The economic downturn in Nigeria is threatening the operations of domestic airlines as two of them have suspended scheduled service. Chinedu Eze of Thisday x-rays the challenges facing the aviation industry
There are four key factors threatening Nigeria’s airline industry. One is that everything about aircraft maintenance, including repairs and most often technical personnel is imported and C-check is done overseas. So in a recession whereby over N400 is exchanging for $1, it is difficult for Nigerian airlines that sell tickets in naira to raise enough funds to maintain their aircraft.
Two, over 40 per cent of operational cost is spent on aviation fuel. Today that product sells at N230 per litre because it is imported. Nigeria has refineries that are not working. They were not privatised and under the Nigeria National Petroleum Corporation (NNPC) they have not been put to good use for years, so Nigeria imports its fuel products.
Three, airfares do not reflect the actual cost of operation because of the low disposable income of Nigerian citizens. At the current cost of aviation fuel and maintenance, for a Nigerian airline to make profit it should charge about N45, 000 for one-hour flight, according to aviation analysts. This amount will seem outrageous but that is the actual pricing that could generate profitable revenue for airlines.
The Federal Airports Authority of Nigeria (FAAN) is seeking private sector funding in its efforts to boost the state of infrastructure in some of the nation’s airports.
Some of the new infrastructure which FAAN said it needed the private sector participation includes the construction and management of hangar facilities and well as fixed base operations (FBOs); construction and management of hospitality facilities, including but not limited to hotels; construction and management of automated car parks; development of terminal buildings; construction of runways, taxiways and aprons; construction and management of helipads; and construction and management of independent power plants (IPPs) and aviation fuel depot facility. FAAN is also demanding that the private sector partner with it in the construction and management of cargo air services for perishable agricultural produce.
Managing Director/CEO of FAAN, Mr. Saleh Dunoma, who stated this at the weekend said the aviation industry contributes over $1 billion to the Nigerian economy annually and was supporting more than 150, 000 jobs in Nigeria, thus creating immense business opportunities for both local and foreign investors.