Unburdening the aviation sector

Unburdening the aviation sector

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There is no doubt that Nigeria’s aviation sector is embattled. Groaning under the yoke of the scarcity of Jet A1 fuel, inability to pay salaries and service debts and the inability of some of the airlines’ managements to take discerning administrative decisions, operators in the sector may be on the verge of shutting down completely, except something drastic is urgently done to save the situation.
The President Muhammadu Buhari-led administration should, therefore, pay more attention to the unfolding events in the sector with a view to finding lasting solution to the problems.
The sector has been bedeviled with several events in the last few weeks. Shock snowballed into anger at the Murtala Muhammed Airport II in Lagos on August 31, 2016, after Nigeria’s supposedly second largest commercial carrier, Aero Contractors, announced the temporary suspension of its operations, forcing its work force to proceed on a compulsory and indefinite leave.
Barely 24 hours after Aero’s exit, First Nation Airlines jumped on the bandwagon, followed by Arik Airline, which later resumed operations within 24 hours. Unlike Aero, First Nation and Arik are hiding under the excuse of issues bearing on maintenance and insurance, respectively.
Apparently frustrated by low patronage, and in the wake of the new Central Bank of Nigeria’s forex policy that cost foreign airlines about N64 billion in losses, the National Association of Nigerian Travel Agencies followed suite.
NANTA warned that its members would soon relocate to Ghana, a country the agencies argued, has consistent aviation policies.
In the last four months, no fewer than 15 airlines have withdrawn their services from Africa’s most populous nation. Some of them are United Airlines, Air Gambia and Iberia, among others.Like NANTA, the few foreign airlines left in Nigeria have moved to Ghana to fuel their fleet of aircraft.
However, a huge burden is about to make matters worse than ever.
According to industry watchers and experts, more airlines and stakeholders are on the verge of shutting down operations, sooner than expected. Travel agencies that sold about $1.4 billion worth of air tickets in 2015 have been recording losses, as many more airlines quit the Nigerian routes.
The government last year introduced a fiscal policy through the CBN, restricting access to forex and funds transfer out of Nigeria. Our sources estimate that Delta and United Airlines have up to US$180 million hanging in the Nigerian economy, while Air France-KLM is estimated to have over US$150 million. British Airways has about US$100 million, while Iberia, which has already withdrawn its services, has US$5million of its funds trapped.
While NCAA has yet to see ‘a big deal’ in the development, critics reminded the agency that foreign airlines remained a major stakeholder in the industry, accounting for about 90 per cent of air passenger traffic and if some airlines lose about 50 per cent of their funds due to the forex policy, then, the worst has yet to come.
It is, therefore, obvious that the sector’s problem is multi-faceted, and that its burden is hampering sectoral growth, and even the economy at large, is not in doubt.
Dealing with the nation’s complex and immense problems requires unrelenting thinking, which aviation experts believe is the work of both FG and stakeholders.
On the part of the government, they advised President Buhari to introduce well thought out policies that are not counterproductive but could boost and encourage trade promotions in the country.
There are, however, allegations of incompetence on the part of the airlines. Critics believe some of the airlines’ managements were incompetent as they had failed to take discerning and proactive measures towards tackling the economic recession.
It is understandable that it is expensive to run an airline, especially with the scarcity of aviation fuel, popularly called Jet-A1, but we must say it is unwise that the airlines’ managements could not introduce measures to beat the meltdown. For instance, most of them employed expatriates for jobs that can be done by Nigerians and still retained them after the recession.
It is clever to reduce expenses in order to remain in business as recession persists because what you need to maintain an expatriate is enough to maintain about six Nigerians.
Another way to manage the crisis, as suggested by observers, is for the operators to merge or face total collapse. They are seen to be better off if they can merge than operating alone, a development which can lead to their collapse one after the other, like a pack of cards.
We can make do with a few airlines that would offer quality service and not ailing operators. Anything short of that, critics say, would be a waste of time and resources.
The truth is that Nigerians are losing their patience over the little or no attention given to the ailing sector by the Presidency.

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