AM EDITORIAL: Airlines’ Proliferation, Apprehensions Over Future In A Peculiar Operating Environment
Between February 2024 and February 2025, the Nigeria Civil Aviation Authority (NCAA) approved five Air Operating Certificates (AOCs) to five applicants to enable them commence commercial flight operations.
These approvals were granted after the applicants went through and successfully completed rigorous certification processes and procedures. With over 10 active carriers already operating today, more certificates were issued recently to the likes of Enugu Air and Binani Air, Gateway Airline, and more AOCs are on the queue. We applaud the authorities’ efforts to also ease access to aircraft and acquisition processes.
While we appreciate the industry regulator’s good intentions of boosting commercial flight operations and business competition, we call for industry’s caution and attention on the prevailing operating environment, under the influence of internal and external economic factors that question industry sustainment capacity with continuous addition of new airlines to a market with extremely constrained demand volume.
Airline business in Nigeria today harbours an environment where cost pressures are very high and margins are thin. Air travelers have had increasingly diminishing purchasing power and limited ability to patronize air travel within the last three years, with the prolonged economic constraints induced by fuel subsidy removal effects, high standards of living, inflation, and other factors.
According to Federal Airports Authority of Nigeria (FAAN), total domestic passenger movement from January to December 2024 was 1,004,931 out of over 200 million population of the country. This represents less than 2% of the population.
At this point in the history of the industry, looking at market size amidst threatening operating costs, high prices on all fronts and in the light of history of creating so many airlines that end up with low mortality rates, we would propose industry resilient approach to admission of players into the field so as not to suffocate a system already stretched beyond its limits. Market fragmentation is an enemy of sustainability. When the same few passengers are redistributed across more operators, it tends to compress yields and weaken survival capacities.
Even though any investor that meets the requirements for setting up an airline is free and has the right to do so, the nature of airline business and the current dynamics of the sector in the light of national and global economic unpredictability demands that both industry leadership and players share futuristic lenses, viewing the industry.
The much talked about mergers and partnerships can also help to maximize passenger patronage, reduce operating costs and build profit margin.
Without paying attention holistically to optics and the industry’s future, it is easy to applaud the establishment of airlines by more and more state governments and private investors for domestic operations at this point in history. However, a deliberate effort is required to ensure that the second 100 years of Nigeria’s aviation history runs with airlines established with industry sustainability and durability in focus.AM
