central Africa, a small country like Ghana, which has been able to put its acts together in aviation is dominating the sub-region in the sector.

The operators insisted that it is through deliberate economic policy that the aviation industry can grow.

"There is an urgent need for a deliberate economic policy that will eliminate the many challenges that adversely affect the sector in a bid to guarantee survival of domestic airlines in the country and to make Nigeria the hub for Africa," Meggison said.

He noted that Nigeria has huge potential as a country blessed with a natural God-given geographic location at the centre of Africa (4.30hrs to most parts of Africa); with most of its airport at approximately sea level, being the 6th largest producer of crude oil (JetA1), a human population of 190 million, and skilled manpower, yet Nigeria is not a hub for aviation activities on the African continent.

Following the air crashes of 2005/06, the federal government came up with a deliberate policy to ensure air safety in Nigeria. As fallout of that singular action, today Nigeria has had an excellent safety record of 93 percent between 2006 and 2017.

The country also secured the Category 1 safety status and most of the scheduled airlines are currently IATA Operational Safety Audit (IOSA) certified as a strong testimony of the country's commitment to air safety.

Safety and economic policy go hand-in-hand. Where there is no financial profit for airlines safety would be compromised. A clear economic policy for the survival of domestic airlines is very critical at this time which has resulted over the years in the death of over 25 airlines in 30 years.

Safety and financial economic policy must go hand-in-hand; as airline investors are in the business of aviation for the profit and can't make profit without safety or have a safe airline without profit, Meggison said.

The AON said some of the major issues that need to be addressed to grow the sector include, but are not limited to: the Removal of Value Added Tax (VAT), as domestic airlines are the only mode of transport paying VAT, noting that marine, road, rail and even the international airlines don't pay VAT.

The operators urged government to review the five percent Ticket Sales Charge (TSC) to a flat rate in line with the global best practices; the harmonisation of over 35 multiple charges, which add huge burdens on airlines.

Others charges include poor navigational and landing aids that limits operations to daylight operation for most airports Nigerian airlines fly an average of only five hours as against the average of 10 hours worldwide per airplane; high cost and epileptic supply of JetA1; Obsolete infrastructure that hampers the ease of doing business; and lack of consultations with airlines before introduction of new charges and policies among others, which throws off the feasibility studies of airlines out the window.

These are some of the main reasons for the short life span of Nigerian airlines averaging about eight years, Meggison added.

He said that IATA recently conducted a quick impact analysis of a potential removal of the domestic VAT of five percent, using an average domestic airfare, it would reduce the ticket price by 4.39 percent, which would mean a boost in domestic air traffic of 3.51 percent or around 133,000 passengers a year together with the multiplier effect of additional turnover of revenue from other indirect businesses; so there would be more landing and parking fees for the airport, hoteliers, car hire, airline support services and most importantly, create spending to jump start the economy out of recession.

NIGERIA: Sorry Nigerian Government, You Must Always Stand By Nigerian Airlines

One of the major challenges being suffered by Nigerian airlines is lack of government support.

Whereas other countries easily negotiate Bilateral Air Service Agreement (BASA) with the Nigerian government for their airlines, Nigerian carriers always find it difficult to get approval from other countries to operate to their airports.

While Nigeria's rising domestic carrier, Medview Airline had got approval to fly to Dubai, which it slated to start in July, but the ground handling company, which is owned by the state and enjoys a monopoly in Dubai had told the Nigerian carrier that it would not have a slot to handle it at the Dubai airport, so it could take its operations elsewhere.

In other words, because the handling company cannot earmark a time to provide service to the Nigerian carrier, it cannot operate to Dubai.

About a month ago, the European Union blacklisted the same airline along with others in Africa and Asia and stopped it from operating to London with Nigerian registered aircraft, prompting it to wet lease aircraft from European Union based airline to operate to London.

Also about five years ago, Arik Air was stopped from operating Abuja-London flights, when UK airport authorities told the Nigerian carrier that it does not have slot for its flights from Abuja, so it had to only operate Lagos-London flights, which was seven times a week, while its UK counterpart British Airways was operating daily flights from Lagos to London and from Abuja to London.

Also Virgin Atlantic Airways was also operating daily flights from Lagos to London. So in total, two UK carriers were operating 21 flights weekly to London, while the only Nigerian carrier was allowed to operate seven fights weekly to London with 14 frequencies as allocated in the BASA between Nigeria and the UK unutilised.

When the then Minister of Aviation, Senator Stella Oduah protested and wanted to retaliate by stopping British Airways flights from operating to Abuja, the British Prime Minister then called the then President Goodluck Jonathan, who quickly stopped Oduah from barring BA's operations to Abuja.

At the end of the day, Arik was stopped from operating to London from Abuja. And it was the Nigerian government that allowed that to happen despite the fact that in the BASA signed between the two countries, both countries could allow 21 flights weekly for their indigenous carriers.

While UK strategically stopped Arik to curb competition for BA, Nigeria ignored the spirit of reciprocity that govern international diplomacy and allowed UK to cut down the operation of Arik.

While the Nigerian government eagerly welcomes foreign airlines to Nigeria, other countries whose airlines operate into Nigeria usually refuse Nigerian carriers from operating to their countries in order to protect their own airlines by curbing or eliminating competition.

The Chairman of Air Peace, Chief Allen Onyema told journalists recently that the airline was refused request by Togolese government to operate to that country until he threatened court action.

The letter he wrote to Senegal to approve its flight operation to that country was not responded to. But these are countries in West Africa, which see Nigeria as the biggest market in the sub-region and which are given BASA approvals by the Nigerian government.

Industry observers accused the Nigerian government of complacency and indifference to the well-being of Nigerian carriers and said that while other countries support their airlines and protect them; the Nigerian government seem detached from the problem of its indigenous carriers.

Travel expert, Ikechi Uko said that without government's support, airlines cannot succeed; whether the airlines are owned by government or by private investors; that government's support buoys such carriers to success when government opens diplomatic doors for its indigenous carriers.

An Airline official commented that Nigerian government has a misconception that because the indigenous carriers are owned by private investors it does not have any obligation towards the airlines.

Government has to realise that it must have to support Nigerian airlines for them to do well. We are not asking for intervention fund; we are asking for support in the sense that government should be conscious of the fact that if a country refuses a Nigerian airline entry, government should also reciprocate and make it clear that any Nigerian airline that is dealing with another country or organisation of another country is representing Nigeria.

We are flag carriers of Nigeria; it is not only national carriers that should be protected and support by government, the operator said.

Also a senior official of Medview noted in a recent interview that if Medview is not operating to London the fares from Lagos to London would have doubled by BA and Virgin Atlantic Airways this summer, but it still hovers around 500 pounds.

They bring this politics to eliminate competition so that they can fix exploitative fares and milk our citizens.

With Medview operating to London they do not have the privilege to hike their fares and this is what they are scheming to do if they succeed in stopping Nigerian airlines. This is what government should understand and take it as its responsibility to protect our own. There is nothing wrong protecting your own, the official said.

An industry observer alleged that Emirates might have used its ground handling company to stop Medview from operating to Dubai and noted that there was a time Emirates was operating daily flights to Abuja and twice daily from Lagos but immediately our economy entered into recession, they withdrew their Abuja-Dubai flight and also stopped one of their daily flights from Lagos.

You can bet that when the economy rebounds they will come back and the Nigerian government would give them quick approval. They were encouraged to treat Medview the way they did because they are aware of what BA did with Arik and knew that the Nigerian government did nothing to protect its own carrier.

Very sorry for Nigeria Airlines!!!!!!

NIGERIA: Airline Operators Cry Over Unfair High Taxes And Expensive Jet Fuel, JET A1

Nigerian airlines are in serious dire straits, raising grave concern over their continued existence. Many of them are already finding it difficult to operate due to high Customs duty, astronomical cost of aviation fuel, otherwise known as JET A1, high interest rate, low passenger traffic, alleged multiple taxation and unfavourable government policies.

Operators said that these challenges were detrimental to the sustenance of their business. Already two carriers (names withheld) have ceased operations, with few others wobbling and providing less than satisfactory services The Managing Director of Arik Air, Chris Ndulue, said that for domestic airlines to grow, the Federal Government must have to support the operators by streamlining taxes, reviewing them downwards and even banish Value Added Tax (VAT), which is not paid by other sectors in the transport industry.

He said that there must be consistent, planned and committed policy by government to grow and encourage domestic airlines to operate profitably. Ndulue added that such help would provide incentives to safety and manpower development by the airlines. He said: “What we expect from government is to provide good environment for doing business. One of the major problems in this environment is borrowing.

The borrowing cost is very high; this can be reduced by 75 to 50 per cent. Multiple taxation is one of the major problems in the industry. “The aviation industry requires special support. It is an industry that government should be supporting, but it has not been getting this support.”

Also, the Chairman of Airline Operators of Nigeria (AON), Captain Nogie Meggison, said that one of the major challenges being faced by Nigerian airlines was the high cost of aviation fuel, known as Jet A1, which, he noted, was not always available. He explained that aviation fuel used to be piped from Atlas Cove to the airport, but had been stopped many years ago.

Since then government has not deemed it necessary to rehabilitate the pipeline, which would have made it easier to obtain fuel at the airport without trucking it as it has attendant fire risks,” he added. Meggison said that these and other factors had made airline business not too profitable for investors.

Also, it was learnt that the failure of many of Nigeria’s domestic carriers, their short life span and uncertainty of the future have been attributed to wrong use of equipment, poor capitalisation, high cost of fuel and access to credit facility at high interest rates.

Till date, no Nigerian airline on scheduled commercial operation has thrived for up to 20 years, except the defunct national carrier, Nigeria Airways Limited (NAL), which was finally liquidated by the Federal Government in 2004. While the country’s air transport market is viable and highly profitable to foreign airlines, Nigerian operators have been narrating tales of woe, losses and insolvency.