Nigeria’s aviation industry in the past seven years has not done badly. The sector has been resilient enough to withstand shocks. Taking a holistic review of the industry, it can be said to have done relatively well despite many challenges that are yet to be resolved. Overall, it can be scored highly, writes WOLE SHADARE
Evolving aviation industry
The aviation industry has come to represent a significant aspect of people’s lives in more evolving ways than was ever imagined simply by facilitating mobility. The aviation industry in Nigeria has come a long way, having witnessed about 75 years of operational existence characterised, over the years, by the industry’s own peculiar cycles of booms and wanes resulting majorly from its management and leadership profiles and styles.
Nonetheless, the industry in Nigeria has, despite the serial cases of mismanagement, corruption, and general inefficiencies remained resilient and evolving. Recent strides noted in the industry attest to the fact that greater potentials abound in the Nigerian aviation industry.
Promises and expectations
In 2015, President Muhammed Buhari’s administration came with so many promises to improve on what it met. While some promises have not been met or at best at the gestation stages, the Minister of Aviation, Hadi Sirika-led administration could be said to have surpassed the expectations. Not that the sector’s challenges had overnight been solved, it is still a work in progress but the aviation industry is on a positive trajectory. The Minister of Aviation has worked relentlessly to make the sector better. Despite the good period, the sector had enjoyed in the past seven years, the industry equally faced challenges such as COVID-19, which slowed down activities in the sector as many activities were grounded.
The various phases of the virus, especially the Omicron variant, slowed air travel recovery.
The sector faced two recessions that hampered growth and led to the unintended seizure of foreign airlines’ funds causing embarrassment to the country before the Federal Government through the Central Bank of Nigeria (CBN) released funds totaling $600 million in 2016.
The country again owed the carriers a fresh $465 million out of which $265 million was defrayed a few weeks ago. International carriers had threatened to exit Nigeria over their trapped funds which caused them a whole lot of problems.
There are still many issues to contend with. At the center of the sector’s current crisis are the high exchange rate and exorbitant cost of aviation fuel, known as Jet A1, which increased by over 200 percent from N300 per litre in February 2022 to about N1,000 per liter in July.
Consequently, the cost of flight tickets has skyrocketed. Domestic airlines have increased domestic fares by over 100 percent. An hour’s flight in economy class has risen up to N125,000 from the N50,000 it sold earlier in the year depending on the time of the day.
The aviation industry is capital intensive. About 80 percent of its operations are in foreign currency. Sourcing for the dollar to meet these obligations has become a herculean task in an economy that battles with an unending foreign exchange crisis.
The negative impact on the industry has led to low revenue and a decrease in passenger patronage amid the non-repatriation of international carriers’ ticket sales proceeds.
What is happening to the aviation sector is a reflection of the challenges of the wider economy, which has been poorly managed over the years. Aviation is a critical sector. There was a fear of danger in the entire industry, which was bound to spiral out of control if something was not done urgently.
While the Nigerian aviation infrastructure deficit may not have been totally resolved, the President Buhari administration has invested so much in aviation infrastructure development than any other administration.
Sirika, who was made the substantive Minister of Aviation in 2019, hinged the Federal Government’s policy on a roadmap centered on four main areas the establishment of a national carrier, the concession of four of the nation’s international airports, the establishment of the Maintenance, Repair and the Overhaul centre (MRO), and lastly, the establishment of the aviation leasing company, which is the aircraft leasing programme.
Abuja airport runway fixed
On April 17, 2017, Julius Berger Nigeria Plc completed emergency rehabilitation of the existing runway and main taxiways at the Nnamdi Azikiwe International Airport, two days ahead of schedule, beating the highly challenging 6-week project deadline.
The existing 3.6 km runway and main taxi-ways were extensively deteriorated with aged asphalt, wide alligator cracking, shear deformation, and widespread pothole formation – posing a risk for take-offs and landings.
Other key deliverables
Other key deliverables for which notable milestones have been recorded consistent with the roadmap are the establishment of a national carrier, the development of a scheme for the continuous maintenance and optimal use of airport facilities, a proactive strategy for the development of a functional PPP arrangement for further integration of the private sector into the aviation industry.
Enugu airport rehabilitated
The delivery of the Akanu Ibiam International Airport upgrade is a key area of the government that has
been scored high by key players in the aviation sector. The Federal Government on August 24, 2020, shut down the Enugu international airport for repairs and N10 billion was released for that purpose.
The progress being made in the concession of the four international airports is another area the minister had been applauded. Although there are several controversies around the concession the minister received recently, the outline business case certificate of compliance from the Infrastructure Concession Regulatory Commission, ICRC, for the concession of the airports by June 2020.
Ongoing concession exercise
Plans are now ongoing for the concession of the airports, which will result in revenue generation and the creation of more jobs in Nigeria. The establishment of the aviation leasing company, which is in incubation since the inception of the Buhari administration is still a dream.
The planned aviation leasing company
In February 2020, Egypt Air, Ethiopian Air, and a consortium AJ Walkers/Glovesly were shortlisted as bidders for the proposed leasing company and its MRO facility.
Following the shortlisting of the three companies, a bidders conference took place during which the consortium of AJ Walkerr/ Glovesly and Egypt Air was shortlisted for the aviation leasing company. At the same bidders’ conference, the consortium of AJ Walkers, Egypt Air and Ethiopian Air were shortlisted to handle the MRO facility. Identifying the need for an MRO, many stakeholders in the industry applauded the move by the government as it would aid major aircraft maintenance and technological transfers, which will create more employment.
Abandoned airfield lighting project revived
For many years, precisely more than 20 years, the second runway of the Murtala Muhammed Airport, Lagos, operated without airfield lighting. For many years, airline operators struggled and mounted pressure on the Federal Airports Authority of Nigeria (FAAN) to provide light on the second runway popularly referred to as 18/ Left.
The Federal Executive Council (FEC) had, earlier this year, approved N2.3 billion for the supply and installation of airfield ground lighting for the MMIA, Nnamdi Azikiwe International Airport, Abuja, and Mallam Aminu Kano International Airport, Kano. The facilities, especially that of Lagos, are nearing completion.
The carriers, over the years, may have spent over N6 billion on the amount they burn to taxi from 18/R runway whenever it is past 6 pm as air traffic controllers forbid them from landing on the 18/Left and remained a sunset ‘airport’ like many other aerodromes that do not have night landing facilities.
Nigeria Air underway
One project that has continued to elicit joy in the aviation industry is the commitment to float a national carrier that will be private sector driven. The project is gathering pace and one that is expected to be launched later this year.
Penultimate week, the spokesman for Sirika, Dr. James Odaudu, disclosed that the carrier would launch a shuttle service between Abuja and Lagos to establish a new comfortable, reliable and affordable travel between these two major Nigerian Airports, stressing that other domestic destinations would follow thereafter.
He said the Request for Proposal (RFP) under the PPP act, governed by ICRC, was completed, hinting that after a careful, detailed, and ICRC-governed selection process, Ethiopian Airlines (ET) Consortium has been selected as the preferred bidder, offering an owner consortium of three Nigerian investors, MRS, Skyway Aviation Handling Company Plc and the Nigerian Sovereign Fund (46%), FGN owning five percent and ET 49 percent.
His words: “All executives have been approved by NCAA, the Air Transport License has been issued by NCAA, Nigeria Air (after having identified the first three aircraft) will now finalise all necessary operation manuals and then go through the inspection and approval process of NCAA.”
It is the belief of many that Nigeria Air should be seen in the next few months as a positive development.
Despite the odds stacked against aviation in the past seven and half years, the sector holds huge prospects for the airlines, the agencies, and the general aviation value chain while not oblivious of the numerous challenges that the sector still faces.