It was another frank conversation on problems, prospects and opportunities in the air transport sector, at the National Aviation Conference (FNAC) in Abuja, recently. Regulators and operators alike were on the same page on the need for in-depth reforms to wean the sector off bureaucratic hurdles.
World airlines have projected full industry recovery in 2024, with the sector ferrying as much as four billion passengers yearly, like it did pre-COVID-19. The airlines, under the aegis of the International Air Transport Association (IATA), said the withdrawal of travel restrictions had brightened the industry’s prospects.
The new forecast, however, predicted weaker growth for airlines in Nigeria and other African countries. Indeed, passenger numbers to, from and within Africa will recover more gradually than in other regions, reaching 76 per cent of 2019 levels in 2022, and surpassing pre-crisis levels only in 2025.
The weaker growth projection is not for lack of potential, which Nigeria and others have in abundance; but for in-house challenges that are clipping the wings of aviation growth, for economic prosperity.
Stakeholders, who met recently at the second edition of the Federal Airports Authority of Nigeria’s (FAAN) National Aviation Conference (FNAC), said aviation in Africa has brighter prospects than projected, if it is complemented with policy reforms that treat it as core business, supported with emerging technology for efficiency, and all parties have the mind of growth.
Presenters and panelists at the conference, with the theme: ‘Sustainability of the Aviation Industry in Nigeria,’ agreed that describing Nigeria as the “potential giant,” in Africa and indeed among the comity of nations for more than half of a century was gradually becoming a swansong.
They also concurred that at this stage of the country, with its population of over 200 million people, Nigeria at least should by now be among the leading 10 aviation countries in the world.
According to experts, for any airport to be sustainable, it must grow its non-aeronautical revenue to about 60 per cent of what it generates, while aeronautical revenues could be between 30 t0 40 per cent. Most importantly, it must be able to draw a good traffic for viability, and in turn plough its earnings back to further development of the sector – contrary to the case in Nigeria.
President, Airport Council International (ACI) Africa, Emmanuel Chaves, said that most airports are operating at a loss due to insufficient passengers to drive their sustainability. Chaves declared that any airport with less than one million air travellers yearly is not viable and cannot sustain its operations.
Besides, the ACI Africa President opined that the aviation industry on the continent of Africa should migrate from its present way of doing business and grow with the modern trends, most especially through the adoption of technology.
According to him, in a bid to sustain growth in the sector, aviation as a big consumer of electricity is contributing to the environmental pollution, which has been on the rise globally over the years.
Chaves proposed that to change the narration, it was necessary for authorities in the sector to invest in sustainable electricity, like solar and renewable energy sources, stressing that by doing this, environmental pollution through the sector would reduce drastically.
Director-General Civil Aviation (DGCA), Capt. Musa Nuhu, in his paper: ‘Sustainability of the Aviation Industry in Nigeria: The Regulator’s Perspectives’, said that the African continent and the global aviation industry are collectively responsible for less than five per cent of man-made global warming and greenhouse gas emissions.
Nuhu stated that although the sector and continent contribute minimally to climate change, Africa is already experiencing devastating climate impacts and would bear the brunt of future global warming effects, ranging from desertification, flooding and climate-induced conflicts.
Right reforms, adjustments
He further said that for the Nigerian aviation industry to sustain its growth, its carriers must embrace the Single African Air Transport Market (SAATM), which he said had enhanced the sector’s contribution to the Gross Domestic Product (GDP) to $128 million.
It is on record that no fewer than 17,400 jobs have been created in the country through the programme, while it has enhanced consumer benefits by $93 million.
The DG said that full adoption of SAATM by all industry professionals would strengthen and position the nation’s aviation sector as a key player on the continent, adding that it has immense economic benefits for Nigeria and its investors.
Nuhu, however, regretted that the sector in Nigeria was faced with numerous challenges that impacted sustainability and profitability. He mentioned some of the challenges to include high cost of funds, debt profile, Jet A1 and forex scarcity.
Former Managing Director, FAAN, Capt. Rabiu Yadudu, offered that government policies were some of the reasons the sector in the country attained slow growth.
Yadudu explained that the recent policy whereby agencies in the sector are compelled to contribute 40 per cent of their revenues to the federation account was hindering growth.
According to him, FAAN in 2022 alone, contributed about N44 billion of its earnings to the federation account. He also said the compulsory contribution to the federation account by the agencies contravened the new FAAN Act 2022, which stipulates that all revenues generated by the agency must be ploughed back into the sector for the purpose of infrastructure development.
He said: “Talking about government policy, right now, we have 40 per cent of our revenue being deducted at source. Finance is about 99 per cent of the challenges we are facing in the industry. Last year, about N44 billion of our revenue went to the federation account. The price of diesel has increased to N1,150 per litre from N400 when we were buying it about a year ago. Now that we have our own Act, FAAN should not be sending any percentage of its revenues to the federation account.”
For a sustainable aviation industry, Yadudu also emphasised that airports operators should diversify their sources of income and have access to adequate funding from the government for the development of infrastructure to meet international and world-class standards. He also said that airport operators should maintain a high level of service quality, develop and implement a formidable corporate governance culture, emphasizing that government policies should be made to encourage the industry, consider it as a major economic enabler and catalyst.
Managing Director of Afri-Air International Limited, Capt. Sheu Iyal, said that the compulsory contribution of 40 per cent revenues of aviation agencies to the federation coffers was having a negative effect on the agencies’ performance.
Iyal explained that the survival rate of the agencies was minimal and appealed to the Federal Government to reverse the policy for the growth of the agencies. He noted that aviation was not for profit-making, rather for national security, stating that such deduction may distract them in the long run.
He said: “If FAAN uses 40 per cent of its revenue and the government takes it, how do they want them to be able to run it? So, there is a need to talk to the government. There is a need for the government to realise that aviation is more than business, aviation is a component of national security.
“So, there is no reason our airports and airlines should have the kind of problems we are having today because aviation is a component of national security. So, for whatever reason, we must find a way of helping them to survive. Then, we can talk about sustainability. This is in two stages, but if we want to carry the two of them together, fine. We must realise that there is a need for survival,” Iyal said.
The Coordinator, AviaCargo, Road Map Committee, Ikechi Uko, said that Nigeria, despite being the largest producer of many agro-products globally, loses about $1 billion yearly to non-certification of its agro produce for export.
Uko lamented that 80 per cent of containers arriving Nigeria return empty, while out of every 10 containers that come into the country laden with imports, less than three leave the country with exports.
He added that with a concerted effort at eradicating bureaucracies and better collaboration among all parties in the aviation value chain, “it can only be left to our imaginations what our aviation sector will look like with extra $1 billion in the bag”.