EXPERTS in the aviation sector have said that the recent takeover of Arik Air by Asset Management Company of Nigeria, AMCON, and failure of majority of airlines  in Nigeria is due to the country’s harsh operating environment. This has reduced the number of operational airlines from 150 in 2000 to less than nine airlines in  2017.

The Nigerian Civil Aviation Authority, NCAA, had recently disclosed that when the airline commenced operation in year 2000, it had 150 operating airlines in its register but that number has reduced today to about nine airlines.

Arik Air

One of the aviation experts, Gabriel Olowo, the President and Chief Executive Officer, Sabre Network NMC West Africa and President of the Aviation Safety Round Table Initiative while interacting with aviation reporters in Lagos said  that 30 percent of the failures of the airlines is as a result of mismanagement by the owners and 70percent is as a result of the harsh government policies.

According to Olowo, “I have been in the sector since 1973 and I have seen the airlines failing within a space of ten years they started operations. So, there is a common factor. The business of Nigeria Airways was government business. The problem of corporate governance has always been there. The airline was supposed to be repackaged and become a new carrier but the then president said the government are not buying into the repackaging.”.

He revealed  that the second generation airlines such as Okada airline, Hak air, amongst others all meant well, but the federal government did not support them by providing an enably environment and  that is why  Okada Air brought in a Boeing 747 and the  aircraft never flew but allowed to  rot away at the airside, which was a wasted investment .

“The operator of the airline got a promise from the vice president then but we were looking at the airplane everyday positioned to do Lagos-London-Lagos routes. That was on the side of government and this was the same situation for Okada ,  Hak Air, and others ” Olowo said.

The current foreign exchange regime of the federal government has not helped airline operators as airline business is dollar denominated. He  recalled that as far back as 1994, exchange rate was around N22 to a dollar, while Nigerian airlines were selling one hour in Jet for Lagos-Abuja or Lagos-Kano at N2,200 and at the exchange rate of N22, that amounted to 100dollars. “Lagos-Abuja was 100dollar value in 1994, which was about 23 years ago. Today exchange rate has moved from N22 to N450. Today, an airline sold ticket for N16,000, which  amounts to 30dollars”.

Olowo added that government should be concerned and ask the airlines how they are breaking even. “ Someone in government should raise alarm on whether they want to kill the airlines. If I am in government, I will shut down the airline, because this is showing you desperation for cash flow. And they call it promotion. What kind of promotion? Exchange rate will never make you earn the right tariff because people will not be able to buy the ticket.

“So, you decide to reduce the price, meanwhile your cost is increasing. The airlines in Nigeria currently are not charging the right tariff after 23 years. If I am NCAA DG, I will shut any airline that charges less than 100dollars,” he explained. An airline official who does not want to be named accused federal government of giving equal routes to foreign airlines in Nigeria knowing fully well that domestic airlines cannot reciprocate such routes considering their capacity and fleet number.