Is airline business jinxed in Nigeria?

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A recent report released by the Nigerian Civil Aviation Authority (NCAA), the apex regulatory body overseeing airlines in the country revealed that the number of airline operators which peaked at over 150 as at the year 2000 have gone to a ridiculous low of nine operators currently, thus making keen observers of the nation’s aviation space to wonder if airline operation is indeed jinxed in Nigeria. Ibrahim Apekhade Yusuf examines the issues

These are certainly not the best of times for the nation’s aviation sub-sector. Reason: majority of the airlines who hitherto commanded a lot of admiration from the Nigerian flying public, including the Nigeria Airways, the nation’s carrier, ADC Airlines, Afrijet Airlines, Air Nigeria, Albarka Air, Al-Dawood Air, Bellview Airlines, Capital Airlines (Nigeria), Dasab Airlines, EAS Airlines, Freedom Air Services, Fresh Air, Meridian Airlines, Nigerian Eagle Airlines, Okada Air, Sosoliso Airlines, to mention just a few have since gone into extinction, with only a fraction barely struggling to survive the hard times.

According to the result of a survey carried out by the Nigerian Civil Aviation Authority (NCAA), the apex regulatory body overseeing airlines in the country, there has been a high turnover of airlines in the last 17 years.

Mr. Sam Adurogboye, the NCAA’s spokesperson, who shared the outcome of the survey with The Nation at the weekend, said the number of airline operators which peaked at over 150 as at the year 2000 have thinned down considerably to nine operators at the moment.

He listed a number of factors from poor managerial capacity of the operators, high cost of maintenance, credit crunch, poor business model, poor infrastructure, to mention just a few as being responsible for the parlous state of the sector.

Reason for high turnover of airlines

Adurogboye’s claim is further buttressed by experts, who equally hold the view and very strongly too that the sorry state of the nation’s aviation industry is a function of unfavourable operating climate, inconsistency in government policies, high cost of maintenance, credit crunch, poor business model, poor infrastructure, among other militating factors.

Firing the first salvo, a player in the sector who simply gave his name as Dotun said the sector is plagued by a lot of problems which is rooted in the wrong business model adopted by a majority of the actors in the industry.

Expatiating, Dotun said, “There are lots of things wrong with the system. I think the problem with the sector is symptomatic of the trouble with the country itself. This speaks to our penchant for allowing sentiments rather than intelligence to determine our reasoning. Most of the airlines that have become extinct today is as a result of allowing mediocrity to reign supreme when logic should have been the case.”

Pressed further, he said: “There is an unconfirmed report that a particular airline, has since gained notoriety for laying off staff at the beginning of the year. This ploy is to simply ensure that no permanent staff in on its employment so that it may not have to pay severance package when they exit from the company. Most of their staff are on a short term contract.”

Politics not ruled out

Besides the issue of poor management and infrastructure, Mr. Daniel Adebusuyi, a stakeholder in the sector also argued matter-of-factly that a number of owners of airlines operating in the country are politically exposed persons, PEPs, such that once they fall out with the new government, their businesses are naturally affected as they loss patronage.

A case in point, he says, is Slok Air, owned by former Abia state governor, Dr Orji Uzor Kalu, one of the political godsons of the then president Olusegun Obasanjo, who was forced to move his airline operations out of the country to the Gambia.

“You may recall that Chief Olusegun Obasanjo’s led regime in 2004 forcefully revoked the license of Slok Air. Today, the airline is the major air carrier in the Gambia, and has other operating offices in Ivory Coast, Ghana, Senegal, Sierra Leone, Guinea and Liberia thereby giving quality employment to the citizens of its host countries. But for Obasanjo’s vindictiveness, Nigeria and her citizens would have enormously benefitted from the operations of Slok Air, especially in the area of employment.”

A snapshot of the sector’s present standing

Nigeria’s civil aviation industry is currently hit by a financial crisis which affects all airlines in the country, including the nation’s flag carrier Arik Air.  Arik Air and Aero Contractors have since been taken over by the Asset Management Corporation of Nigeria because of their huge debt profiles.

On the other hand, according to the Airline Operators of Nigeria (AON), it had enumerated about 15 different charges imposed on them. These charges are blamed to have contribution for causing financial problems for the airlines.

A recession, combined with a shortage of dollars, high costs and scarce fuel supplies have created the perfect storm for the industry.

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