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Toeing unusual path to reduce local airlines’ mortality rate

By Wole Oyebade
12 November 2021   |   4:13 am
Nigerian flag carrier, Air Peace, recently marked its seventh anniversary in the local sector where startups rarely see the sixth birthday or more.

Nigerian flag carrier, Air Peace, recently marked its seventh anniversary in the local sector where startups rarely see the sixth birthday or more. Amid commendations for the feat, stakeholders say more carriers can also turn the corner by learning from the Air Peace model to emerge stronger and last decades. WOLE OYEBADE reports.

Not ‘too-big-to-fail’ is a cliché that resonates loudest in the global aviation industry. The truth is that the bigger and higher the altitude, which also symbolises strength, the more the risk of a burst.

Thomas Cook was a 178-year-old iconic travel operator in the United Kingdom and Europe. On the day it collapsed in September 2019, it had 34 aircraft, 82 destinations, 525 scheduled flights and over 600, 000 passengers waiting to board it across Europe. But the refusal of the British Government to grant it a $250 million bailout sent it into extinction.

The devastating coronavirus pandemic exposed the fiscal underbelly of most global airlines, with a majority on life support and getting government bailout not to fail. So, forget the glitz and glamour often on display, the accessories often cost more than average airfares can afford.

The experience in Nigeria is most revealing and staggering. Unlike in other climes, the cost of routine maintenance is a major nemesis that lets down operators.

For instance, one of the major maintenance programmes – C-check – is done overseas every 18 months, and at a cost that ranges between $1 million to $3 million (N411 million to N1.23 billion) per aircraft.

Next are about 35 sundry charges that account for another 30 to 68 per cent of the airline’s earnings. The long-suffering airlines are then left with little for fuel, and overhead, among other obligations.

Add to those costs, mismanagement and poor decision-making, no one would be surprised that the “mortality rate of airlines in Nigeria in the last 16 years stands at 57 per cent,” according to an estimate by the Airlines Operators of Nigeria (AON).

A well-acknowledged fact is that the local industry 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 five to 10 years. No fewer than 150 airlines had been registered as of 2000. Only 28 survived till 2006. The sector currently has 11 scheduled carriers and a couple of charter operators.

The dismal records notwithstanding, stakeholders have consistently said that the aerial woes of the last two decades were sufficient lessons for startups to turn a new leaf. They emphasized the imperative of having the right business model and looking beyond the traditional routes to link local, regional and international corridors.

Specifically, the Minister of Aviation, Hadi Sirika, rallied behind fleets going young and cost effective. Aviation Safety Round Table Initiative (ASRTI), a think-tank group of the sector, said the era of mushroom, weak and failing local airlines would be over if the regulator mandates operators to parade a minimum of 10 aircraft at the point of entry.

Expanding frontiers with niche offerings
Airline operators, initially, didn’t warm up to those recommendations, as they were regarded as highfalutin and near vicious to existing investment. But a local carrier, Air Peace, took on the challenge and in good faith.

The airline, which began operations on October 24, 2014 with four aircraft, made entry with a mindset to do things differently. It immediately looked beyond the traditional route of Lagos, Abuja and Port Harcourt, with a carefully mapped out network under the ‘no-city-left-behind’ initiative.

“Instead of flying to three airports, why not 20-plus airports nationwide, ferrying the middle class in all cities. Nigerians in Bauchi, Gombe, Asaba, Ibadan, Akure, Osubi and so on also want to travel by air. They deserved to be served.

That is what the no-city-left behind initiative means,” Allen Onyema, Chairman of the airline, had said.

Indeed the air travel product is the most perishable commodity in the world. So, a good strategy for success is to be where the customer is and with the right equipment that will not have more empty seats than those occupied.

Onyema said it was for that purpose that the airline, under the Air Peace Hopper subsidiary, first acquired six low-capacity but fuel efficient ERJ145 aircraft of 50 seats apiece. That way, the airline has increased 19 local route networks in seven years of operations.

Managing Director of SAHCO Plc, Basil Agboruami, said that was the strategy that worked and pushed Air Peace ahead of the pack.

“Amid the challenges, Air Peace has closed gaps between States. Before now, all flights take-off from Lagos and back. But the airline brought connections like Owerri-Abuja, Asaba-Kano, Bauchi-Abuja and so on. That is innovative and Nigerians are beginning to have options. That is a significant contribution,” Agboruami said.

Young fleet, long life
Findings have shown that Nigerians are as eager to travel internationally as much as they do locally. And that opened a new window of opportunity for Air Peace, the right equipment first.

Med-View Airline in 2019 lost out on London and Dubai operations given its low capacity to operate on those highly competitive routes. For Air Peace, it was a learning curve, which propelled it to set a domestic record as the first Nigerian airline to acquire four Boeing 777 aircraft.

Three of the four wide-body aircraft have started long-haul operations to Sharjah in the United Arab Emirates (UAE), and Johannesburg in South Africa, while London, Houston, Guangzhou and Mumbai are in the works.

Not done, Air Peace also set a continental record by placing an order for 13 brand new Embraer 195-E2 aircraft, with the option to acquire another 17 from the Brazilian manufacturer. Despite the delay occasioned by the pandemic, the airline has lately received four Embraer 195-E2 aircraft, with another nine expected before December 2022.

Indeed, the tradition among major legacy carriers worldwide is never to flog an aircraft for too long before they are replaced. Emirates Airlines, for instance, has a young fleet of planes that is often not more than five years old. The idea is to manage the high cost of maintenance that rises as a commercial plane grows older. The bottom-line: the newer the plane, the cheaper the cost of maintenance, the wider the profit margin.

Onyema says Embraer’s new E195-E2 presents a marvel of economic performance. “It is also great that we will be the first E2 operator on the African continent. We already have the ERJ145s in our fleet. So, we understand the high standards of Embraer products.

“The minister (Sirika) threw us the challenge to acquire new aircraft. That is what we have achieved at Air Peace in just seven years. Those aircraft will create at least 8000 additional jobs and career paths.

“Our plan is to massively expand our operations from our base in Lagos into mini-hubs across all regions of Nigeria and the West Coast of Africa. There is no doubt that as the leading and biggest airline in Nigeria with a fleet size of over 40 aircraft, we are now more positioned to transform air travel experience in Nigeria, the West Coast of Africa and beyond. But more importantly, we are proud to use our flight services to build bridges of unity in Nigeria,” Onyema said.

Sirika, who commended Air Peace for heeding the call, said it was the right way to go for a modern commercial carrier that wants to compete, survive and endure.

He said Nigeria has had its fair share of multiple carriers using the wrong aircraft type, earning the nation an unpleasant place among countries with the highest number of unserviceable aircraft.

“We must never forget that the propensity to fly is determined by the price of the ticket, and in turn the choice of equipment. The equipment type determines the profitability and sustainability of operations. A new aircraft is fuel-efficient, requires minimal maintenance, the low workload on pilots and higher profit; all of which wrong equipment does not have. I will urge other operators to rethink their type of equipment for sustenance, following the example of Air Peace,” Sirika said.

Support us not to fail
Quite an ambitious plan by a Nigerian carrier, but it speaks volumes on resilience of the Nigerian private sector. Assistant Secretary of ASRTI, Olumide Ohunayo, reckoned that the airline and its management had demonstrated rare courage and made landmark successes in seven years.

Ohunayo said given that the true strength or weakness of local airlines are usually tested in age five to 10 years of operation, the airline needs to consolidate on transparency and go into strategic international partnerships beyond point-to-point operations.

“Aeropolitics is real and that is where the Federal Government should come in. Air Peace cannot afford to be isolated or left to find its way. Once you designate an airline, it becomes your flag carrier and (partly) owned by the government.

You must ensure removal of all hurdles on the path of its successful operation, and reciprocate actions in its defense.

“Also, we should begin to improve our infrastructure. There should be runway lights in all our airports for airlines to fly more hours and bring down airfares. That way, both players and passengers will benefit and our economy will grow,” he said.

Aviation enthusiast, Daniel Akindele, saluted Air Peace’s stride at seven and asked for better support from the system.

“I have no doubt that our operators can make us proud. With all the problems and tough environment that they operate in, Air Peace and others have been able to sustain operation. Now, imagine if they have better support mechanisms. I think it is time for the government to support the airlines by providing a good environment and also set targets for the operators to do better in terms of customer service. Air Peace has done well, but we expect more from the carrier,” Akindele said.