By Lawani Mikairu
NIGERIA’s aviation industry in 2016 witnessed relative safety as there was no air crash and no major safety incident despite the harsh economic environment the airline operators were forced to operate in. The current economic recession in the country with resultant scarcity of foreign exchange impacted negatively on the aviation sector as it relies heavily on the dollar.
The sector saw the grounding of some domestic airlines as they could not source the scarce foreign exchange to carry out their regular maintenance of aircraft and prompt payment on leased aircraft. Some of the major issues that impacted negatively on operations of the airlines were poor state of infrastructure at the airports.
The last days of December witnessed massive cancellation of flights and delays due to the harmattan haze which made visibility at most of the airports to be less than the minima of 800 metres. The landing aids at the airports were almost not functioning.
Debt overhang to service providers and workers, as well as the scarcity and exorbitant cost of insurance premium, aviation fuel, and foreign exchange were some of the issues the operators had to contend with. These issues led to the scaling down of operations or total shutdown of three of the leading domestic airlines. Airlines like Dana Air and Aero Contractors announced the suspension of their Lagos/Accra flights due to the scarcity and exorbitant cost of aviation fuel.
This was followed later with Aero Contractors closing down operations for three months due to issues with workers who resisted the airline decision to down size and other reasons bordering on aircraft maintenance, debt to creditors, and unpaid staff salaries.
Arik Air suspended operations twice due to its inability to pay insurance premium and owing workers several months of salaries and allowances. First Nation, which operates just two aircraft was asked to shut down due to maintenance issues with its aircraft.
The international airlines and Nigerian travellers on international routes were not spared by the harsh environment. A new Central Bank of Nigeria (CBN) policy restriction on forex repatriation led to about $575 million earned from ticket sales by the foreign airlines to be trapped for almost nine months and the hampering of their operations. Most of the airlines had threatened to pull out due to the forex restriction policy and the threat was carried out by Iberia and United Airlines.
This forex scarcity forced airfares on international routes to go up by 100 per cent and Nigerian travellers were made to bear this burden. The aviation agencies were not spared. Federal Airports Authority of Nigeria (FAAN), Nigerian Airspace Management Agency (NAMA) and the Nigerian Civil Aviation Authority (NCAA), recorded very low revenues.
This is because the airlines, especially the domestic airlines, were in financial distress and found it hard to remit the five per cent mandatory payments from ticket sales to these agencies. These airlines also had difficulty paying navigational, landing and parking charges at the airports which they operated into.
However, it was not all gloom for the sector. The federal government heeded the call of airline operators. The government started the implementation of the waivers for Customs duties on imported aircraft parts, which brought a lot of relief financially for operators. The Federal Government also mandated the CBN to grant a special sectoral allocation of foreign exchange to airline operators in the Secondary Market Intervention Sales, which ensured that airlines had access to forex to import parts and carry out routine aircraft maintenances abroad.
Local airlines like Dana Air, Medview and Air Peace also expanded their routes locally and regionally, a development that eased movement and trade and brought smiles to numerous air travellers within and outside the country. Med-View expanded it operation to international routes. Its Lagos – London Gatwick route has been a huge success, with its flight always fully booked.