NIGERIA: Survival Options For Local Carriers

Global air transportation is going through its most challenging moments, following unfavourable travel statistics released by the International Air Transport Association (IATA).

According to IATA, 55 per cent of passengers surveyed in the world said they do not plan to travel in the year. Besides the lowering passenger traffic airlines are grappling with, IATA said the sector might not rebound post-COVID-19 era until 2024.

Its Director-General/Chief Executive Officer, Alexandre de Juniac, said while short haul travel was expected to recover faster, long haul flights would take longer.

He said: “Passenger traffic hit bottom in April, but the strength of the upturn has been very weak. What improvement we have seen has been domestic flying. International markets remain largely closed. And, in many parts of the world, infections are still rising. All of this points to a longer recovery period and more pain for the industry and the global economy.”

The IATA boss said the travel industry was going through a lull because of reduced business due largely to shrinking corporate travel budgets.

Juniac said while pent-up demand existed for visiting friends and relatives, leisure travel and consumer confidence remained weak in the face of concerns over job security and rising unemployment, as well as risks of catching COVID-19.

To keep airlines afloat, experts said various collaborations were open to operators, including alliances, codeshare, interline agreements, mergers and other convenient models.

In Nigeria, three weeks after domestic travel resumed, operators are still struggling to have their aircraft filled. The development has called to question the aircraft type used by airlines and the need for them to embrace cooperation.

To keep their operations afloat, experts have advised local carriers to initiate codeshare agreement to enable them maximise the use of their aircraft.

Chairman, Association of Aircraft Maintenance Organisation of Nigeria (AAMON), Isaac David Balami, has called on domestic airline operators to work together to sustain their operations.

He said there was no better time than now for operators to put aside their ego and save themselves from running into debts with the poor passenger load factor they are recording on the routes.

Balami said in Lagos a situation where three airlines schedule to fly to the same destination carrying about 30 passengers each on an aircraft with over 100 seats did not make business sense.

He said if the operators reach a codeshare agreement, the passengers could be taken to thier destination on a full aircraft operated by an operator, adding that this had proved to be a win-win for many airlines, which adopted the model.

“The problem of domestic airlines is first and foremost that there is no unity;  like the way and manner Air France and KLM are working together. You hardly see two, three airlines coming to work together.

“You see three airlines taking off at the same time with five passengers and they cannot say let us merge and they cannot say let only one person go because of pride and lack of unity,” he  added

He said if the strategic plan was embraced by operators, they should be willing to avoid any default to sustain the agreement.

Balami continued: “It is not their fault also. Sometimes, you want to collaborate with somebody and the person would want to take advantage of you. Sometimes you agree on a codesharing formula. Some people will default and that takes us back to what we are talking about.”

According to the AAMON chairman, “So, the problem is that we need to look at that critically. We have issues. It is not easy. All hands have to be on deck. I look forward to airlines coming together as soon as possible to start code sharing; at some point an airline management would tell you that ‘my airline is a new generation, yours is old generation; how can you do code sharing? But there could be a balance.”

Balami, however, noted that some airlines  were trying their best; airlines that have been there for over 15 to 20 years unlike the normal lifespan of 10 years, but no encouragement.

A few years ago, operators disagreed on the merger option for airlines.

Accountable Manager, DANA Air, Obi Mbanuzuo, said merger was not the solution to challenges operators were grappling with

Although the proposal has worked in other countries, according to Mbanuzuo, it still remains a mirage in Nigeria because carriers are too weak. He said airlines could collaborate in many areas while maintaining their individuality.

He said airlines in Nigeria were too weak to exploit the merger option because the weaker partner in the deal could pull the other down.

Mbanuzuo said operational partnership, by pooling equipment and personnel on some strategic routes, could enhance the capacity of many airlines.

But the operational environment, he said, is not yet ripe for such arrangements because each carrier has its structural template for operations, which differs from airline to airline.

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