Nigeria @63: Aviation industry still gasping for survival – Stakeholders

Aviation industry still gasping for survival - Stakeholders
Aviation industry still gasping for survival - Stakeholders (Image Credit: Naira Metrics)

As Nigeria celebrates its 63rd independence anniversary, our Correspondent examines how the aviation sector has responded to the needs of air travelers across Africa.

Transportation is one of the earliest global economic activities that has spurred sustained growth. Every economic system engages in it, and it is a legitimate profession that supports microeconomic operations.

An important factor in a nation’s ability to thrive economically and connect its citizens is the aviation industry. By offering effective transit options, it supports business, tourism, and international trade. While boosting associated businesses like tourism, hospitality, and manufacturing, this industry also creates a sizeable number of direct and indirect job possibilities. A strong aviation industry supports economic growth, boosts employment, and improves a country’s position in the world economy.

The Nigerian aviation sector faces a variety of challenges, such as security issues and inadequate surveillance technology, crumbling infrastructure, outdated equipment, lack of qualified personnel, lack of check-in and out technology, high debt loads, high taxation, scarcity of aviation fuel, and restricted access to foreign exchange.

The aviation industry must be in line with the demands of passengers at a reasonable and competitive price for it to contribute to Nigeria’s economic progress.

The amount of investor money locked in Nigeria, according to several aviation stakeholders, is a significant barrier to new investment in the industry.

The International Air Transport Association (IATA) recently disclosed that Nigeria owes $812.2 million out of $2.27 billion trapped funds, making it the country with the highest trapped funds globally. The association warned that rapidly rising levels of blocked funds are a threat to airline connectivity in the affected markets.

The other four countries that account for 68.0 percent of blocked funds include Bangladesh ($214.1 million), Algeria ($196.3 million), Pakistan ($188.2 million) and Lebanon ($141.2 million).

“Airlines cannot continue to offer services in markets where they are unable to repatriate the revenues arising from their commercial activities in those markets. Governments need to work with industry to resolve this situation so airlines can continue to provide the connectivity that is vital to driving economic activity and job creation,” Willie Walsh, IATA’s Director General said.

Collaborating this position is Engr, Chris Amokwu, a staff of the defunct national carrier, Nigeria Airways, who said that foreign exchange challenges has impeded growth in the sector.

He said: “Look at the foreign airlines’ trapped funds. The problem remained unaddressed for more than two years and till date. How many foreign investments have we had in the last 63 years? None to the best of my knowledge. We have a long way to go in this sector.”

Another setback to the growth of the aviation sector according to some experts is lack of national carrier. After the collapse of Nigeria airways, attempts were made to establish another national carrier namely: Air Nigeria, NewCo, Nigerian Global, Nigerian Eagle, Virgin Nigeria, Air Nigeria, Nigerian Eagle, Nigeria One and lastly Nigeria Air which ended up on the drawing table after several billions has been siphoned from the nation’s coffers.

In 2015, former Minister of Aviation Hadi Sirika he had put forward an aviation roadmap with National carrier as the queen project, which he promised to deliver before former President Muhammadu Buhari’s administration winds up but it ended up as the greatest ‘scam’ in the industry.

But some stakeholders in the aviation sector believe that all hope may not be lost for Nigeria Air. They are hopeful that the project could be reactivated if Festus Keyamo, the new Minister of Aviation and Aerospace Development, is transparent with the processes and ensures that the interest of local operators are taking into consideration.

They also suggest that the Nigerian Government can empower and support existing carriers to fly the country’s flag.

Seyi Adewale, an aviation analyst and chief executive officer of Mainstream Cargo Limited, told our reporter that the new aviation minister must review all contracts relating to Nigeria Air with the primary goal of addressing all the ‘loopholes’ in the National Interest.

Adewale advised that the Minister needs to rebuild trust and confidence with its Ministries, Departments and Agencies (or parastatals), the general public, unions, interest groups and other industry stakeholders.

“Firstly, the Minister ought to be transparent, avoid sycophants, listen to critics, and genuinely work in the nation’s best interest.

“He has to consult widely with industry professionals and critical stakeholders such as Airline Operators of Nigeria (AON) before deciding any definite course of action. The terms and conditions of any bidding process must be followed strictly, and other ethical considerations,” he added.

Alex Nwuba, CEO of Ghana-based Smile Aviation and former CEO of Nigerian-based Associated Airlines, said that Sirika’s biggest mistake was not protecting the interest of local airline operators in the entire Nigeria Air project.

Nwuba said that the new Minister of Aviation can still reactivate the Nigeria Air project by tweaking the system to carry local operators along.

He said, “The Minister needs a surgical examination of the aviation industry, not just airlines; he needs a team that understands the industry to guide his decision-making and strategic focus”.

A staff of Nigeria Civil Aviation Authority who does not have the capacity to speak disclosed to New National Star in confidence that appointing a minister who have no knowledge or tract record in the aviation sector just to pacify politicians will continue to hold down the sector and impede its development.

He said, “The major challenges I see here are the inability to run the agencies as commercial entities by those who provide services and allow the regulator to run as an independent, unbiased, uninfluenced body.

“As of today, we have politicised the industry with too many politicians appointed and they put so much pressure on the agencies.

“I think there is a need to scrap the Ministry of Aviation and return to the Ministry of Transportation because politicians have put more political interference on the agencies, including the regulator.”

Despite these challenges, the International Air Transportation Association (IATA) stated in a recent report that the Nigerian aviation industry has contributed more than $1.7 billion and created 241,000 jobs.

The Honourable Minister of Aviation and Aerospace Development recently quoted National Bureau of Statistics (NBS) data which showed that Aviation Sector contributed about 117 billion Naira which is 4% to the National GDP in the first quarter of 2022, supported about 200,000 jobs and paid about 8.5 billion Niara in tax annually.

To breath fresh air into the sector, Keyamo, embarked on a working visit to Canadian Aviation Electronics (CAE), a global aviation company renowned for its state-of-the-art flight simulation technologies and training solutions as part of efforts to repositioning the aviation sector for revenue generation and growth.

Speaking to journalists recently he said, “as a Ministry, our mandate amongst others, is the formulation and management of the government’s aviation policies, overseeing of air transportation, airport development and maintenance, provision of aviation infrastructural services and other needs.

“To achieve this mandate, the ministry developed an Aviation Road Master Plan which clearly defines what we need to do to achieve our objectives. It is also instructive to state that upon assumption of office, I have reviewed the progress made so far vis-a vis the existing gaps. Accordingly, we are already looking at focus areas which are encapsulated in a five-point agenda.

“They are strict compliance with national laws and regulations; and international obligations, improvement and development of infrastructure for passenger convenience and support for the growth and sustenance of local airline businesses.”

Techrectory with Agency Report.

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See also ICOA audits, Nigeria’s 5 int’l airports yet to be certified says NCAA

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Written by Percy Onyeka

A seasoned Tech/Business Analyst, Digital Media Consultant , Publisher and Entrepreneur with more than a decade experience. Online Editor in Chief-New National Star newspaper and a host of clients...

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