July 29, 2022
•More shut downs imminent – Operators
•NCAA blames weak corporate governance
•Analysts call for govt intervention
No fewer than 131 airlines registered to operate in Nigeria’s domestic airspace under scheduled and non-scheduled flight have gone into extinction largely due to hostile operating environment as well as bad management.
Scheduled flights are those which get their schedule approved by the aviation regulator in advance for a period running into months. Non-scheduled flights are charter flights that are operated as per requirement.
Findings by Vanguard Aviation World showed that before the establishment of the Nigerian Civil Aviation Authority, NCAA, in 2000, over 52 airlines operating in the country had already gone into extinction.
The Authority effectively commenced operations on 1st January, 2000, and between then and 2022, additional 79 airlines went under, bringing the total number of collapsed airlines in the country to 131.
Recall that, the NCAA was established by decree 49 of 1999, with among others, the statutory responsibilities of ensuring regulating, monitoring and promotion of the safety, security, economic and reliability of air navigation oversight in line with the International Civil Aviation Organisation (ICAO) standard and recommended practices (SARPs).
A breakdown of the nation’s aviation sector comprises 20 airports and many regulated airstrips and heliports; 23 active domestic airlines; 554 licensed pilots; 913 licensed engineers and 1700 cabin personnel.
Nigeria being Africa’s most populous country is an important destination for over 22 foreign carriers. Nigeria currently has Bilateral Air Services Agreements with over 78 countries.
From Nigeria, air travellers can fly directly to many of the world’s business centres such as London, Paris, Frankfurt, New York, Johannesburg, China, Atlanta, Amsterdam, Dubai, and Jeddah, amongst others.
The death nails
The findings show that several factors led to the shutdown of these airlines ranging from re-capitalization mandate introduced by the federal government, misappropriation of funds, mismanagement, poor business plans, and lack of proper structures, amongst others.
The federal government had set a deadline of 30 April 2007 for all airlines operating in the country to re-capitalise or be grounded, in an effort to ensure better services and safety, about seven airlines failed to meet the deadline.
Amongst them are ADC Airlines, Fresh Air, Sosoliso Airlines, Albarka Air, Chrome Air Service, Dasab Airlines and Space World Airline.
One of them, ADC Airlines, which became operational on January 01, 1991 and listed on the Nigerian Stock Exchange in 1994, had its entire fleet grounded indefinitely, and license revoked by the federal government for not being able to recapitalize in 2006.
The airline had tried to restart operations in 2002, with a recapitalisation and acquisition of additional aircrafts which operated Lagos-Calabar scheduled flight, but a crash of one of the newly acquired aircrafts in 2006 which killed 96 passengers nailed the operations of the airline.
The Afrijet airline started operations in 1998 but they stopped in 2009 even after meeting the recapitalisation mandate the NCAA. The airline was saddled with management issues as well as bad loans.
Sosoliso airline started operations in July 2000 on Enugu, Port Harcourt, Abuja, Owerri and Lagos route.
But its Flight 1145 from Abuja crash-landed at Port Harcourt International Airport in December 2005, knocking off the airline from the aviation industry. Sosoliso, which was among the seven airlines that failed to meet the recapitalisation deadline, ceased operation in 2006.
The national carrier, Nigeria Airways, began operations in 1971, but due to gross mismanagement and government interference the airline ceased operation in 2003.
Med-View Airlines founded in 2007 as a charter airline mainly operating Hajj flights, and has offered domestic passenger services since November 2012. It expanded into regional and long-haul scheduled passenger routes.
But the airline began having financial problems and was forced to lay off most of its staff from 2017.
In April 2018, Medview Airline suspended international flight operations due to debts and decreased aircraft, and by August, 2019 Medview reportedly shutdown all operations as its only operating aircraft went out of service.
NCAA position
While commenting on some common factors that led to the collapse of the airlines, the spokesperson for NCAA, Sam Adurogboye, in an exclusive chat with Vanguard Aviation World noted that the economics of managing airlines globally is quite tasking and very challenging, and not peculiar to Nigeria alone.
“Among the several reasons why they failed was as a result of lack of corporate governance, that is, having the right person doing the job while understanding the need for due process and carefully executing it.
“Also, they believe in working independently instead of aligning with internal or external support. By now, Nigeria’s airlines should have formed alliances within themselves, as well as with mega carriers but that is not the case.
“An airline alliance is an aviation industry arrangement between two or more airlines agreeing to cooperate on a substantial level. None of these mega carriers does it alone, they all form alliances. There are three major airline alliances, we have SkyTeam, Star Alliance and Oneworld, and each has different partner airlines.”
More shut downs imminent — AON
Meanwhile, the Airline Operators of Nigeria, AON, has lamented that the current hike in the price of aviation fuel along with the scarcity of foreign exchange might cripple their businesses and force them to cease operation.
According to the Vice Chairman of AON, Mr. Allen Onyema, “Since the COVID-19 crises, most airlines all over the world, including Nigeria have not recovered except those whose countries have injected intervention funds to assist them.
“This is nobody’s fault. It just happened. Government has tried its best by giving us this aviation fuel. This aviation fuel can take airlines out, not only in Nigeria but everywhere in the world. Some airlines outside Nigeria have closed down because of the effects of rising aviation fuel. If these things are not addressed in Nigeria, it can affect the bottom line of all airlines in Nigeria.
”We have come to realise that there is little or nothing the committee set up can do because this is as a result of foreign exchange and the price of oil all over the world now. The fuel marketers will sell according to what they are paying. The cost of aviation fuel has increased, even in London and every other country. Our own is worse because of the increase in foreign exchange.”
Way forward
Meanwhile, indications have emerged that these airlines would not have parked up if they had a serious alliance and proper business strategy which would have seen them still flying in the country’s airspace.
An aviation analyst, Olumide Ohunayo argued that the financial management in the sector need to be tweaked along with the security architecture.
“The federal government needs to give the industry access to an official window for critical operating expenses.
“Rather than wait for Dangote’s refinery or the Turn Around Maintenance, TAM, of the nation’s four refineries, crude oil should be supplied to the modular refineries to start refining to make Jet A1 available for airline operations.
“Taxes and charges associated with Jet A1 can be suspended temporarily pending the return of normalcy.
Also, NCAA’s Adurogboye stated that if an airline has an issue like Dana Airline, that has its operation suspended, there should not be any form of panic if the airline had an alliance from them along with their ticket holders, all they need to do is to direct them to the other party that would take care of them and ensure they reach their destination.
“The need for Nigerian airlines to form an alliance cannot be over-emphasized. NCAA has tried to initiate such an alliance for them but they refused. They need to form an alliance with a bigger carrier.
“If the likes of Lufthansa, and Air France could form an alliance with other airlines, what stops airlines in the country from tolling the same part? Insurance is also heavy for them, cost of components, and aviation fuel is also high, which is not peculiar to them. There was a protest over the increment and scarcity of aviation fuel in Accra, Ghana, Brazil, the United Kingdom, and others.
“Nigerian airlines need to look inward, strategize, all of them needs to go through International Air Transport Association, IATA, safety audit, which includes, IATA Operational Safety Audit, IOSA, IATA Safety Audit for Ground Operations, ISAGO, IATA Standard Safety Assessment, ISSA, amongst others, so that they can have enhanced safety response and the foreign bigger carrier will trust and form an alliance with them.
“Auditing is one of the essential pillars of the services offered by IATA to the aviation industry. With this, they will be exposed to training, and new technologies, which would enhance their growth.
“Most airlines in Nigeria do not have good customer care desks, public relations, others. The truth is, if you take care of your passengers, you will end up gaining more but if you don’t, you end up losing more passengers.
“Customer care is important because airline business is tough everywhere, it is capital expenditure, no cutting corners, no waivers, and of course you need to think of profit the next day. So the business is free entry, free exit. If you come in and you follow the rules, you remain. If you come in and you don’t do the right thing you go under.”
On his part, the Centre for International Advanced andProfessional Studies, CIAPS, Director, Prof. Anthony Kila, stated that, “Airlines need to start stronger, they need very big capital and theyneed to develop as a concern of a consortium rather than as individuals.
“To besustainable they might need to charge fees in Dollars instead of in Naira, theyalso need to spend more capital on human development so that can get the rightskills. They also need partnerships with the government and other sectors of theeconomy.
“The federal government should havewaded in to salvage those airlines, but that should have been done with theclear intention of ensuring services to citizens and making sure that airlinesbecome viable by encouraging or even enforcing consolidations and mergers aswas done in the banking industry.”
