Aviation: Punch Newspaper Sets Agenda for Tinubu
The Punch Newspaper in their editorial published on May 4, 2023 tasked incoming administration of Asiwaju Bola Tinubu to prosecute a liberalisation programme to attract investments, create jobs, infrastructure, and facilitate competitive Nigerian-owned private airlines of global standard
THE recent warning strike by aviation industry workers’ unions over sundry issues, including poor welfare packages and the government’s move to pull down a building housing some key agencies at the Murtala Mohammed International Airport, Lagos, refocuses public attention on Nigeria’s troubled aviation sector. Beyond the sit-ins, the recent purchase of firefighting trucks at controversial prices, the failed national carrier dream and the crisis of trapped funds of foreign airlines suggest that the President, Major General Muhammadu Buhari (retd.), and the Aviation Minister, Hadi Sirika, after eight years, are leaving the aviation sector in the messy state they met it.
The strike left hundreds of intending air travellers stranded and was called by the National Union of Air Transport Employees, Air Transport Services Senior Staff Association of Nigeria, National Association of Aircraft Pilots and Engineers, and the Association of Nigerian Aviation Professionals, who demanded, among other things, that the planned demolition of aviation agencies’ headquarters in Lagos be halted, and the implementation of earlier approved conditions of service for workers.
The government has made efforts, but these have not been enough to transform the sector. The crises bedevilling the industry are multi-faceted. Airlines are in precarious financial positions; maintenance facilities are patchy, and there is no national hangar that can handle major aircraft.Corruption and incompetence persist in the regulatory agencies, and the poor state of facilities raises safety concerns.
Apart from a few aircraft and flight frequencies in relation to the country’s population size, airfares are prohibitive. The National Bureau of Statistics’‘Transport Fare Watch’ report November 2022, showed that average cost of airfares in Nigeria increased by 97 percent, from N37,022.97 in November 2021 to N73,267.57 in November 2022. The trend has continued in 2023.
The rise is largely blamed on the aviation fuel shortages, which began in February 2022, and the plummeting naira exchange rate. JetA1 rose from N200 per litre in December 2021 to over N400pl in February last year; and to N800pl in2023. Local airlines now fly to neighbouring West African countries to source aviation fuel; international carriers have simply stopped refuelling in Nigeria.
The Airline Operators of Nigeria warned that if unresolved, the crisis would force airlines to suspend operations. It also identified multiple taxes as eroding the revenue of carriers, as well as regulatory, institutional, and structural challenges; poor infrastructure; and under-investment.
The government has prevented international airlines from repatriating about $802 million from the country mainly due to dollar shortage. Local laws stipulate that the airlines sell their tickets in naira, but the carriers have opened their foreign currency window for Nigerian travellers and selling tickets at prices double what is obtainable in Ghana for the same destinations.
With less than a month to go, the Buhari regime has not undertaken the promised concession of airports and creation of new airport cities (aerotropolis). It had hinged its aviation programme on the concession of the airports and listed some viable international airports for that purpose. Sirika in 2016 unveiled the Aviation Roadmap aimed at transforming the sector with deliverables like a new national carrier, Maintenance Repair and Overhaul facility, and creation of aerotropolises at major airports.
The Lagos, Abuja and Kano airports last year got designated concessionaires, but the process has stalled due to official tardiness and opposition by the unions.
Instead of reforming the statutory agencies for efficiency, and creating an enabling and liberalised environment for private domestic and foreign investment, Buhari and Sirika have been fixated on a government-promoted ‘national carrier,’ wasting time and resources in that forlorn quest.
The unions too should change their mindset. Current realities and the future of the aviation and allied hospitality and tourism sectors lie with private capital, not government ownership and control. The transformation of the sector through airports and allied facilities development are better left in the hands of private investors for efficient service delivery, profitability, and job creation. Their persistent opposition to privatisation and concession is retrogressive.
Markets N Research estimates the global airline market size at $513.5 billion (2022) and is forecast to reach $635.8 billion by 2030.Africa’s aviation market was valued at over $80 billion by the World Economic Forum in 2019 and projected to reach $176 billion by 2040. Nigeria’s current value of $600 million, a meagre 0.04 percent of GDP, is pathetic.
With other stakeholders, unions should insist on transparent asset sale and concessions only to competent investors and operators that combine expertise, global track record, name recognition, financial and technical capability. They should form investment vehicles and seek financial partners to position their members as investors, including the management buy-out option.
Aviation is an international business; countries that make their environment most attractive to investors under liberalised regulatory frameworks are the winners. Britain’s privatisation and liberalisation has seen Global Infrastructure Partners led by a Nigerian, Adebayo Ogunlesi, winning concessions for three major airports in the country, and with other investments in several other airports, seaports, and energy infrastructure around the world.
The unions’ call for a comprehensive forensic audit of the projects undertaken under the Aviation Roadmap is on target; their opposition to further approvals for new airports by state governments is also right as most of the country’s 32 airports are not commercially viable; governors build idle, unviable airports as political projects.
The new MMIA terminal opened in March 2022 has virtually been abandoned by airlines due to design flaws. Touting and lax security, which manifests in lack of perimeter fence, invasion by grazing animals, infiltration by stowaways and bandits, and terrible sanitary conditions prevail at Nigeria’s international airports.
Consequently, none is rated among the first 10 in Africa. The top three rated by Skytrax in 2021 are all in South Africa, followed by one each in Mauritius and Morocco respectively. There are bright spots like winning long-sought IATA certification.
The incoming government should avoid Buhari’s and Sirika’s inertia and vigorously prosecute a liberalisation programme to attract investments, create jobs, infrastructure, and facilitate competitive Nigerian-owned private airlines of global standard that would utilise the country’s Bilateral Air Service Agreements for maximal national benefit.
Culled from Punch