From seaports to airports: How Nigeria is losing businesses to neighbours
Air travel is a global venture that is not only internationally regulated, but also thrives on connectivity and commercial thinking. Leveraging open sky policy and good business sense, Nigeria’s neighbour, Ghana is showing how to reposition its aviation sector for maximum returns. But for how long will Nigeria continue to lose businesses to her neighbours? WOLE OYEBADE writes.
If global air transport industry were a country, its Gross Domestic Product (GDP) of $2.7 trillion would rank it 21st in the world, similar to that of Switzerland or Sweden.
And should the aviation sector in various countries be state entities, some would have good financial rating, some low and others showing records that will not even add up to their input.
The difference, however, is not in opportunities disparity, rather, the coordinated zeal of stakeholders (government, airport managers and airlines) or the lack of it, to maximise opportunities within prevailing circumstances.
Where such has been maximised, the imperative of connectivity and conducive atmosphere to international market has been priority.
Sadly in Nigeria, that has not been the case in all rounds of travel services – be it in the air or on water and that explains why the country has its lot among those with records that will just not add up.
Nigeria and her neighbours, Benin and Niger Republic, are examples of how to or not to maximise business advantages. Until 2006, about 70 per cent of Niger Republic cargo was transited through Nigerian ports. Today, Nigerian-bound cargoes are now coming through Benin Republic with attendant lose of revenue.
While the neighbours continue to open up to the global freight market, Nigeria is seemingly closing up its seaports, levying multiple taxes and parading some of the most expensive duties that scare away businesses.
In the area of air transport, the International Civil Aviation Organisation (ICAO) identifies air connectivity as key to unlocking a country’s economic growth potential, because it enables the country to attract business investment and human capital. An increase in air connectivity also spurs tourism, which is vital to many countries’ economic prosperity.
Apparently in tune with global thought process, African countries have been pulling alliances to improve connectivity, particularly on the continent. And one of those countries that is profiting from such collective agreements is Ghana.
About three decades ago when it was fashionable for countries to have national carriers, Ghana guarded the Ghana Airways and its airspace jealousy like Nigeria did with the defunct Nigerian Airways. Between the two national carriers, travelling from Lagos to Ghana (a 45mins flight) may take three days, if the passenger is lucky. Both Ghana and Nigerian Airways were therefore not missed when they died.
With deregulation of the sector, Ghana opened up to Nigeria and the rest of the African countries. Strangely, the open arms were devoid of the usual demand of reciprocity for Ghanaian flag carriers.
In the last four years or thereabout, no fewer than four Nigerian carriers have plied the Ghanaian airspace almost for free. They are Bellview, Arik, Virgin Nigeria and Aero Contractors. When Bellview and Virgin Nigeria went under, Med-View and Dana Air replaced them. No single Ghanaian airplane fly into Nigeria for years, until about a year ago when Africa World Airlines started venturing.
Keen observers were unanimous that Ghana is not just opening up its airspace to African air transport market. Ghana was up to something that in the end makes a lot of economic sense.
It was clear to some that the government indeed appreciated the importance of aviation for economic development and was doing everything possible to support the sector, making most of the opportunities that comes with the Yamoussoukro Decision of 1999.
Named after the capital of Ivory Coast, Yamoussoukro decision was enacted by African heads of states, to develop the aviation industry through the removal of barriers by promoting the liberalisation of the industry.
Nigerian operators and some of their counterparts on the continent till date have a lorry-load of reasons why the decision should not yet be implemented within their domain.
Though Ghana, like Nigeria, has no national carrier currently, most of the big international carriers fly into Accra as long as the safety requirements are met.
Opening up the skies to Nigeria and the rest was actually to impact the Ghanaian economy, both in the area of human capacity and revenue. With Nigerian carriers operating several frequencies, a fraction of the Nigerian over 160million population would be attracted to fresh opportunities in a place like Ghana with convenient flight services. After all, Nigerian travellers could go in the morning and return in the evening, since flying Lagos-Accra (45mins) requires lesser travel time than flying Lagos-Abuja (50mins).
That way, a lot of Nigerian-owned businesses have been replicated in Ghana. Talk of the banks, communication companies like Globalcom, and construction firms among others.
Many Nigerian students are also able to flock to Ghana, with the economy making a lot from school fees, taxi fares, hotel services and so on. Fact is that a lot of people work in Nigeria and have their families resident in Ghana.
So, where Ghana could not reciprocate in carriers and passengers, it got in revenue in-flow. Ghana has also opened up the skies to South African airlines, allowing it pick passengers en route Washington. Africa World Airways supplies the domestic passengers and also sells tickets on South Africa airplanes, with commissions.
Today, the Ghanaian authorities are expanding two airports in preparation for 6.5 million total passenger traffic expected in the coming years.
In the area of aviation fuel, otherwise called Jet A1, Ghanaian supply was one of the most expensive on the continent. The government recently agreed to slash price by 20 per cent to further attract international carriers into their airspace. It was actually a sacrifice of government’s own tax on fuel consumed. The fuel (G1.96 cedes per litre) is now parallel to that of Ivory Coast, which is her biggest rival, and even lesser than prices currently on offer in Nigeria.
The economic sense is that the more airlines that come to Ghana, the more revenue generated to recoup investments already sank into airport infrastructure. Airlines like Emirates are now taking passengers to Ghana to refuel en route Dubai, because it makes a lot of economic sense to buy fuel from Ghana.
Again, the government does not manage the airports like it is still the case in Nigeria. They are managed by Ghana Airport Company Limited, which has a board, of which government only have a representative.
It, therefore, enables the sector is run like a business; pushing for those innovations that add value, ensuring that the operating environment is more conducive for airlines.
Notwithstanding, the government’s backing is huge. It took the Ghanaian President, John Mahama, to declare the 20 per cent slash in aviation fuel price, telling the world that his country will “play vital role in business direction of West Africa, with aviation industry as focus.”
Mahama said his government’s vision of making Accra the preferred aviation hub in West Africa was on track, adding that the increase in traffic into Accra, particularly transit traffic, and coupled with other incentives are to attract investors.
Prior to the declaration, the president has been to Kotoka International Airport in Accra to commission state of the art Automated Boarding Control (ABC) facility and an aviation training school. The gesture confirms government’s commitment to aviation growth as a mainstay of the economy.
Nigeria indeed has the biggest market in Africa in terms of population but still not in terms of travel. There are many airlines that are not coming to Nigeria and they are potential gold mines for the sector that is already losing patronage.
Lessons learnt from the Ghanaian experience. The first goodwill must come from government in terms of policy. This will be guided with knowing what to do with aviation and really positioning it properly to take advantage of existing opportunities. Concessioning airports is an international standard, but has to be transparent and in the public interest.
The Nigerian carriers that are lobbying against open airspace should realize that it is an idea whose time has come. To flow with the tide, onus is upon them to restrategise for strength and competitiveness. After all, only weak airlines cry against deregulation in a liberal world.