By Dickson Omobola

For stakeholders in the Nigerian air transport sector, 2024 would not be forgotten in a hurry.

Reason: three significant events occurred in the country’s aviation sector. First, Nigeria cleared its blocked funds of almost $800 million. Second, the country exited the global watchlist for non-compliance as the Aviation Working Group, AWG, co-chaired by Airbus and Boeing, increased Nigeria’s global rating from 49 per cent to 75.5 per cent. Third, Middle East carrier, Emirates, returned after a two-year break.

What is more? These developments became even more exciting when Ado Sanusi, the managing director of Nigeria’s oldest airline, Aero Contractors, also revealed that for the first time in eight years, the carrier recorded 14 per cent profit, indicating recovery.

Sanusi, who addressed newsmen at the organisation’s headquarters in Lagos, had said: “We believe the next aspect of our recovery will be to invite investors to come and invest into the company. We have also reduced our liability by about 33 per cent. So, we are preparing the company for investors to come in and invest. This is a great success story for us. A company that, for about eight months, was closed down before I came in 2021. And now we have turned it around, and it is on the trajectory of recovery.”

Beyond the joy Sanusi expressed while making this disclosure, there were other aspects he discussed, many of which Saturday Vanguard believes should be looked into to enable the growth of the air transport sector this new year. His words:

On Dangote Refinery

With the coming onboard of the Dangote refinery, we have seen a constant supply of Jet A-1, otherwise known as aviation fuel, at relatively stable prices. With that, we can project. And that is a very good thing for the industry.

On profitability of wet leased aircraft

Wet leases are usually profitable for a short-term. But you have to understand that you are selling your tickets in Naira and you are paying per hour in dollars. So, if the dollar is fairly stable and you have made your projection, then it might be profitable. But if the dollar decides to start going on a roller coaster ride, then the pricing of your ticket will go on a roller coaster too because you must pay the leasing company.

Cape Town Convention

What the Minister of Aviation and Aerospace Development, Mr Festus Keyamo, has achieved with the Cape Town Convention, CTC, Practice Directions is quite commendable. But it is just part of the ingredients needed for aviation growth. Why do I say that? We have the Cape Town Convention, so that means that airlines can borrow money and buy airplanes or airlines can borrow money and lease airplanes. Or airlines can borrow money and finance aircraft leasing. But there is a key factor to it and that is the interest rate.

Cost of funding

The cost of funding in this country is very important. Recently, they just increased the Monetary Policy Rate, MPR, to 27 per cent. That is stifling the growth in aviation. With all the gains of the Cape Town Convention, I can not see an airline going to borrow money at 33 to 35 per cent interest rate and make profit. It must be addressed. I am not an economist, but I do not think that in this economy, it is wise to increase the interest rate to chase inflation. Rather, it will be a move to kill businesses. For instance, 90 per cent of our vendors that provide us with spare parts borrow money. And they borrow money at exorbitant prices. It is actually affecting the growth of the aviation industry.

Government should consider Nigeria’s peculiarities

As a country, we need to look at this issue. We do not need to copy what the United States of America is doing or what other countries are doing by increasing interest rates to reduce inflation. We have to look at the peculiarity of our economy. The small-scale industry, the vendors that are supplying airlines. For us the airlines, what kind of funding do we have? 33 to 35 per cent is not sustainable. There is no airline that can borrow money to finance an airplane at 35 per cent interest rate while the dollar is at $1 to N1,721.50 and expect to make profit.

On what govt should do to assist airlines

I think a lot needs to be done. It is not only to have a beautiful terminal building. The airlines need to get to where they are going and insurance is important. The CTC is important. But most importantly, the cost of funding is important. The cost of running an airline in this country is high. We should address the taxes, the multiple taxation. It should be addressed. I think we should make a deliberate effort to see that airlines survive in Nigeria. We need to understand why. We need to understand the reasons that airlines are struggling. The reason airlines are struggling is very simple: multiple taxation. 

On survival of airlines

The airlines are trying to support or to pay for the services the parastatals are giving. Like I have always said, I do not think airlines can fund the parastatals. It is not possible. There must be another source of funding for the parastatals. This is necessary as the airlines are struggling and the parastatals are struggling too to provide the services. Again with the deduction of 50 per cent from the revenue of agencies in the aviation industry, I think it is affecting us the most. And I believe that it should be looked at, the Federal Government should look at aviation not as a source of revenue, but as a business enabler and economic growth.

Revenue provider

If the federal government is looking at aviation as a revenue provider, then it is going to kill the aviation industry. But if it is looking at aviation as an enabler to economic growth and foreign direct investment, then you can see the growth. I can give you an example of Rwanda. The president understands that aviation is not bringing revenue to the country, but he understands that aviation will enable him to bring tourists, foreign direct investment and export. For those reasons, he invested a lot in RwandAir. Now, I think it is a success story.

Success of aviation industry dependent on economy

The aviation industry cannot operate more efficiently than the economic situation we have. If the economy says we are in recession, then definitely, the situation of the aviation industry will be reflected in that. If we are experiencing challenges in our economy, definitely there will be challenges in the aviation industry. You cannot operate outside it (the economy). You can not be more efficient than the system in which you operate. And we have economic challenges. So, all these issues of saying we have made progress and all that, if we are telling ourselves the truth, we have not. That is the truth, we have not. And unless we agree that we have not, and we now work towards recovering the economy, then building the aviation industry to ensure sustainability, I think we will be telling ourselves lies.

Three aircraft and reliability

We (Aero) have three aircraft. We have two flying, hopefully we have a third coming up. Operating three aircraft is not top of the list. Reliability of those three aircraft is important. And what we have done is to judiciously use those airplanes to service our routes and to make sure that we are reliable. Of course, there is power in numbers. Of course, if we have 10 aircraft, we will be a stronger airline, right? But this is what we have and we have made profit with what we have, meaning this company has its value.

On maintenance, repair and overhaul

The maintenance, repair and overhaul, MRO, is complementing the airline. The airline also is complementing the MRO. Of course, if you say which one is more important, I think both are important. The MRO is a bedrock for any airline. I mean, all the airlines that you see flying, they must have an MRO somewhere because you must fix the airlines. If we do not have the airline, then the MRO will not exist because there won’t be any airplanes to fix. So, they complement each other. We have continued to do the MRO. Now, we have Moroccan approval. We have Mongolian approval. We have Congo approval.

 We have Senegalese approval. Of course, we have Ghana approval. You can see that we are expanding the MRO to accommodate 737 engines. We are also increasing our capacity. We are looking at CRJs, 145s, 175s and the like. We intend to be a bus stop shop for all the airlines that are operating in the country. That is our plan. 

We will continue to upgrade our maintenance facility because we believe sustainability of the aviation industry requires a formidable maintenance centre in the country.