The President of Sabre Network West Africa and the current President of Aviation Round Table (ART) a think-tank body in the industry, Gbenga Olowo has acknowledged that the fortunes of air transport sector is declining with reduction in fleet and poor service of some domestic routes.
Olowo attributed Nigeria’s airlines problem to government’s lack of policy focus and hostile operating environment, which include high charges indiscriminately leveled on the airlines.
“Airline user charges for example are as high as 15 per cent. User charges are revenue collected for other organisations factored into the fare (without commission ) whereas airlines are not revenue collectors. Hence the International Air Transport Association (IATA) Director-General, Tony Tyler described airlines as cash cows.
“High cost of fuel, high cost of funds, exorbitant airport rent, airspace movement charges at home require government serious attention. On the other hand, poor management decisions and corporate governance by the airlines owners have resulted to high mortality rate in the industry,” Olowo said.
He recalled that in 2010, Nigerian airlines had 54 commercial operating aircraft but by 2013 the fleet had reduced to 39, noting that with declining fleet size, route expansion would be limited and robust schedule very difficult and down time for maintenance would impact negatively on schedule.
On charges, THISDAY learnt that the Federal Airports Authority of Nigeria (FAAN) has charges that include landing and parking, passenger service charge, Common User Terminal Equipment (CUTE) charge, avio-bridge charge, rent and service recovery charge. There are also on duty card charge, toll access payments, airside operator vehicle permit and electricity charge.
These are major charges directly paid by airlines to FAAN, which also gets N2.50 from every litre of Jet A1 uplift at the airports. Industry observers say these charges are too much but FAAN, which relied heavily on aeronautical charges has to diversify and explore non-aeronautical source of revenue, which has become the vogue for airport operators in modern times.
However, Olowo observed that airline mortality rate in Africa especially Nigeria is relatively high usually 10-15 years but often less for so many reasons and attributed it to very difficult operating environment resulting from government policy inconsistency and lack of direction or focus to absolute lack of support “from what the Bible describe as dull hearing.”
“The airlines are faced with so many operational issues without government attention. That is not all. There is no corporate governance in most of the airlines. One-man owner calls all the shots and takes a lot of unwholesome decisions. The airlines are relatively small, weak and vulnerable to competition.”
The ART President said Nigerian airlines cannot cope with the charges, the harsh operational environment and still thrive unless government takes actions to reposition the domestic carriers, which are critical to the economic development of the country.
This unfavourable situation, he noted, has put airlines in huge debts and they have become insolvent.
“Insolvency simply put is when an individual or organisation can no longer meet its financial obligations. Do an x-ray of our airlines today; this is precariously what you find. All the airlines owe huge debts to fuellers, workers, government and trade partners. Government should set up revenue collection agent either individual firms or banks to collect user charges being collected on tickets and eroding airline revenue with several debt burden and conflict with government agencies.”
He said President Muhammadu Buhari should task Transport / Aviation Ministry to deliver at least 1 percent of the GDP by 2020. It is presently 0.4 percent, “a grossly underperforming sector, by implication the sector will be required to grow annually at 25/30 percent and this is achievable. If we apply 5:20 rule to our airlines requesting them to grow fleet by 20 aircrafts every five years, it means three airlines by 2020 will parade a minimum of 60 operational aircrafts each, provide job for 15,000 workers and 30,000 workers with 120 aircrafts by 2025 at the rate of 250 workers per aircraft.”
In the same vein, he noted that airports, airspace and catalytic activities would also grow simultaneously.
“This is the only way to rescue market share from foreign airlines that must repatriate up to 95 per cent of their income back to their home countries in dollars and continue the weakening of the Naira. Truth be told, 5-10 aircraft airlines as we have it today cannot be described as strong schedule players. All the existing seven operators should pool their resources together, operate under one AOC (Air Operator Certificate), harmonise their schedule and stop the stupid ongoing competition among themselves. Then we will be having two near strong players,” Olowo urged.
CULLED FROM THISDAY
