… State Govt Should Stop Wasting Resources On New Airports- Yusuf
The Nigerian aviation sector is one of the most important in Africa considering its over 200 million population but the sector has suffered huge challenges that have led to the liquidation of about 130 airlines in the last 64 years, according to an analysis done by NewsNGR.
The aviation sector in Nigeria has underperformed in terms of contribution to the Gross Domestic Product. In the second quarter of 2024, air transport only accounted for N42.37bn of GDP.
In 2023, air transport accounted for N290.97bn. In Q1 and Q2 of 2024, it contributed N137.9bn to GDP.
Compared to Ethiopia, the country’s domestic aviation has a direct input estimated at a whopping $1.54bn (N2.6tn) which is about 5.7 per cent of the country’s total GDP.
According to International Air Transport Association (IATA), air transport industry, including airlines and its supply chain, are estimated to support $5.2bn (N8.84tn) of GDP in South Africa.
In Egypt, the country’s aviation sector accounts for $1.7bn (N2.89tn) to GDP.
The industry is facing severe challenges including foreign exchange, jet A-1 fuel, poor infrastructure and the difficulty in acquiring aircraft due to country risk, according to Airline Operators of Nigeria (AON).
The former Director-General of Lagos Chamber of Commerce and the Chief Executive Officer of the Centre for the Promotion of Private Enterprises said the sector has consistently faced severe challenges that have reduced life expectancy of airlines.
Yusuf said, “The business of aviation is a very challenging business in Nigeria and in other parts of the world. This is why it takes a very robust package of government policies to support the sector and sustain private investment in the sector.
“The truth is that in Nigeria, the mortality rate of airlines is extremely very high. We hardly have airlines that stay within five to 10 years without folding up. We have seen airlines like Med-View Airlines , EAS (Executive Airlines Services) Airlines, IRS, Chanchangi Airlines and Sosoliso Airlines Ltd, Albarka Air, Kobo Air, Space World and so many other.
“Even the few that are existing, most of them are struggling. Airline like Arik has been taken over by AMCON. So, this is the story of the Nigerian aviation sector.”
Checks by NewsNGR showed that airlines like TAT Nigeria was established in 2008 and folded in 2009; Air Nigeria started operation in 2010 and became defunct in 2012; African Chartered Services started in 2005 and shutdown the same year while Alheri Airlines closed shop in 1987 which is the same year it was established.
There is also ADC Airlines, African Chartered Services, African International Airway, African Trans Air, Afrijet Airlines, Afrimex, Air Midwest, Air Nigeria, Airstream Aviation, Albarka Air, Amako Air, Arab Wings Nigeria, Arax Airlines, Bako Air, Barnax Air, Bellview Airlines, Capital Airlines, Chanchangi Airlines, Concord Airlines, Dasab Airlines, Delta Air Charter, Dominion Air, Easy Link Aviation, Executive Airlines Services, Falcon Airline, First Nation Airways and Intercontinental Airlines among others.
Nigeria has about 18 surviving local airlines including Air Peace, Aero Contractors, Arik Air, Green Africa Airways, Azman Air, Dana Air , First Nation Airways, Kabo Air and Ibom Air among others.
Yusuf said currently, the exchange rate has worsened the conditions of surviving airlines.
The CPPE CEO said, “Aviation business is a foreign exchange intensive business and when you have a situation that you are dealing with not only the volatility of the exchange rate but also the depreciation of the exchange rate, it makes the business of aviation extremely difficult.
“I don’t know how they are coping and I doubt how long they will remain afloat because it is a very challenging business.”
On the solution to the sector, the CEO said the government needs to introduce a robust package of fiscal incentives to support the aviation sector.
“This is not the time to impose high taxes on them. They need to be given a lot of relief in terms of taxation,” he advised.
Yusuf lamented that 50 per cent of the cost of air ticket is charged as tax, adding that Nigeria lacks a domestic maintenance facility.
“This again is another problem. So, we need a lot of incentives to support airlines and the sector. We need to ensure that investment in aviation is also an economically-wise investment.”
He lamented that some state governments are setting up airports when the existing airports are not viable.
“We have seen some state governments setting up airports here and there, many of which are not viable. The financial resources would have been used to support their citizens by building roads, educational and health facilities but they invest it on airports and some of these airports attract low traffic in a year,” he added.