THE crisis plaguing the aviation sector has deepened, compounding the country’s economic woes. With jet fuel price now sky-high, and grounding and disrupting flights, the situation has never been this bad. As many of Nigeria’s highways and train routes have been rendered unsafe by terrorists, the transportation system is in trouble, fuelling inflation and disrupting businesses and social activities. The Federal Government must think outside the box and find lasting solutions.
Worse, unable to repatriate their dollar earnings and other constrictive conditions, international airlines are reducing flight frequencies to the country or suspending flights outright.
Hitherto sold at below N300 per litre, aviation fuel is now an outrageous N900 per litre and there is no respite in sight for the beleaguered operators. Airfares have subsequently been priced out of the reach of many. This has negatively impacted businesses and dealt a big blow to the struggling economy.
Operators say the lingering aviation fuel and forex scarcity, which has forced some airlines to shut down operations, will lead to further job losses and declining capacity. Characteristically, the President, Major General Muhammadu Buhari (retd.), and his Aviation Minister, Hadi Sirika, have no effective response.
The dollar liquidity crisis has further inflamed the situation. According to the International Air Transport Association, about $600 million of foreign airlines’ earnings are trapped in Nigeria. Emirates, unable to repatriate its $85 million revenue, has reduced its flight frequency to Nigeria. It is also suspending all flights there from September 1. This worsens the crisis. It is incumbent on the Central Bank of Nigeria to sort out the liquidity issues and facilitate the repatriation of trapped revenue.
The benefits of the aviation sector to the economy cannot be over-emphasised. IATA data offers an illuminating perspective on the importance of air transport; from jobs to the flow of trade, tourism, investment, and city pair connections.
Airlines, airport operators, airport on-site enterprises (restaurants and retail), aircraft manufacturers, and air navigation service providers employ 20,000 people in Nigeria. By buying goods and services from local suppliers, the sector supports another 35,000 jobs. Additionally, it is estimated to support a further 16,000 jobs through the wages it pays its employees, which are mostly subsequently spent on consumer goods and services.
Foreign tourists arriving by air in Nigeria, and who spend their money in the local economy, also support an additional 169,000 jobs. In total, 241,000 jobs are supported by air transport and tourists arriving by air. Cumulatively, the air transport industry, including airlines and its supply chain, adds $600 million to GDP in Nigeria, research has shown. Spending by foreign tourists supports a further $1.1 billion of GDP, totalling $1.7 billion. In total, 0.4 per cent of the country’s GDP is supported by inputs to the air transport sector and foreign tourists arriving by air. This is rather low.
Air transport uniquely contributes to building bridges between cities; therefore, the flow of goods, people, investments, and ideas that stimulate economic development should flow unimpeded to maximise their contribution to consumers and the wider economy.
Instead of Sirika’s obsession with floating a state-promoted ‘national carrier,’ the government should strengthen the sector and make Nigeria West and Central Africa’s major regional aviation hub. Formerly state-owned airlines in Europe and the Americas have been privatised, and many airports have also been sold to private investors. With its horrific record, the Nigerian government has no business in owning or part-owning an airline.
Instead, the government should facilitate a favourable operating environment and strengthen regulatory agencies to discharge their duties effectively. Presently, Nigeria is losing the aviation advantage and opportunities to Ghana, Ethiopia, and South Africa. The air transport industry contributes $5.2 billion to South Africa’s GDP, and foreign tourist visits a further $4.3 billion, said IATA.
Due to low capacity, Nigeria’s passenger facilitation is rated at 1.8/10, below the African average of 3/10. On the World Economic Forum’s Travel & Tourism Competitiveness Index, the country ranks 127th for visa openness and 69th out of 136 countries for cost competitiveness. Nigeria’s facilitation of air cargo through its customs and border regulations ranks 68th out of 124 countries on the Air Trade Facilitation Index, and 36th out of 135 countries in terms of the e-Freight Friendliness Index.
The Enabling Trade Index ranks Nigeria 127th out of 136 countries for the facilitation of the free flow of goods over borders and to its destination. Nigeria’s air transport market is forecast under the “current trends” scenario to grow by 174 per cent in the next 20 years, yielding an additional 9.4 billion passenger journeys by 2037. If met, this increased demand would support approximately $4.7 billion of GDP and almost 555,700 jobs.
Unfortunately, budgetary constraints, not employing professionals, scarcity of foreign exchange, sustainability of waiver on aircraft and spares, decaying and ageing infrastructure and obsolete equipment, deplorable airport facilities and equipment, as well as blocked airline funds, might make the 2037 forecast a mirage.
Though the Aviation Sector Roadmap was unveiled in 2016, implementation, as usual in these climes, is slow. Sirika’s ill-advised Nigeria Air project has failed to fly despite reportedly gulping N14.6 billion since 2019, 14 per cent of which was professedly channelled to “working capital, consultancy and transaction advisers’ fees.”
To close the gaps in the sector, experts say the right kind of manpower, skills acquisition and effective partnerships are required. When fully developed and capacitated, Nigeria’s aviation sector could become the regional hub strategically positioned to take advantage of the expected growth in the African market due to its proximity to Europe, the Middle East, and the rest of Africa.
Smaller Rwanda, recognising air transport as crucial to its development, has been positioning itself to become a regional service and tourism hub. It is investing $789 million 2019–2030, revealed Aviation Benefits Beyond Borders, an arm of the Air Transport Action Group (Geneva, Switzerland).
Such visionary response should be the government’s focus and not chasing after the elusive ‘contrails’ of a doomed Nigeria Air.
