Local aviation risks are deteriorating because just 38 of 98 planes are functioning.
Aside from the withdrawal of two scheduled carriers, the whole local aviation sector may be forced to shut down due to a persistent loss of fleet capacity, which has made schedule reliability nearly impossible.
According to The Guardian, the eight active airlines have a combined fleet capacity of 38.77%, with 60 of the 98 listed planes grounded pending the availability of foreign exchange earnings to cover maintenance costs.
• Air Peace, Arik, Azman operate at 38.8% fleet capacity
• Hurdles for air travellers as over 30 per cent are underserved
• Operators blame lack of foreign exchange for maintenance
• Sirika’s Aviation Roadmap fails to deliver on promises seven years on
• Industry needs new policy direction to survive, stakeholders say
• Only four of 22 airports are viable, turn others to shopping malls, Bernard tells FG
This comes as an aviation industry stakeholder, Mr. Bankole Bernard, urged yesterday that the country’s 18 unviable airports be converted into shopping malls to generate cash. According to him, only four of the country’s 22 airports – Lagos, Port Harcourt, Abuja, and Kano – are viable. He added that the operations of the other 18 airports had become unviable over the years.
Rail and road apprehensive passengers are not finding relief in air travel either. Flights to their destinations are either limited or prohibitively expensive, with poor schedule reliability often leaving checked-in travelers stranded in crowded terminals.
The terrible state of the local operating environment was acknowledged by stakeholders. They blamed the lack of a buffer on the lack of a long-term aviation growth strategy.
Most notable is the present administration’s Aviation Roadmap plan, which has failed to deliver on at least one of its pledges in seven years.
A careful examination of the Lagos Airport ramp over the weekend shows an industry in decline. Grounded planes are quickly taking up parking areas reserved for operational flights. Further investigations verified the suspicions.
Air Peace is the market leader, accounting for more than 40% of total domestic operations in 2021. It has 32 planes, just 12 of which were operational as of late Friday.
In terms of market coverage, Arik Air comes in second. Prior to its acquisition in 2017, it boasted 11 aircraft out of 30 on its fleet. It currently operates five operational aircraft.
Azman Air has eight aircraft on file, just three of which are actively operational. According to the Airfleets Aviation portal, Max Air has four operating planes out of a total of eight attributed to its operations.
Ibom Air, the only state-owned airline, has a total of eight planes, six of which are in use. United Nigeria has purchased four aircraft in over a year of business, two of which are now operational. Overland Airways additionally operates four planes out of a total of eleven. Green Africa currently operates two planes. Aero Contractors and Dana Air have a total of 14 planes, all of which are now idle.
The impact of having just 38 planes operational out of a total fleet operating capacity of 98, or 38.77 percent, is especially telling in the face of growing passenger volume. In April 2022, the National Bureau of Statistics (NBS) reported that 13 million people used Nigerian airports in 2021.
Domestic travelers account for around 10 million of the total, or 27,397 every day. When compared to the 38 operating flights, each jet has 720 passengers each day – an average of seven to nine hours of operation (depending on aircraft cabin size).
George Uriesi, Chief Executive Officer of Ibom Air, stated at an aviation conference in Lagos that nine flight hours per day would be fine in other parts of the world, but not in Nigeria, where the average daily operating hours per aircraft is five – given a plethora of limiters that render airplanes grossly under-utilized.
Technically, more than 30 to 40% of travelers are now underserved, putting a damper on demand and driving up travel costs, just as air flying has become an act of faith.
As of yesterday, The Guardian has learned that most seats on the congested Lagos-Abuja-Port Harcourt-Kano-Kaduna route, if available, were selling for between N76,000 and N100,000 for one-way economy seats. The price of a round-trip ticket ranged from N140,000 to N190,000, depending on the route, airline, and time of purchase.
According to the Chief Operating Officer of one of the airlines, the prolonged downtime reflects the industry’s grave situation.
“In reality, more than half of those dormant (60) planes should be flying right now.” I’m aware that many of them are in various states of upkeep but are being held up by a lack of actual money. So, while we are fighting to fill the few available slots, we are simultaneously asking for funds to put new equipment into service. You know how much a dollar costs now (N725/$), and a C-check on a B737 costs an average of $2 million.
“The combination of the two concerns is overkill for any operator.” We’re struggling and trying to make the best of a bad circumstance. Customers are harmed by the delays and cancellations, but the airline must first exist. Every move must have a cost; else, there is no point. It is a challenging situation for all of us. “And I don’t see anyone surviving this for long until something catastrophic happens,” he continued.
Uriesi, a former Managing Director of the Federal Airports Authority of Nigeria (FAAN), stated that the plague of idle capacity created by the ‘Nigerian dilemma’ impacted operators the hardest.
He said that for every hour of flying time missed by an average aircraft, at least N4 million in potential income is lost.
“The Nigerian airline uses the same jet as everyone else on the planet.” However, in comparison to Europe, America, and even Asia, our jets are far more expensive to acquire. Second, we pay greater insurance premiums. Our safety record is now excellent, yet it makes no difference to the insurance. They have banned Nigeria, and you would have to pay a premium that is three times more than the operators in Europe.
“There is already no balance, yet you pay in dollars but sell in Naira.” Furthermore, you work in a systemically limiting environment that makes it difficult for you to be as productive as your colleagues in Europe, Asia, and North America.
“The amount of flights we don’t use in a day due to such limiters is plus or minus three.” That is N12 million in income opportunity squandered every day. And for a 67-passenger trip, I’m using N60,000 per seat, which is relatively cheap for most airplanes. That is N4 million in income every flight, 90 flights per month, and N360 million in revenue lost in a month for one aircraft. And it’s 1,000 flights and N4.3 billion per aircraft in a year,” Uriesi remarked.
He went on to say that it was past time for Nigeria to establish a home-based aircraft leasing firm that would serve local operators in local currency and relieve them of the burden of seeking hard currency for aircraft purchases.
Indeed, his idea is one of the central goals of the Aviation Roadmap project, which was launched in 2016 by the Minister of Aviation, Hadi Sirika, in Lagos and Abuja. The program, which aims to “transform” the industry, includes objectives such as a new national airline, airport concessions for efficiency, MRO facilities to reduce capital flight, and aircraft leasing firms to service local operators. None of them have ever seen the light of day.
Chris Aligbe, CEO of Belujane Konsult, believes that the components of the Aviation Roadmap are critical factors that should transform any sector at any moment, and that “it is for that reason why many of us supported it.”
“Sometimes, one becomes concerned that certain components did not arrive as soon as they should have. The industry would have been substantially superior. In the context that circumstances appear to have made it what it is today, I am rather dissatisfied. We were on the verge of it, but the conditions of COVID-19, as well as the downturn that followed the epidemic, were big issues, not only for our country but for many countries,” he remarked.
He went on to say that the local sector’s challenges go beyond the industry and the Ministry of Aviation. And “we would continue to remain in this quagmire unless the various branches of government came together with affirmative action to handle the issue of currency and gasoline.”
“If we allow aviation to fail, the entire nation will fail.” But we must not wait for it,” Aligbe said.
Capt. Roland Iyayi, CEO of Topbrass Aviation, stated that the sob tale may have been different if aviation policy had been designed to catalyze economic growth.
Iyayi pointed out that Kenya and Ethiopia have comparable difficulties but are less vocal about them because they have created a policy framework for the growth of their natural economies.
“The policy we have in place in our industry is not appropriate for the country’s development needs.” You establish aircraft not because you can, but to catalyze the country’s progress. All of our airlines are competing in a limited market, as we have been saying for the past ten years. There is a need to address policy to assist the expansion of other sectors of the economy, such as tourism and the extractive industry.
“In the medium term, I see more airlines collapsing simply because there isn’t enough capacity and airlines aren’t receiving the financial strength to satisfy obligations.” As a result, airlines will fail. It’s likely to grow worse before it gets better. It’s a pity since the foundation isn’t sound,” Iyayi stated.
MEANWHILE, Bankole Bernard urged yesterday that the country’s 18 unviable airports be converted into retail malls in order to generate cash. Bernard, Group Managing Director of an airline holding business, was addressing on the margins of the League of Airport and Aviation Correspondents’ 26th annual conference.
According to him, just four of the country’s 22 airports – Lagos, Port Harcourt, Abuja, and Kano – are viable. The other 18 airports’ operations had become unviable over the years, while efforts to improve operations at Owerri Airport, another international aerodrome open from sunrise to sunset, had been futile.
He asked the federal and state governments to explore building shopping malls and other amenities to entice more economic activity to the inefficient airports.
“Given the multiple issues, we have in the sector, what are the potential solutions to consider?” We may begin by modernizing airport terminals with retail complexes.
“This will help to ensure the financial sustainability of airports and other critical infrastructures such as the internet and a consistent power supply to support enterprises.”
“We must begin to consider other power sources, such as renewable energy, to keep airports operational and minimize operating costs in the long run.” This will also make airports more feasible and appealing,” he added.
He also suggested that the government consider providing inexpensive hotels, which would provide credibility to sector investments.