The International Air Transport Association (IATA), in its latest global passenger traffic data, saiddemand (measured in total revenue passenger kilometers or RPKs) climbed 3.8 per cent in August 2019 compared with the same period in 2018.
The data, released a fortnight ago, also showed a slight increase from 3.5 per cent in July to 3.8 percent in August .
“While we saw a pick-up in passenger demand in August compared to July, growth remains below the long-term trend and well-down on the roughly 8.5 per cent annual growth seen over the 2016 to Q1 2018 period. This reflects the impact of economic slowdowns in some key markets, uncertainty over Brexit and the trade war between the US and China. Nonetheless, airlines are doing a great job of matching capacity to demand. With passenger load factors reaching a new high of 85.7 per cent this is good for overall efficiency and passengers’ individual carbon footprint,” said Alexandre de Juniac, IATA’s Director General and CEO.
The IATA data, not only speaks volume about the increase in patronage or preference for air transportation in contemporary times, but also contains a subtle message on the need for emerging economies like Nigeria to take urgent steps to harness the benefits of aviation, particularly to grow their local airline industry.
Indeed, with dwindling revenue from crude oil, there is no better time than now for government and regulatory agencies to come up with favourable policies that will permit the emergence of viable flag carriers competing strongly in the international market. Aviation, if properly harnessed remains a most potent tool in ongoing efforts to diversify the economy.
An aviation analyst, Ephraim Andem suggested that for Nigeria to unlock its aviation potential for national prosperity, it should come up with a local content law that makes it compulsory to fly and hire Nigerian aviators. Andem said the government should compel the CBN to evolve a policy that allows local airlines access to a single-digit interest rate, just as the Nigerian National Petroleum Corporation (NNPC) should be made to work directly with airlines in the supply of affordable aviation fuel. At present, cost of Aviation fuel (Jet A1) accounts for more than 50 per cent of local airlines’ overhead.
Andem, who bemoaned the lack of deliberate government policies that supports local airlines following the liquidation of Nigeria Airways about 15years ago, urged the Federal Government to take a cue from the oil rich gulf-states of Qatar and United Arab Emirates that have used aviation to diversify the economy.
“Nigeria’s eight local airlines are nowhere close to benefiting from the huge global air passenger traffic; a raft of inventionist policies is required to support their growth. This is what the gulf-states and other countries around the world are doing,”said Andem.
“And it starts with putting in place the policies for strong airlines to emerge. What Emirates and Qatar have brought to the Middle East economy in recent years, certainly surpasses what Nigeria has derived from the NNPC,” said Andem.
According to the Chairman of the Airline operators of Nigeria (AON), Capt. Nogie Meggison, Nigerian airlines cannot even be considered as airlifting any significant numbers of international passengers from the 5million trafficking annually through the country’s international airports in Lagos, Abuja, Kano, Enugu, and Port Harcourt.
Except for Air Peace that recently launched operations into Sharjah and Dubai, United Arab Emirates (UAE), there is no other Nigerian flag carrier operating internationally.
According to the AON, Nigeria loses about $3billion annually as capital flight in aviation to foreign airlines who operate or account for over 99 per cent of international flights into Nigeria.
Meggison, said aviation is the barometer by which nations measure their economic growth. He said given the contribution of aviation to GDP, many nations are intensifying efforts to protect and increase patronage for their flag carriers.
“Our policies should be geared at one goal: Nigeria first; we have to support our airlines to grow, create jobs, and improve the economy,” said Meggison.
Fly Nigeria Act
At the ever-busy terminal of the Murtala Muhammed international Airport, Lagos, a local travel agent hired on commission to sell Dubai tour packages while taking stock for the day notices a trend that is not helpful to the country.
“The majority of the big men and women here are flying foreign airlines to the United Arab Emirates. They don’t seem interested in flying a Nigerian airline,” she said.
It is a job she has been doing since 2016, and her inference is drawn from the number of persons wanting to buy her package who are flying on the two gulf-state carriers, Emirates and Etihad.
Preferring to remain anonymous, she explains that once a Nigerian airlines launches operations into a foreign route, the response of the national or flag carriers on such routes is usually very inimical to the Nigerian carrier.
“They will come up with various packages; slash the cost of the air tickets, discounts on hotels, increased baggage allowance, free tours and meals, and they do more to spoil business and first class tickets passengers. These airlines have the strong backing of their governments to frustrate the Nigerian carrier out of their country,” she said.
In July, Nigerian carrier, Air Peace launched its international operations with flights on the Lagos – Sharjah – Dubai route.
The airline is also planning to commence flights to Johannesburg, South Africa; London, United Kingdom; Houston, Texas; and Mumbai, India.
In the same vein, Medview and Arik Air are targeting returning to the international market.
It behoves on Nigeria to take a cue from examples set by the governments of Qatar and UEA, by supporting local airlines making a foray into the international market.
One of such policies, according to experts, is the launch the Fly Nigeria Act.
The experts under the aegis of Aviation Safety Round Table Initiative (ASRTI), made their position known in a communiqué issued after a breakfast meeting held in Lagos recently.
The Act, they noted, would make it compulsory for anyone travelling on government expenses to fly local airline or its partners, except on routes not operated by local airlines.
“There is need to sign the Fly-Nigeria-Act legislation to help protect the Nigeria travel market for both local airlines and travel agents,” the AON said.
The industry think tank noted that the industry was shortchanged given the dominace of foreign airlines airlifting passengers out of the country and also repatriating over 75 per cent of their revenues.
The AON noted that if the Fly Nigeria Act was introduced, foreign airlines would be forced to partner with local airlines in code-share and other arrangements that would allow local airlines airlift passengers from domestic airports and feed the foreign airlines on international airports in Abuja, Lagos, Port Harcourt, and Kano. This is the global trend. The partnership allows local carriers would earn some revenue from tickets jointly operated by the two airlines.
Minister for Aviation, Hadi Sirika has already hinted of efforts by government to have the National Assembly pass a ‘Fly Nigeria Act’ in order to achieve this aim.
“As part of efforts to make airlines viable in Nigeria, the ministry is making moves to have the National Assembly pass a fly Nigeria act. This Act will require that anybody travelling on a ticket bought with public funds must travel on a Nigerian carrier unless the route is not served by a Nigerian carrier. However, with your private funds, you can do as you like. Many countries, including America, have such Acts,” said Sirika.
As noted by Sirika, countries desirous of growing their airline and tourism industries make it mandatory for government officials to fly their carriers, except if airlines from the country are not operating there.
For instance, amid the financial crisis engulfing Alitalia, successive Catholic pontiffs continue to fly the Italian carrier, including Pope Francis.
Queen Elizabeth 11 also complies with this patriotic act as she doesn’t fly any airline, except British Airways and Virgin Atlantic.
As President Muhammad Buhari begins to take steps to cut down on travel cost for government officials, a Fly Nigeria Act that compels officials to patronise local airlines should be added to the list. It is a policy that will benefit not just the existing private carriers, but the planned national airline, Nigeria Air.
Access to single digit interest rate
There is no denying the fact that over the years the local airline industry has failed to meet public expectations in service delivery.
For instance, in recent years, fewer numbers of aircraft and inability to source for ‘cheap funds’ to re-refleet has remained a major challange for local airlines. Even accessing funds to carry out routine maintenances of aircraft abroad has been herculean.
It is a challange not helped by the depreciation in the naira against the dollar, as well as the high interest rates on loans by Nigerian banks. Ironically, aviation is a dollar demininated business; local airlines selling air tickets with the naira, are forced to source for forex at exorbitant prices to buy or lease aircraft and also maintain them abroad.
The best response to complaints of poor service delivery by local airlines is through laws or policies that eases their businesses. And access to single digit interest rates and cheap fuel should be considered as critical government policy to support the industry.
A local airline like Air Peace that is flying internationally would benefit immensely from a government policy that gives it the same competitive age in cheap fuel supply as enjoyed by Emirates and Qatar.
In the same vein, a government or CBN policy directive that allows commercial banks to offer single digit loans to Nigerian airlines would ease the burden of paucity of funds for fleet expansion and maintenance. Increase in number of aircraft would naturally result in expansion of routes, improved service delivery, and employment of more Nigerians.