Wednesday, 7th June 2023

Air transport sector in 2022: All motions, little lift

By Wole Oyebade
30 December 2022   |   3:17 am
The last 12 months have been another turbulent year for aviation in Nigeria. While financially-stressed airlines managed to surge on, policy drivers again failed to deliver on critical developmental goals. The proposed national carrier was conspicuously the biggest flop of all. WOLE OYEBADE reports. Twenty-twenty-two was a year that shattered all economic projections. And for…

The last 12 months have been another turbulent year for aviation in Nigeria. While financially-stressed airlines managed to surge on, policy drivers again failed to deliver on critical developmental goals. The proposed national carrier was conspicuously the biggest flop of all. WOLE OYEBADE reports.

Twenty-twenty-two was a year that shattered all economic projections. And for all the beautiful business plans airlines parade, no operator saw the 2022 harsh realities coming. Across the value chain, meeting obligations got even tougher!

Indeed, it was the year U.S. Dollar – the currency of global aviation business – ballooned to N950 against the Naira on the black market window (the most reliable source for forex). Aviation fuel also hit the N1000/litre mark. Air travellers fled at the sight of a N200,000 ticket for a 55-minute one-way flight. Some local airlines shut down operations. Foreign airlines also buckled over stuck funds. It was an industry in disarray!

Despite the chaos, the industry proved its resilience to weather shocks. Notably, airlines managed to stay in business. Regulators were firm and kept tabs on the safety rules. Service providers also improved airport infrastructure in Lagos, and aeronautical services nationwide. Put together, they all earn the commendation of observers for a job well done, despite the odds.

Conspicuously missing, however, were the deliverables contained in the Aviation Roadmap of the President Muhammadu Buhari-led administration – and another disappointing year for many that were expectant.

Resilient local airlines
The year started with great expectations of a significant rebound in air travel following the devastating effects of COVID-19 pandemic and its Omicron effects in 2021. Mass vaccination and travel protocols seem to have staved off the virus. It was time to fly again! Then Russia invaded Ukraine in February and the price of oil, including aviation fuel, tumbled globally.

Local airlines first saw the pump price of Jet A1 jump from N190/litre to N250, then N400, N500 and N700 within six months. As at last check, it sells for an average of N820/litre.
At N700 per litre in May, the Airline Operators of Nigeria (AON) threatened to shut down operations nationwide. Though the compliance level was poor on the D-day, the significant threat forced the House of Representatives to broker a subsidised price, pegged at N500/litre. The intervention did very little to assuage operators’ pains.

Unable to cope, three of the 10 local airlines showed severe signs of distress. The Nigeria Civil Aviation Authority (NCAA) grounded Azman Air over accumulated debt to the regulatory agencies. Dana Air also got the boot over safety concerns and unmet obligations. Aero Contractors voluntarily suspended operations following the depletion of fleet capacity.

In August, findings by The Guardian showed that the eight active airlines were operating at a cumulative 38.77 per cent fleet capacity, with a total of 60 out of 98 listed aeroplanes grounded, especially due to low foreign exchange liquidity to defray maintenance costs.

Survivor airlines were not spared of industry squabbles too. In November, aviation workers’ unions picketed Murtala Muhammed Airport II (MMA2) facility, in protest against alleged anti-labour activities. Though the clampdown barely lasted 24 hours, the ripple effects on carriers were huge.

Those troubles notwithstanding, the much-vilified “weak” local airlines proved their mettle. They showed strength in the face of adversities. Dana Air and Aero Contractors got better and returned to the skies in December. Other airlines further capitalized and leveraged on leased aircraft to expand route operations and frequencies across networks. A new start-up, ValueJet Airline, also made a foray into the tough operating environment with high expectations.

Emirates exits again
Foreign airlines had their share of the rough patches. The year reminiscent of 2016 when airlines funds were stuck and legacy carriers ditched Nigerian airspace. Beginning in March, the foreign exchange liquidity crisis started getting in the way of ticket sales’ repatriation. By August, the stranded fund had reached $464 million, prompting the intervention of the Central Bank of Nigeria (CBN) to pledge release of $265 million.

For the discomfort, foreign airlines introduced a premium regime to fare pricing, offering travellers rates that are 200 per cent higher than the global average – be it on Economy or Business Class cabins. The implication is that a six-hour Economy Class ticket that erstwhile sold for an average of N600,000 went up at between N1.6 million – N3 million. The Business Class variants became N3.5 million and N5 million, depending on the destination and airline of choice.

Unimpressed by the tardy intervention to their plight, the national carrier of the United Arab Emirates, Emirates Airlines, in October withdrew passenger flight services on Nigerian routes and exited yet again. It was barely 11 months after it restored operations, following the COVID-19 travel protocol diplomatic spat of 2021.

International Air Transport Association (IATA), the clearinghouse for over 290 global airlines, in December listed Nigeria in the top five markets with foreign airlines’ blocked funds (excluding Venezuela). Nigeria was estimated to hold the lion’s share of $551 million; Pakistan, $225 million; Bangladesh, $208 million; Lebanon, $144 million and Algeria, $140 million.

IATA’s Director General, Willie Walsh, insisted that governments must remove all barriers to airlines repatriating their revenues or “the local economy will pay a high price” for the breach of trade agreements.

Infrastructure upgrade in Lagos, others

It was not all sob-stories though. Infrastructure got a significant boost in 2022, with the eventual opening of the new terminal at the Murtala Muhammed International Airport (MMIA) in Lagos and the restoration of Runway 18L lighting and night operations to the local wing of the airport after 14 years of blackout.

The Nigerian Airspace Management Agency (NAMA) was also very busy deploying advanced Instrument Landing Systems (ILSs) across nationwide airports to enhance night operations and safe flights even at low air-to-ground visibility.
Acting Managing Director of NAMA, Matthew Pwajok, described it as a productive year for the service provider, given the agency’s feats in the general overhaul of navigational facilities nationwide. Besides the upgrade of Instrument Landing Systems (ILSs) at all airports, the controversial Total Radar Coverage of Nigeria (TRACON) and Safe Tower facilities also got new equipment, estimated at N36 billion.

A former scribe of the National Union of Air Transport Employees (NUATE), Olayinka Abioye, reckoned that it was indeed a good year safety-wise too, and all stakeholders, including air travellers, could pat themselves on the back.
“Despite various shortcomings experienced in terms of aviation fuel shortages, out of reach foreign exchange, inaccessibility to foreign airlines trapped funds, delayed flight operations occasioned by sometimes deliberate design of airline operators, I can say proudly that aviation scored 85 per cent,” Abioye said.
National carrier; going…going…
Perhaps one of the biggest disappointments was another failure of the Aviation Roadmap to materialise six years after it was incubated and just six months to the end of the administration.

Recall that the Aviation Roadmap is the initiative of the Minister of Aviation, Hadi Sirika, which was unveiled to stakeholders in Lagos and Abuja in 2016.

The “developmental agenda”, aimed at “transforming” the sector, has deliverables like a new national carrier, a concession of airports for efficiency, Maintenance Repair and Overhaul (MRO) facilities to curb capital flight, and aircraft leasing companies to serve local operators. Besides the trio of Lagos, Abuja and Kano that got concessionaires named in October, none of the other deliverables has seen the light of the day.

The controversial national carrier, Nigeria Air, yet again, created the loudest buzz all year long. In November, Ethiopian Airlines – the biggest African carrier – got into the narrative as the “preferred” technical partner ahead of the December 2022 take-off date. Unimpressed by the alleged tacit “giveaway” of the Nigerian national carrier to fellow African competitors, local operators approached the court, technically throwing spanner into the works of Nigeria Air.

An aviation consultant regretted that for all the good works done in the area of infrastructure upgrade and review of agencies’ Acts, key projects like airport concession and national carrier were a huge let-down.

“Those programmes were expected to drive the industry and take us to the next level. Unfortunately, they are all mired in controversies, despite over seven years of Sirika being in the saddle. He (Sirika) is Nigeria’s longest-serving Minister of Aviation! The sad thing is the amount of money and human resources wasted on these projects between 2016 and now.
“Of course, the botched Nigeria Air is the biggest failure. It’s only a non-discerning company or one with ulterior motives that will want to invest in this kind of project in an election year and with a possibility of another party taking over the Federal Government. It could be another P&ID scandal in the making,” he said.


Apparently in agreement, aviation security consultant, Group Capt. John Ojikutu (rtd), said it was time to ditch the idea of a national carrier. As a replacement, “government must come out boldly with at least two flag carriers and do away with a government carrier that is being sold to Nigerians as a national carrier. Government should not put a dime into this project. I am sorry to say that this airline (Nigeria Air) may not last and may also end up like Virgin Nigeria,” Ojikutu said.

The labour leader, Abioye, however, said that the roadmap was already due for review if it must fly. “In 2023, I hope that the great roadmap initiated by the outgoing administration will be addressed and reviewed holistically so that the same roadmap can be returned with a human face and inclusivity of stakeholders so that at the end of their implementation, we can both boldly say that we did all these together.

“You are aware that MROs are springing up here and there. This should be encouraged, particularly given the enormous benefits Nigeria will enjoy from them. We must commend the government of Akwa Ibom, the Aero Contractors Management and the 7Stars. The FG should support these initiatives by granting them some waivers to enable them to achieve their optimum expectations,” Abioye said.

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