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    Stakeholders List Factors that Will Spur Aviation Sector in 2023

    13 Jan 2023

    In many ways, Nigeria aviation industry recorded remarkable progress in 2022.

    Nigeria was one of the first countries to overcome the effect of Coronavirus pandemic in the world and improved its passenger traffic to pre-2019 levels. The industry recorded milestones, including the installation of airfield lighting in one of the busiest runways in the country, the R18L, known as domestic runway at the Murtala Muhammed International Airport, Lagos after almost 14 years of operation.

    Despite low capacity at the major part of 2022 and the high cost of aviation fuel, passenger traffic was able to build up that by the time the final passenger traffic is published, it is believed that it would not be less than 14 million both domestic and international.

    The new Civil Aviation Act 2022, will give five years validity of Air Operators Certificate (AOC) while the non-schedule carriers, would have three years validity. Currently AOC for schedule operators is renewed every two years. NCAA said it is working on the review of the current validity. This is perceived by industry insiders as great achievement in 2022.

    In addition to this is the fact that no airline went under in 2022; rather, more airlines joined the market and Air Peace, Nigeria’s biggest carrier, started flight operations to China and extended operations to regional destinations.

    Opportunities

    The Managing Director of Flight and Logistics Solutions Limited, Amos Akpan, identified what he referred to as low hanging fruits that would spur the sector in 2023.

    One of these low hanging fruits is that airline operators will accept each other’s ticket.

    “They should get a platform that pays each airline for tickets utilized on their flights. This is critical for optimal capacity utilization of aircraft. It will also make for better utilization of feeder flights from secondary airports into the airports that process both domestic and international flights,” he said.

    Akpan recommended that the NNPC Limited should dedicate one refinery in Nigeria for refining kerosene and Jet-A1 fuel. This, he said, would reduce the costs associated with importation of aviation fuel. He noted that reduced cost of fuel would bring down the cost of producing/providing a seat on Nigeria’s domestic flights.

    “Consequently a seat per one hour flight will be less costly than it is now,” he further said.

    To ensure longevity and profitability of Nigerian airlines, Akpan said an institution should be created to provide credit facility to the airlines at single digit, long term interest rates, noting that Nigerian carriers cannot be competitive with other airlines in the world when it pays outrageous interest rate of about 26 per cent; when its competitors pay about three per cent for similar facility.

    “No matter the name given, an institution should be created that enables investors in aviation to get facilities at single digit interest rates and a repayment period that inputs sufficient timeframe to develop a service and attract the market. This is the foundation to sustained operations and survival. The caveat in this concept is that NCAA (the Nigeria Civil Aviation Authority) must ensure adequate compliance with corporate management practices to avoid malpractices. We need our airlines and aviation allied companies to position for global competition. Financial capacity and corporate governance are the keys,” he said.

    Maintenance

    According to him, 2023 will be year of consolidation in the area of local aircraft maintenance because it has become inevitable, considering the huge expense airlines pay to carry out checks of their aircraft overseas. He noted that raising such money would be a huge challenge to the airlines, as the Naira continues to diminish in value compared to the dollar.

    “7star, Aero, and Ibom MROs should step up capacity to accommodate aircraft utilized by Nigerian operators for maintenance. This would reduce the man-hour cost associated with maintenance. These three facilities must seek to understand the maintenance needs of Nigerian operators. These three MROs should partner with NCAT (the Nigeria College of Aviation Technology, Zaria) to bridge the gap between training and field experience for aircraft technicians and engineers. This is how Egypt, South Africa, and Ethiopia meet the maintenance needs of their operators,” Akpan said.

    He added that the Buhari administration should be concerned with setting appropriate framework to build a Nigeria Air (national carrier) within the remaining four months of his administration.

    Akpan argued that Nigeria needs a national carrier that could utilize most of the nation’s existing Bilateral Air Service Agreement (BASA).

    “A Nigeria Air that most domestic and regional operators will feed with traffic. This government must consciously develop one hub airport in Nigeria in the fashion of Oliver Tambo, Heathrow, Dubai, and Doha. Currently, none of our airports has infrastructures and facilities that qualify as hub, except for mere strategic location,” the industry stakeholder said.

    Training

    In the area of training, Akpan said there must be conscious efforts to harmonise aviation training curriculum in Nigeria, especially that of NCAT in order to produce manpower for the operators and the agencies; so NCAT would become the workforce supplier of the industry, while more courses would be incorporated so that Nigerians would not be travelling overseas for training in some aviation skills.

    “There must be conscious efforts to harmonize the training curriculum of NCAT to the needs of the Nigerian operators to enable the products of NCAT become the workforce in our aviation industry. This should be seamless transition from class to manpower. For example, B737&A320 certified technicians should be NCAT’s focus for maintenance training at this phase of our growth,” he said.

    Akpan also suggested that there was need to harmonize cargo airports with the needs of air cargo exporters, remarking that the potential in cargo export is underdeveloped.

    “We need to design the structures to build this sector of aviation upon. What we have now as cargo terminal in Murtala Mohammed International Airport is a mini-oshodi park. This new design must be clear so that investors can read, can interpret and operate with,” he said.

    Akpan projected that the import of air cargo would grow in 2023 because “we are still import dependent. Exports will grow minimally because of awareness campaign for small entrepreneurs to produce to international market standard; example are dress makers, and chocolate makers.”

    He said more airlines would come on stream because the developed routes within Nigeria and West Africa still need capacity, intoning that forex to procure spare parts, and the high cost of funds, as working capital would remain a problem to operators.

    “Security will still limit aircraft utilization to a maximum availability of 16 hours a day out of the 24 hours. You cannot plan to depart Lagos by 11pm to Port Harcourt, or Owerri, or Kaduna by air, primarily because of security and infrastructure limitations,” he added.

    New Government

    Industry media consultant and the CEO of SY&T Communications, Mr. Simon Tumba, told THISDAY that there would be nothing much to look out for in 2023 because it is the year a new administration would be ushered both at the federal and the states level, adding that the new government which will take charge, will introduce policies that may differ from its predecessor in the first seven months. He however advised the incumbent administration to continue to provide infrastructure, like the installation of airfield lighting at MMIA domestic runway, which is a safety critical facility with economic implications because landing on the runway in the night would save airlines fuel burnt while taxing from the international runway to the domestic terminals.

    “This government has only four more months. After the election the government will continue with routine activities, nothing fundamental. Those things like concession cannot be continued with because the coming government would come with its own ideas. But this government can continue providing infrastructure at the airports. This is what it can do. It cannot do anything on policy because a new government is coming in,” Tumba said.

    Flight Operations

    The Director of Research, Zenith Travels and the publicity secretary of Aviation Round Table (ART), Olu Ohunayo, said between now and after the election in February, there would be movements in charter services, observing that non-schedule operators would make so much money; just like last year when the primaries were conducted by the political parties.

    Looking at the prospects for the year, I think we are going to experience between now and after the election, a lot of movements in terms of charter flights. The non-schedule operators will make so much money as they made from the middle of last year when the primaries were about to hold, up on till now. And also part of the schedule operators will make money from politicians, from the meetings and INEC in moving materials and also from some group of travellers who have chosen to come together and use a charter flight than wait for schedule operators, as we have seen with some religious bodies, so I expect that the movement with pre-elections will bring activities into the non-schedule sector, and some schedule operators will benefit from such movement,” Ohunayo said.

    Apprehension

    However, Ohunayo expressed fear that the in-coming government might not be inclined to keep some foreign investment facilitated by the current administration. He however said when it happens, it might become injurious to foreign direct investment and might also tarnish the image of the country.

    So the action that the in-coming government would take would determine what will happen in the aviation industry after the Buhari administration.

    “After the elections, this is where the problem might come, considering that we have this penchant of not holding on to agreements or binding agreement to the next government. We might see that some foreign investors may not want to push ahead with their investment plan or agreements involving them giving out aircraft (leasing). What the next government does will determine what foreign investors would do. Maybe, some who are already investing may hold back to see the disposition of the next government before they would go along with the investment,” Ohunayo said.

    He remarked that Nigeria might not have foreign direct investment in the first six months of this year until after the election and hand over to the incoming government.

    “So I expect that since handing over is round May 31st, we might probably not have good foreign direct investment for six months until July before anything can happen. So what we can only do is to pray that the forces are aligned for us and see if we can stabilize the naira and with the stability of the naira there will be access to funds, release or remittance of revenues earned in the county (blocked funds) to the foreign airlines and see if that will stabilize the price of foreign flights, continue with the domestic operators as they are now and that will stabilize the ticket fare. If we continue like that, it will be a better year for Nigeria.

    “There will be more stability in the price of ticket, there will be more stability in foreign exchange and once there is more stability, there will be more investment, and once there is more investment, you will expect more flights and we will have more airlines bringing the aircraft and that will get ticket fares come down. So what we can really do is to work and sustain our safety level. So the government and the future one in particular must realize that there is a need to keep to agreements and also we need to look at some of the things that we have done in the past,” Ohunayo added.

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