A fortnight ago, Med-View Airlines announced the suspension of its Lagos-Abuja-Dubai operations which it launched on December 7, 2017 with a lot of fanfare. The suspension, according to the airline’s Managing Director/CEO, Mr. Muneer Bankole, became necessary following the breakdown of the only aircraft (a Boeing 767) which it deploys on that route.
Put differently, Medview Airlines suspended its service on the lucrative Lagos-Abuja-Dubai route because it lacked the financial capacity to either buy or lease the requisite aircraft to operate the route to compete with Emirates that has over 500 aircraft.
Sadly, the exit of Med-View Airline on the Dubai route, came after Arik Air had similarly abandoned the same route as well as its two other international routes – Johannesburg, South Africa and New York, United States of America. At present, Medview Airline is also struggling to service its Lagos-London route. Without doubt, the poor showing of Nigerian airlines on the international market, the latest being Medview Airline, speaks volume about the poor health of its local airline industry.
According to the President of the Aviation Round Table (ART), Mr. Gabriel Olowo, the local airline industry has suffered massive rot in recent years with the combined fleet of Nigeria’s domestic airlines presently at 41. About 14 years ago, the combined fleet of local carriers stood at over 90 and this ensured minimal flight cancellations and delays at airports across the country.
This figure, Olowo described as abysmally low considering the population of the country (about 180 million) and the need to meet the increasing demand for domestic and international air transport by Nigerians while also growing revenues from the sector to the national coffers.
Banana peels to avoid
But what really is responsible for the high mortality rate of Nigeria’s airlines? Operators would list several factors ranging from multiple taxation by regulatory and airport agencies, to high cost of fuel, the absence of maintenance hangers in Nigeria, high cost of forex to buy spares and exorbitant insurance premium as part of the many challenges crippling their operations and profitability.
According to the spokesman for the Nigerian Civil Aviation Authority (NCAA), Mr. Sam Adurogboye, about 45 airlines floated by Nigerians have gone bust in the last 30 years. Some never flew beyond their first five years. At present, there are eight local airlines operating in Nigeria – Air Peace, Dana Air, Med View, First nation, Overland, Arik Air, Azman Air, and Aero Contractors Airlines. Of the eight, only Air Peace, Azman Air and Overland are considered financially stable. The rest are battling with one financial crisis or another withArik and Aero Contractors at present under AMCON receivership.
All the same the high mortality rate of Nigerian airlines, has in fact, has become a big source of worry to industry stakeholders given its vast implications for the economy. Aside its negative impact on Nigeria’s ability to reciprocate its BASA with other countries, the demise of any airline also comes with attendant job losses to pilots, aeronautical engineers, cabin crew, and loss of revenue to the airports.
Wrong aircraft type
Most of Nigeria’s private airlines are alleged to be owned by cronies of top government officials or persons who at one point or another stumbled on “free cash” and not finding any other business venture to launder the money chose the airline business. The challenge with this type of ownership structure is that professionalism is often thrown overboard while cronyism is being promoted.
In fact, experts in the aviation industry have pointed out that because most investors in Nigeria’s local airline industry are non-professionals, they hardly see the need to dissipate their energy in getting a reputable firm to carry out proper feasibility studies prior to floating an airline. With the absence of clear cut feasibility studies, such investors are often misled into the purchase of the wrong aircraft type as well as plying routes that make it herculean to recoup their investment and remain in the sky. For instance, there is no economic sense in deploying a Boeing 737-500 jet aircraft on the Lagos – Benin route that doesn’t last more than 40 minutes. A turbo prop, a Fokker, a Dash-8, and an Embraer aircraft, which all fly at low altitude and consuming less fuel remains the most suitable equipment for Nigerian routes.
In fact, most routes in Nigeria hardly last more than one hour making the jet engine aircraft that is designed for long haul flights (lasting three to 12 hours) an unsuitable aircraft in Nigeria. But most operators out of ego (and negating business principles would most often opt to either buy or lease the Boeing or Airbus aircraft type.
For this reason, the purchase of the wrong aircraft type is seen in Nigeria as the first banana peels most investors stumble upon. And like a hungry predator, it has not spared any of its prey. Dotting the various airports apron in Nigeria are some of those aircraft now abandoned by their owners due to the high cost of maintenance as well as their high rate of fuel consumption. The first step therefore that existing airlines must take to halt drifting into oblivion is to overhaul their fleet and get the right aircraft type.
Another banana peel that existing local airlines must avoid is the quest to spread to routes that they have not done a proper feasibility study on to ascertain their financial viability. Minister of State for Aviation, Mr. Hadi Sirika, while faulting the business models adopted by local airlines in their route expansion programme said it was important that financial considerations be placed above all other reasons before airlines embark on route expansion projects whether within or outside the country.
“Local airlines must get their priority right with the right business model that will bring money for them. They must not all do scheduled operations,” he advised.
Another pitfall that cripples the local airline operators easily is the tendency at the inception to over hire. Being mostly a one-man business, there is usually the temptation to saturate the non-technical units with friends and family members. And such an overhead had led to the financial misfortunes for such airlines. An example could be seen in Arik Air and Aero Contractors that had well over 1,000 workers each even at a time their aircraft fleet had depleted to less than five and the stream of income was seriously eroded.
The recipe therefore is for existing airlines to hire staff it considers only imperative to their operations.
In the same manner, the use of expatriate workers in place of locals should be avoided given the huge finance (in foreign exchange) required to pay the expatriate workers. Efforts should therefore be made to train and re-train local manpower by existing airlines to reduce cost.