With diminishing disposable income due to downturn in Nigeria’s economy, many Nigerians who hitherto travelled by air cannot afford it currently. If the situation continues, Nigeria may have blighted aviation sector, which only benefits foreign airlines that operate most of the international flight service from Nigeria.
As Christmas season draws near, relief is yet to come to Nigeria’s aviation industry as low capacity, high airfares continue to diminish the domestic travel market.
Many Nigerians who could afford travelling by air in the past cannot afford the cost now, which has continued to increase as more passengers scramble for fewer seats, just as exchange rate continues to push down the value of the naira. Again, airlines continue to grapple with the challenge of high cost of aviation fuel.
In the current economic doldrums in Nigeria, the number of people who could travel overseas for holidays has significantly reduced because of high exchange rate and during this holiday season, where schools have closed for the long vacation, many parents would have preferred to take their children to local tourist destinations, but they cannot do this because of the high cost of tickets.
On the other hand, while many Nigerians cannot travel overseas for holidays, a lot of Nigerians are still travelling overseas in the ever growing japa syndrome. International travel is dominated by foreign airlines in Nigeria. As domestic air travel is shrinking, international travel is growing because many Nigerians are leaving the country in exodus for better life. So, Nigerians are selling their property to raise funds to leave the country. This means that foreign airlines are still recording high load factor on the Nigerian route.
Travel expert and organiser of Akwaaba African Travel Market, Ambassador Ikechi Uko, told THISDAY that a family of six would find it difficult to travel by air locally to any tourist destination due to high cost of tickets. He said this tempting holiday season is the time parents would have liked to take their children out to many tourist places that abound in Nigeria.
He further said this would have been the time to discover Nigeria by travelling to such places like Ikogosi Warm Springs, Obudu Mountain Resorts, Idanre Hills, Ngwo Pine Forest, Port Harcourt Tourist Beach and many other places, if not for the high cost of domestic air tickets.
Uko observed that travelling for business has gone down because of the dwindling economy but traveling for leisure is up and he suggested that Nigerian carriers should embrace and promote tourism in the destinations they operate in any country.
He also said that the intractable lack of forex is a major challenge in aviation and that it is the main reason for the low capacity Nigeria is experiencing in air transport, noting that if the airlines have access to forex and bring back their aircraft in maintenance facilities overseas, availability would thaw the high fares.
“Many of us cancel our trips to different places in Nigeria because we cannot get flights. I would have been in Enugu few days ago but I could not because getting flight is difficult,” he said.
Forex Challenge
Many Nigerians familiar with air travel in Nigeria are worried that if the current prevailing situation continues till the Christmas season, more airlines may go under and this will drastically affect domestic air travel further. Christmas season is critical, THISDAY learnt, because it is the time some airlines revive economically and this has been happening for decades.
“So, if we have any year that airlines do not enjoy the high Christmas season which puts more revenue in their operations, some of them will not survive till March,” intoned an industry observer.
The Chairman and CEO of United Nigeria Airlines, and Spokesman of Airline Operators of Nigeria (AON), Professor Obiora Okonkwo, had earlier urged government to treat aviation as a special case because of the pivotal role it plays in the economy by moving people and goods to places at the quickest possible time. He said that as catalyst to economic development, aviation should be given special attention by government by making forex available to the operators.
“As long as the government does not understand the importance of aviation and make the appropriate investment in aviation, creating an enabling environment for aviation industry to survive, which means access to single-digit capital, reduction of all the charges that are so extranous in Nigeria. Because we have just came from South Africa on IATA conference, it is still on record that Nigeria has the highest cost of aviation services. Every airline pays higher than even what you pay in the Western world. And we, the local operators, are victims on a daily basis. Every ticket, don’t forget, every ticket you sell, we have about 20 to 22 deductions and some of them are repetitions. We have been crying and it seems like nobody is listening to anybody. If nothing is done quicklythis operation is not holding well for better tomorrow,” Okonkwo said.
According to him, the request of the operators is that the government should understand that this is a very critical sector because investment in the aviation industry is a win-win situation.
“It is one sector that any ticket you sell, the government has their own cut. So, if they invest in it, they will get the money back. And then, one way or another, they are also enabling and facilitating all other aspects of business within the ecosystem of the economy,” he said.
Diminishing Airlines
Some airlines that used to be active operators have stopped existing or reduced their operations, which has further reduced available seats for air travellers. In April Dana Air operation was suspended by the Nigeria Civil Aviation Authority (NCAA) for safety reasons and from all indications, that airline is not resuming flights any time soon. Last week, court ruling removed three aircraft out of Arik Air fleet (Court stated four, but NCAA stated three, leaving the airline with one aircraft) and recently Max Air had its aircraft grounded after runway incident, where the tyres of its aircraft deflated why taxiing.
Paucity of Aircraft
The Managing Director of Flight and Logistics Solutions Limited, Amos Akpan, told THISDAY that it is tough operating in Nigeria’s air travel market because of the inhibitive forces that counter the efforts to make progress. He said that what is really driving investors who put money in airline business is passion, which pushes them to buffet through the odds.
According to him, there are a lot of disincentives to investment, from the difficulty in leasing, the inability to acquire aircraft spares due to lack of forex to many charges, which airlines start paying even from demonstration flights for Air Operator Certificate (AOC).
“On the issue of diminishing number of aircraft in our domestic airlines fleet, this is caused by the business environment. No forex to buy spares and repair on time to return aircraft into service,” Akpan said.
He said Dana Air was grounded by the regulator- NCAA, for various regulatory infractions which they issued statement on. Arik Air has three of their aircraft grounded by a court order. If Arik Air has other aircraft besides the specific three, they are allowed to operate them. This means Arik Air is still operational by regulations.
“I’m saying that NCAA must do her job as a regulator. We also must be a society that respects judgement from our courts. Arik can operate that one aircraft and lease more aircraft to operate others than the three grounded by the court. So, Arik is operational not technically grounded. It’s a matter of management strategies and options,” he said.
Low Capacity
He also argued that airlines seem to lump their operations on certain hours of the day in order to ensure that the record high load factor at any time they put their equipment in the sky. In other words, the Managing Director of Flight and Logistics Solutions Limited is indicating that passenger traffic is undulating even at this period of few operating aircraft; that if airlines are not strategic they may not have the number of passengers that would justify their operations in terms of revenue. However, many differ on this.
“7:00 am to 8:00 am flights on the Lagos and Abuja as destinations are usually filled to capacity.The airlines try to juggle the time placement of other flights in the day to achieve breakeven payload. I have said the above to bring to question if we have low capacity issue on domestic flight operations. That is, does our airlines really have less seats than the number of passengers on the domestic routes?Or is it a cluster that happens at specific rush time on specific route? No airline will plan economic utilization of its aircraft on one or two full flights a day for just four or five days in a week. As a rule of thumb, aircraft has minimum guaranteed hours of utilization per month with a break-even payload per flight; often calculated as revenue per kilometer from payload – passengers, excess baggage, and cargo.
“So, what people see in the short rush hour does not reflect the accurate capacity situation. The airline manager has to worry how to further deploy the aircraft for profitable operations after 10:30am when it returns from that morning’s rotation. We cannot use that to conclude that there is shortage of capacity. Instead we can profer possible alternative solutions to that rush hour capacity problem,” he said.
But THISDAY investigations indicate that although there is low disposable income, which is disincentive to air travel, but the existing number of aircraft is inadequate to meet the current demand of air travellers. As Uko disclosed earlier, he made efforts to secure flight to Enugu recently but he couldn’t get a flight because the airlines operating the route were fully booked. It is similar experience to others who spoke to THISDAY.
Informed sources from one of the airlines told THISDAY that there were fewer seats that cannot meet passenger demand but they were also careful at scheduling to ensure the maximisation of capacity, disclosing that airlines have withdrawn from some routes that are not high yield, while they await for arrival of more aircraft.
It is the position of many industry stakeholders that the federal government should encourage airlines to acquire more aircraft to boost domestic air travel and also make air travel profitable by reviewing the charges on domestic flight tickets.
