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Stiff Competition May Force All Domestic Airlines Out Of Business – Investigation



Leadership Nigeria News Today


Unless all the airlines in Nigeria merge into one strong mega airline within the next seven years, the remaining local carriers operating domestic and regional routes may find it extremely difficult to operate further due to stiff competition that would arise from the open skies initiatives that is recently gaining ground in the African continent, LEADERSHIP findings have shown.

Open Skies for Africa was signed at the Yamoussoukro Declaration of 1988, in which many countries in Africa agreed to principles of air services liberalization.  With the deregulation of air services and promotion of regional air markets, making it open to transnational competition, it is expected that most airlines, especially the weak ones would finally collapse completely.

Although the implementation of Yamoussouko Declaration has fallen short over the years but aviation experts have warned that once it comes into force, weak airlines have to give way for the stronger ones within the region. The declaration is expected to take full force within the next five to seven years.

Apart from liberalization of African airspace, it was gathered that most local airlines in the country are not getting it right and may not compete favourably with other airlines that are more equipped for regular flight operations. For instance, investigations have also shown that less than 20 airlines out of the 47 registered airlines have good insurance policy as at present in country.

Further investigations indicate that airlines in Nigeria are not doing well because they have poor business plans, bad aircraft holding, operation of multiple aircraft types, poor maintenance philosophy and bad crew and aircraft management system.

“Why can’t four airlines merge and share their responsibilities. In the next five years, say maximum of seven years, if Nigerian domestic airlines do not merge, all of them are going to go under because they will not be able to compete due to open skies. That calls for merger and strong fronts.

“Nigerian airlines are not making it because they have poor business plans; Apart from Air Peace, their aircraft holding cannot sustain their flight schedules. Another problem they have is the operation of different aircraft types which calls for extra expenses since they will now require huge funds to maintain them,’’ a source told LEADERSHIP.

‘‘The longest flight in Nigeria is perhaps, Lagos Maiduguri which is about two and half hours; A 737 is good for such regional operation but you find some of the airlines going for bigger aircraft to move from point A to B”, the industry source added

In addition, it was also gathered that most airline’s CEOs have poor corporate governance in running their airlines, a factor that further endangers smooth operations.

“Some of the chief executives are not sincere to themselves. They exhibit poor corporate governance as they pay foreign pilots differently and indigenous pilots differently. They are involved in what I call corporate fraud and some of them cart away about 20 per cent of each money their airlines make in a month”, the source hinted.

On way forward for the domestic airlines, the source pointed out that streamlining of aircraft holding and proposing a realistic business plan to be vetted by Nigerian Civil Aviation Authority (NCAA) experts, would be a way out of the operational crises.

Suggesting further, the source stated that “To maintain their aircraft efficiently, these airlines have to merge so as to increase their aircraft holdings. They must also run their operations with at least seven aircraft. 25 per cent of the aircraft should be reserved. The practice is that if you have 20 airplanes, four should be on reserve while the other 16 should be scheduled so as to get backup when anything happens. In aviation forums, we were told that any good management system must have 15 per cent aircraft holding visibility and 20 per cent reserve.”

The secretary general of Nigerian Aviation Professionals Association (NAPA), Comrade Abdulrasaq Saidu, said airlines’ merger will be the only solution for the survival of the domestic airlines in the country.

Comrade Saidu told LEADERSHIP that, poor management of airline by owners as a result of non-challant attitude remained the greatest problem coupled with the inability of the regulating body the Nigerian Civil Aviation Authority to play its role a regulatory agency further compounded the situation.

Meanwhile, the chief executive officer, CEO, Sabre Travel Network, West Africa, Mr. Gbenga Olowo had continuously advocated for a bigger and a mega airline that would emerge as a flag carrier  and not necessarily a national carrier. According to Olowo, he sees no reason why Nigeria cannot call the airlines together and find a way to make them strong.

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