Why aviation sector remains at infancy 91 years on
As the air travel sector closes in on its centenary, WOLE OYEBADE, in this report, examines its growth rate and why it is sleepwalking.
Bimpe Adesanya has lived in England all her life. A nurse by profession, but her over three decades in the UK has not offered much in terms of satisfaction. Her family, had, half of the period, contemplated a return home to contribute their quota to nation building.
Indeed, Nigerians in Diaspora, especially the professionals, have been taking turns to travel home and support the skillset in care facilities that are already overwhelmed.
Some minutes before her arrival in Lagos, Adesanya was glad to be obeying this urge. Her eyes scanned through the window as the pilot announced final descent into Murtala Muhammed International Airport (MMIA), Lagos. The airport was pitch-dark! It was one of those days the Lagos international aerodrome had hours of blackout.
Adesanya’s heart skipped some beats as the British Airways plane landed and taxied through the darkness. In all her experience of working with international organisations and traveling round the world, she had never seen anything like this – an airport in darkness in a country that is not at war?
With the aid of multiple torchlights provided by the airport officials, they funneled into the terminal that could have been mistaken for an oven.
“It was terrible; a put-off to say the least,” Adesanya recounted some days later.
“The heat that greeted us at the port of entry was blistering. I was covered in sweats but too perplexed to take off my cardigan,” she told her host.
“And there we were for over an hour because every clearance, whatever it was worth in such circumstance, was done manually. It was hell! The confusion and chaos at the nearby departure hall, was out of the world.”
Adesanya’s host, Balikis, merely chuckled at her bewildered guest. Though genuine, it was a tiny fraction of how awry the experience could really be both for international and domestic travellers.
Balikis recalled how a family was, in fact, stranded for days travelling to Uyo from Lagos.
The Attahs, a family of six from Akwa-Ibom State, were in Lagos for a wedding ceremony on a weekend and due to return 3pm Sunday. Flying into Lagos from Uyo was hitch-free. The return trip became a nightmare.
After five hours of waiting among scores of passengers at the General Aviation Terminal (GAT) of the Murtala Muhammed Airport (MMA), Lagos, a message reached them that the flight had been cancelled. All outbound flights were cancelled at the GAT on that afternoon, except one that later flew at 11:30 pm to Abuja.
“The following day, the family was planning to return by road when the airline sent an apology, saying the flight would take-off at 9am. At nightfall of that day, they were still at the airport waiting,” Balikis told Adesanya.
Though merely a conversation between two friends, it apparently mirrors some of the pains air travellers in Nigeria are subjected to daily.
If the aviation industry was to be a human being, it would have celebrated its 91st birthday on November 1, 2016. Like a child born to wealth and power, it came with promises on that Sunday morning of November 1, 1925, when three British single-engine light bombers (De Havilland 9A), landed at a polo ground in Kano from Cairo, Egypt.
Though the maiden flight was a calculated risk by the team, led by Squadron Leader, A. Coningham, it was for the then British colony (today known as Nigeria) the birth of an aviation industry.
Ninety-one years on, one cannot but agree with the sitting Minister of State for Aviation, Hadi Sirika, that the sector has indeed come a long way, yet lags behind among contemporaries.
With at least an airport in two-third of 36 states, including the Federal Capital Territory, a national carrier (now rested); seven surviving domestic airlines, several charter and private jet operators, over N385.9billion in 2016 ticket sales, the sector accounts for an average revenue of N119billion (0.4 per cent of the Gross Domestic Product) as at 2010. The revenue climbed to N137.9billion in 2015, according to former Director General of Nigerian Civil Aviation Authority (NCAA), Harold Demuren.
Oxford Economics, with data-support from the International Air Transport Association (IATA), in 2012, credited 50 per cent of the revenue to airlines, airports and ground services. The rest is from other ancillary services in the supply chain.
Aviation supports no fewer than 159,000 jobs in Nigeria. This comprises 44,000 direct jobs; 64,000 indirect jobs supported through the aviation sector’s supply chain; and 51,000 jobs supported through the spending by the employees of the aviation sector and its supply chain.
On performance indicators, the sector in 2010recorded 4.2million resident air passengers, with a total of 8.3 million passengers yearly. The estimate rose to 15million in 2015. About 181,000 tonnes of freight traveled to, from and within Nigeria in 2010 estimates.
British Airports Authority (BAA) that had similar chequered history, as at 2015 had an annual passenger traffic of 75million and turnover of £2.77billion (N969.5billion).
Wide gap in figures between aviation in England and Nigeria raises questions on rather slow growth in the latter as a result of poor state of infrastructure on offer, efforts of regulatory bodies and personnel, health of local carriers and impact of government’s policies on the local industry.
State of infrastructure
An airport in darkness in the 21stcentury as experienced by Adesanya, and a host of others, actually underscores the state of infrastructure in the sector.
With at least 26 airports scattered across the country, only four are considered to be viable. First is the MMIA that has had long history of less than efficient services expected of a modern airport. Others, in the order of their traffic pull, profitability and standard are the Nnamdi Azikiwe International Airport, Abuja; Port Harcourt International Airport, Omagwu; and Mallam Aminu Kano International Airport, Kano.
International travel website, The Guide to Sleeping in Airports, recently rated the Port Harcourt aerodrome as “the world’s worst airport”. Its Lagos and Abuja counterparts earned places among the 10 worst airports in Africa.
The verdict, from a survey conducted among travellers, came after the last administration ‘invested’ N106billionon infrastructure development, otherwise called nationwide “airport remodelling” exercise.
The huge capital outlay notwithstanding, none of the aerodromes till date rivals the likes of Kotoka International Airport in Accra, Ghana; Cape Town or Johannesburg International Airports both in South Africa or even the Eyadema Airport in Togo and Leopold Sedar Senghor International Airport in Dakar, Senegal.
Sirika admitted the deplorable state when he lamented that no Nigerian airport today is fit for aviation hub services that the country used to be in the days of Nigeria Airways.
“We cannot grow with our airports in the current state,” he submitted. “No way! You cannot create a hub with Murtala Muhammed International Airport, Lagos or Nnamdi Azikiwe International Airport, Abuja, as they are, or the ones in Port Harcourt and Kano.
“Some of the recent high-capacity airplanes that are flying around the world like the Airbus 380s and Boeing 777s and so on are just too sophisticated and too large to be handled by our airports at the moment. The atmosphere within these airports is not anything to talk about. It is really difficult for us to attract passengers to them.”
What the minister didn’t say, though implied, is that most of the airports, including the so-called internationals, could hardly boast of uninterrupted power supply, functional toilet facility, cooling system, escalator, travelator and carousels that are common features in modern aerodromes.
Contractors and officials of the Federal Airports Authority of Nigeria (FAAN) are currently battling to bring to life the escalator and some cooling systems at MMIA, the busiest airport in the country. It took the acting president, Prof. Yemi Osinbajo, to remind FAAN that those facilities are ordinarily a given in a modern airport, when he staged an unscheduled inspection tour at the Lagos airport.
Of the 26 airports (out of which four are state-own), only six currently have air-field lighting system to operate at nightfall. In others, operations are only allowed till 6:30pm; a time when airports around the world are just at optimal for the arrival and takeoff of most international carriers.
Apparently miffed at the turn of event, President of the National Association of Nigerian Travel Agencies (NANTA), Bankole Bernard, urged the Federal Government to declare a state of emergency in the aviation industry.
Bernard noted that poor airport infrastructure, high cost and scarcity of aviation fuel and lack of major maintenance facility as some of the factors that have dogged the progress of the industry.
Airport officials demanding tips and service of touts
Airports around the world are as friendly as possible to passengers. Where too open they become soft targets for security threats. But where too closed to easy access, they are uninviting and a hindrance to growth.
As if the country is promoting a closed-door policy, all security agencies in the country are physically present at the airports today. Especially at the cargo section of the international airports, the officials mount different roadblocks, otherwise called desks, to manually scrutinise every consignment.
Among the officials are men of the Quarantine services, Immigration, the National Drug Law Enforcement Agency (NDLEA), Customs, Police, State Security Service (SSS), Anti-Bomb squad, Air Force, paramilitary bodies among others.
At the departure hall of MMIA, Lagos, for instance, it is not unusual to hear attending Customs or Immigration officials demand tips. With palms pestering recesses of your body for possible ammunitions, illicit drugs and other contrabands, they would say: “Anything for your man? Find me something make I drink water; Shake body for me small…”Not conceding to their demands implies longer and tortuous stay, and the clearance may not be as express as necessary.
Besides the bad image such attitude portends to the country looking for foreign investors, they also mean serious security risk, says aviation security consultant, Group Captain John Ojikutu (rtd).
Ojikutu informed that most terrorists’ attacks in the sector around the world are often accompanied by ‘insider’s threat’ and compromise, in fact, worsened by laxity of airport personnel.
But if you think it is tough for air passengers within, outside the airport may be grimmer for unsuspecting travellers.
A domestic passenger, Bolade Okeowo, recalled a nasty encounter.
Okeowo arrived at the airport with high hope of flying to Abuja after a torrid day. She had just informed her family she would make it after all. Despite the horde of stranded passengers at the terminal, she shoved her way to the counter with a hand-written receipt for the counter official.
“This name is not in our system madam,” the official said after few punches on the keyboard. “No, check well. I just bought the ticket now,” replied Okeowo. She froze when the reply again came as negative.
Okeowo, 43, dashed out of the terminal, straight into the opposite car park in search of the agent that a while ago, offered to get her ticket of an airline that is ‘sure’ to fly.
Having combed the lot for about 20 minutes and her target not in sight, she gave up the chase. It dawned on her she had been swindled of N42, 000.
By the rules, touting and beggars are prohibited anywhere around the airports. Fact is that the rule only exists in the book; not in practice, thereby opening the window for unsuspecting passengers to fall victim.
Blame the regulators
There are three key agencies saddled with the day-to-day running of affairs in the aviation industry. The Federal Airports Authority of Nigeria (FAAN) statutorily owns and manages government airports nationwide, with a workforce of about 6000. Until some weeks ago, the authority has about 40 general managers sitting at the crowded top.
Nigerian Civil Aviation Authority (NCAA) is the autonomous body that regulates the aviation sector in Nigeria. Civil Aviation Act of 2006 empowers the Authority to regulate Aviation Safety without political interference and carry out oversight functions on Airports, Airspace, and Meteorological Services and so on, as well as economic regulations of the industry. It statutorily overseas the affairs of more than 25 airports, 30 airlines, 590 pilots, 19 flight engineers, 258 Air Traffic Controllers (ATC), 677 aircraft maintenance engineers, 1,103 cabin crew and four aircraft dispatchers.
Next is the Nigerian Airspace Management Agency (NAMA) that is saddled with the affairs of the airspace and aeronautical services at all the aerodromes.
FAAN, NCAA, and NAMA collectively rake in the 0.4per cent of the GDP that aviation contributes to national purse. Among the agencies, including the Accident Investigation Bureau (AIB) and Nigerian Meteorological Services (NIMET), are some 3000 workers that had allegedly been shipped into the workforce in the last six years without due process or the required skill.
Former Managing Director of NAMA, Capt. Roland Iyayi, therefore, blamed the poor state of infrastructure on years of mediocrity and sleaze at the regulatory bodies.
Iyayi cited an instance in NAMA. “When I was in NAMA in 2006/7, NAMA had a total budget of N6billion per annum. In three years, two managements have squandered N6.9billion. Now, I can tell you for a fact, because I’m an operator, that in the last four years, tariffs have been increased. The increase in those tariffs is what you see being stolen.”
He added that, “Today, we have 26 airports in the country owned by the Federal government and of all, only three – Lagos, Abuja and Port Harcourt – account for 80.2 per cent of the total public travelling by air. And somebody in the regulatory authority cannot ask the question why this aberration?
“Is it normal that you will have airports built and well equipped, yet there is no service? Their usual answer is that Lagos is the commercial capital, Port Harcourt the oil and gas capital and Abuja is seat of government, but they are all wrong. That is hogwash.
“Are you saying that someone in Kebbi, with an airport will not want to fly to Abuja rather than drive 10 hours? Or someone in Jalingo does not want to come into Abuja by air? Are you saying that people in Benue do not want to avoid all the road traffic problems and fly into Abuja? These are the issues.
“The question is that, do they understand why? If you understand the issues then you’d be able to proffer the right solutions. If the regulators are able to get it right, then every other thing will fall into place.”
A renowned captain and former boss at the NCAA said the main problem with the agencies is the lack of accountability vis-à-vis charges levied on both operators and passengers.
The captain, who would not want his name in print, alleged that the Internally Generated Revenue (IGR) accrued to the regulatory authorities is more than what has been disclosed.
A comparative look at figures and statistics from the NCAA and FAAN immediately shows disparities in estimates. For instance, NCAA recorded cumulative 11million passenger traffic for 2015, while FAAN has 14 million on its records for the same year.
FAAN generates nothing less than $150m from the $50 mandatory Passenger Service Charge (PSC) per passenger on about three million outbound international passengers.
Another $100 million comes in from landing and parking from about 15,000 international inbound flights. NAMA on the other hand, generates not less than $60 million on air navigational and air traffic services provided to inbound, outbound and overflying flights.
Evidences also abound that airlines pay $20 per passenger for security to the NCAA. There are earnings abroad on passenger tickets and cargo sales of about $150 million by the Nigerian airlines operators too on international routes which they don’t get to return home.
On the domestic front, he added that the sum of N1000 is charged on over 100,000 passengers on daily basis. None of these agencies has, however, disclosed how its earnings are spent.
“This is the reason I once called for the audit of the financial earnings of all the operators following the revelations of recurring debts of domestic airlines to the ground and air safety services providers,” the captain said.
Domestic airlines in dire straits
Be it in matter of infrastructure, revenue or regulations, the domestic airlines are often at the centre. They are the cash cow, as well as the mirror image of the sector.
In 91 years of existence, the aviation sector in Nigeria perhaps has one of the highest turnovers of registered domestic airlines in the world. It is also known for parading airlines with the shortest lifespan of 10 years. No fewer than 150 airlines were registered in 2000. Only 28 survived till 2006.
The list of airlines ever registered included: Nigeria Airways; Aero Contractors; Arik Air; Allied Air; Associated Aviation; Hak Air; Kabo Air; TAT Nigeria; Bellview; Sossoliso: Chanchangi; Skyworld Express; EAS; Max Air; Air Peace; Med-View and Dana Air.
Others are: First Nation; Overland Airways; Azman Air; Virgin Nigeria; Air Nigeria; Aviation Development Corporation (ADC) airlines, Concord airlines; IRS; Albarika Air; Odengene and Okada Air.
Among those in operation are: Air Peace, Med-View, Dana Air, First Nation, Overland Airways and Azman Air. Arik Air and Aero Contractors, though currently on partial operations have been taken over by the Federal Government’s debt recovery vehicle called Asset Management Corporation of Nigeria (AMCON). This was in lieu of the airlines’ financial distress, indebted to banks and inability to meet critical financial obligations.
On the day of the takeover, Arik allegedly owe about N300billion, half of which belongs to AMCON and the rest to various creditors in the aviation value chain. Its fleet of 28 aircraft was left with only eight functional planes as 10 were grounded and the rest stranded at various maintenance and repair centres overseas.
Chairman of the Airline Operators of Nigeria (AON), Capt. Noggie Meggison, said the shrinking size of domestic carriers and the sector at large was the reflection of the tough business environment that had continued to take its toll on the industry.
Meggison expressed fear that none of the surviving airlines is immune to collapse as almost all are running at about 50 per cent of their strength.
Fact is that airlines that collapsed or suspended operations are those running at almost 10 per cent of their capacity. Aero Contractors, for instance, once had more than 10 commercial aircraft on its fleet, running scheduled services to 12 states, including Ghana.
On the day of closure, the airline operated two 737s, out of which one was functional, servicing the Lagos-Abuja/Sokoto route. At least six of the aircraft owned by Aero are grounded in Lagos, awaiting mandatory maintenance checks. The airline today operates a fleet of three aircraft.
Maintenance is indeed the soul of aircraft globally. Not less than 40 per cent of the total operating cost of an airline goes to routine maintenance – A to D checks. C-check, one of the major maintenance programmes, is done on aircraft overseas every 18 months at a cost in the neighbourhood of $500,000 to $1 million. Multiplied by the current exchange rate of N450 to one dollar, it therefore cost about N450million to conduct C-check on a plane, if it must fly for another 18 months.
Besides maintenance, another big challenge is aviation fuel, which gulps another 40 per cent of total operating cost of an airline. Jet-A1, as aviation fuel is also called, is 100 per cent imported into the country. Daily supply requirement in Nigeria is in the neighbourhood of three million litres and cost N660 million at N220 per litre.
According to Meggison, “Till April this year, I bought Jet A1 for N105 a litre. About a month ago, the price jumped to N145. Two weeks later it rose to about N200 a litre. Today, the price has skyrocketed about N250 a litre at some airports.
“Considering that the cost of fuel accounts for about 40 per cent of the operational cost of most airlines, the colossal rise in price of the product by over 100 per cent has equally increased the operational cost astronomically. In the light of this, our feasibility studies and financial projections are greatly threatened thereby putting the airlines in a dangerous and difficult financial position,” he said.
Operational challenges notwithstanding, the immediate past General Secretary of the AON, Mohammed Tukur, blamed the operators for the dire situation being experienced.
Tukur said some of the operators historically exhibit flamboyant lifestyles that aviation business could hardly bankroll given its peacetime small margin of profit.
The former Director of Operations, Chanchangi Airline, said: “The indiscriminate pulling out of finance from operations by airline owners is the worst practice in the airline business. Any money taken out of the airline’s daily operations is capable of crumbling the entire system of that airline. Management of various airlines should stop living expensive lives with monies meant for operations of airlines.”
Recall that the aviation sector was one of the beneficiaries of the Federal Government’s N500 billion-intervention fund in the wake of the 2011 recession. The fund, through the banks, was to keep the critical sectors afloat the troubled economy.
Not less than N120billion went to the aviation sector and disbursed to operators at seven per cent interest rate. Among the recipients are Arik Air, Air Nigeria, Chanchangi Airline, Dana Air, Aero, Kabo, Overland, First Nation and Odengene. It is on record that each got between N15billionand N35.5billion in loans. A joint hearing by the Senate Committees on Aviation and Anti-corruption, last June, suggested that a fraction of the loan had been diverted into non-aviation private businesses.
Opinions are divided on how well government’s policies have impacted on the sector. While some observers are of the view that government has not really given priority to the sector, others acknowledged some policies that indeed have turned around the fortunes of the sector.
Among the policies till date is the introduction, early this year, of five per cent duty waiver on commercial aircraft and spare-parts coming into the country. So also is the recent inclusion of airlines operators in the foreign exchange (FX) special concession grant to some critical sectors that are strategic to the revival of the ailing economy.
Others in the pipeline are planned concession of the airports for efficiency and profitability; refloat of a national carrier, development of a Maintenance Repair and Overhaul (MRO) facility for in-country maintenance programmes and a leasing company in Nigeria, coupled with the dedication of the Port Harcourt and Kaduna refineries to local production of aviation fuel.
However, there are views that the commitments are still far in-between, compared to priorities smaller African countries like Rwanda (with RwandAir); Kenya (Kenya Airways), Ethiopian (Ethiopian Airlines) and South Africa (South African Airways) have accorded aviation sectors in their climes.
Chairman, Arik Air, Sir Joseph Arumemi-Ikhide, said the entire system is skewed against the domestic airlines because the Nigerian government and regulators have continued to give preference to foreign airlines, “forgetting that it is the domestic airlines that sustain the sector and not our foreign counterparts.”
At the back of Arumemi-Ikhide’s mind is the Bilateral Air Service Agreements (BASAs) that Nigeria continues to rack up; opening up the airspace to more foreign carriers without plans to ensure its flag carriers (Arik Air and Med-View) reciprocate. Also similar is the preference given to foreign airlines in the FX special grant window, to enable the foreign airlines repatriate stuck funds in the neighbourhood of $600mililion.
The Arik boss said besides the government and public “unfairly calling us (domestic carriers) weak”, they should as well improve the operating environment, with good airports and runways coupled with affordable fuel and maintenance facility”. All of these, he said, would show how strong and competitive they could be.
Spokesperson of the NCAA, Sam Adurogboye, reckoned that Nigeria was yet to maximise its potential in aviation given the non-availability of the right policies that would make the sector more attractive to the global market.
Adurogboye said though the sector is growing, but by geographical location, Nigeria ought to be the natural hub for all international airlines heading southern Africa. “But for the lack of aviation fuel, how do you attract them?”
He added: “Tourism promoting countries like Singapore and Dubai give you visa at the port of entry. They encourage you to come in. That is the policy. That is the area we need to look at. If we want to be hub, we must have the right policies. Singapore has just two airports – international and local. You can walk several kilometers inside the terminal and be there for days without feeling it. It has everything you’d need. It is attractive to passengers. That is what we should also do.”
Growth potential and way forward
Unanimous in the views of Adurogboye, Arumemi-Ikhide, Tukur, Meggison, Iyayi, Sirika and other stakeholders, is the enormous potential of the aviation sector to drive the local economy especially at this time of recession.
A sector that has rapidly grown from 12.5 million passengers in 2009 to 15million in 2015could not be said to be unprofitable.
Addressing stakeholders, to get their buy-in in the airport concession plan, Sirika said: “If we have the best airports, very strong carrier out of Nigeria, a very good leasing company to fund it and financing system to augment the insurance and give confidence, then we will have a new aviation sector.
“Figures from IATA, International Civil Aviation Organisation (ICAO) and other experts including the World Bank, show that the sector is growing at the rate of five per cent per annum and doubling at every 15 years; but the potential in Nigeria has not been harnessed. The fact is that the figures will quadruple; multiply four times, which means that from the onset, once these airports are in place and the carrier is flying, we will multiply 15 by four and is 60 million passengers. That is what is waiting to be taped into,” he said.
Chairman of the Airline Operators, Meggison, reckoned that the growth rate is possible given the geographical location of the country on world map.
He observed that Nigeria is at the “trigger point” of Africa and almost at the centre of the world. The implication is that air travellers can reach any country in about four and the half hours from Nigeria. That is connectivity – the soul of aviation globally.
“We are therefore the pivot and the balance. People wait on Nigeria to supply them. The African Development Bank said three years ago, that $10billion goes out of Africa yearly, with 60 per cent coming from Nigeria.
“We must use aviation as the template for economic recovery with a strong, clear policy of what we want to achieve at the end of the day and with a time frame,” Meggison said.
Chairman, Governing Council of the Nigeria Aviation Safety Initiative (NASI), Captain Dung Rwang Pam, advised the domestic operators to close ranks and emerge stronger to avert complete takeover by foreign airlines.
Pam said the airlines, instead of the current rivalry, should sign commercial agreements for inter-linkages.
According to him, “If Arik is not there, passengers should be able to use the same ticket on Dana Air. But these guys are looking at themselves like enemies, competing against each other. It is very myopic, detrimental to common sense and will lead to the demise of local industry and local skills.
“The idea is that it makes common sense to work together, where you save cost and increase your reach. When you have that inter-line arrangement, passengers can buy one ticket and go to two destinations. It also means that we will reduce our expenses; we will also increase our in-house knowledge and processes,” Pam said.
It goes without saying that the task of transforming the sector requires a well thought-out plan and concerted efforts of both operators and the regulators.
If both are ‘able’ and ‘willing’, nine years is not too short to transform the sector and change the story coming from passengers like Adesanya, Balikis and even Okeowo among a host of others. All of them have no doubt that the system is ‘able’ to frog-leap its growth. But time will tell if the actors are ‘willing’.