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Revenue plunges as Nigeria loses aviation hub to Ghana

By Wole Oyebade 
25 August 2016   |   5:03 am
Already, the revenue that accrued to Nigeria from the fuelling of aircraft and accommodation of cabin crews of foreign airlines has been taken over by Ghana, which now provides these services.
Ghana Airline

Ghana Airline

• NNPC, MOMAN move to tackle fuel challenge

Nigeria has lost its status as the aviation hub in West Africa to Ghana, a neighbouring country.

Already, the revenue that accrued to Nigeria from the fuelling of aircraft and accommodation of cabin crews of foreign airlines has been taken over by Ghana, which now provides these services.

The situation is partly attributable to the 100 per cent increase in the price of aviation fuel in Nigeria, while Ghana slashed the same product by 20 per cent.

Besides, regulatory agencies like the Nigerian Civil Aviation Authority (NCAA), Federal Airports Authority of Nigeria (FAAN) and Nigerian Airspace Management Agency (NAMA) are losing revenue.

The price of Aviation Turbine Kerosene (ATK), also called aviation fuel or Jet-A1, rose from N120 some months ago to N240 per litre since the Central Bank of Nigeria (CBN) introduced the flexible foreign exchange policy.

Aviation fuel is 100 per cent imported, which subjects it to the vagaries of foreign exchange, especially the United States dollar. With the exchange rate around N350 to $1, aviation fuel in Nigeria has become one of the most expensive on the continent.

Due to the price increase, coupled with irregular supply of the product, foreign airlines experienced difficulties refuelling during their trips. For instance, Emirates Airline, which recently reduced its two daily flights from Lagos to just one, last week made a re-route to Ghana, to buy fuel for its Abuja-Dubai flight.

It was learnt that Nigeria’s customer of many decades, British Airways, had started buying fuel from Ghana to power its airplane carrying Nigerian passengers to the United Kingdom.

Air France last week announced that from 2017, it would commence three weekly flights to Accra in Ghana from Paris-Charles de Gaulle. These flights will be operated by Airbus A330 with a capacity of 208 seats until 27 March 2017, then by Boeing 777-200 with 312 seats.

Sources told The Guardian that Ghana had become the new bride of the foreign airlines due to efforts by the government of that country to make the Kotoka International Airport in Accra, the aviation hub for West Africa.

A source, who is one of the facilitators that negotiated the 20 per cent cut on aviation fuel in Ghana, said the West African neighbour might have succeeded in beating Nigeria to being the regional hub for international airlines.

He said unlike Nigeria, Ghana already had a robust connectivity plan in place, which opened the country’s airspace to African and international carriers with so much reciprocity.

“What they have done with the fuel price cut is to further attract the airlines to Accra,” the source said. Aviation fuel is central to the operations of an airline as it constitutes between 35 and 40 per cent of business cost.

“Fuel in Ghana used to be one of the most expensive with government tax being one of the main factors for the cost. But with the support of the Civil Aviation Authority (CAA), and the airport authority in Ghana, we made proposals to the government to take off the 20 per cent tax accruing to government to make Ghana more competitive.

That was what they did. Their fuel is now on the same level with that of Ivory Coast, which is their biggest rival, and even lesser than what we have in Nigeria.”

Commenting on the implications, the Executive Secretary, Major Oil Marketers Association of Nigeria (MOMAN), Obafemi Olawore, said that besides the loss of revenue, the development was bad for the country’s image.

Olawore reckoned that the development could have been avoided if the Federal Government had given the oil marketers the needed assistance, like forex, to facilitate the import of aviation fuel and sell in the country at affordable prices.

He said MOMAN was in talks with the Nigerian National Petroleum Corporation (NNPC) for weeks to provide them forex at interbank market rate. “Nevertheless, we are continuing with our private arrangements to bring in the product (Jet-A1). Between this week and the next, we are expecting 40 million litres of aviation fuel. By the time that arrives and NNPC also brings in its own, things will start looking up. Those airlines that have gone will start coming back to Nigeria. Because it is easier to refuel in Nigeria than elsewhere,” Olawore said.

Industry watchers noted that unless such optimism becomes reality, regulatory agencies like NCAA, FAAN and NAMA that have been complaining of low revenue may face more hardship amid Federal Government’s demand for improved turnover.

The agencies are currently moving to retrieve the over N30 billion from domestic airlines indebted to them in the last 16 years.