AM EDITORIAL: What Nigeria’s Government Can Still Do To Help Aviation Industry Growth
A number of visible measures have been taken by the current leadership of Nigeria’s aviation industry to set the capital intensive sector on the right growth trajectory since the current administration’s emergence.
Such commendable measures include efforts to facilitate aircraft acquisition and access to credit from international financiers for domestic airlines, featuring the signing of the Practice Directions for implementation of the Cape Town Convention (CTC) agreement, an opportunity that airline operators need to leverage on; emphasis on implementation of the national local content policy, example of which is the patronage of local catering service providers by foreign airlines; pursuit of balance in reciprocity of flights on international routes, and so on.
Since 2023, there has been evidence of local airlines’ progress in form of expansion of domestic networks by United Nigeria Airlines, Value Jet, Air Peace, Ibom Air, Green Africa, and Overland Airways.’ There has also been progress with regional operations expansion by airlines like Air Peace, Ibom Air, and Overland Airways’.
Despite government and industry efforts so far, we believe that there are several additional moves that government can make to speed up growth in the aviation sector. In an era when most financial institutions in Nigeria are declaring overwhelming annual profits, a single-digit lending rate for the aviation sector to enhance its growth and contribution to Nigeria’s Gross Domestic Product needs to be considered.
On the on-going review of Nigeria’s existing international Bilateral Air Services Agreements (BASAs) to redirect them in favour of Nigeria, government may need to do some kind of cherry-picking to focus on routes that will support its efforts towards speedy growth and development of the few local airlines that have mustered strength and capacity for regional and international flights.
With the impact of Air Peace on international routes, including the historic effect on the Lagos-London route since March 2024, cost convenience for Nigeria’s international passengers has improved, courtesy of government support to commence that operation.
However, passenger complaints records on international flights, especially flights involving foreign airlines, needs more attention from the Nigeria Civil Aviation Authority (NCAA). Besides, the volume of the domestic traveling public is dwindling due to the high cost of air tickets and reduced purchasing power of Nigerian citizens.
The overwhelming operating cost challenge that impedes airlines’ performance should be given attention. A partnership discussion with Dangote refinery by the Federal Ministry of Aviation or other private refinery initiatives may be necessary to address high aviation fuel costs.
As earlier proposed by Aviation Safety Round Table Initiative (ASRTI), “The federal government could exempt all local refineries with capacity to produce Jet A1 fuel from taxation related to its production within a given renewable time-frame for the sector to recuperate. The domestic market is the target here. Normal global pricing could apply to foreign airlines that traverse the Nigerian air space and vessels outbound Nigeria. Details of the discriminatory policy could be worked out by the ministries of Finance, Aviation and Petroleum Resources.”
Market volatility in an era of low spending power and high cost of living indicates that the industry must consider various funding options for aviation projects by establishing a structured funding instrument, such as a sector bank that can ensure the financial stability of the industry. Government can also support all private service providers in the industry through tax incentives, waivers, and a consistent policy to improve aviation infrastructure by lowering revenue expectations from aviation and removing aviation agencies from the TSA remittance.
Official concession of airports in the country, with private sector investment in airport infrastructure will help to enhance airport facilities and improve passenger experience. The ongoing automation of passenger processes should be firmed up and spread.
Filling the aged aircraft maintenance gap will require establishing a significant maintenance, repair, and overhaul (MRO) operation to support existing ones like Aero MRO, reduce demand for foreign exchange by commercial airlines and the cost of carrying out major maintenance overseas.
Nigeria’s air cargo operations are experiencing a rise in cargo inflow due to improvements in international e-commerce gateways to Nigeria. This has however come alongside a higher security related task as foiled drug trafficking records have increased in recent months. Government needs to explore emerging opportunities in cargo sub-sector and refine operations to mitigate the risk of drug trafficking through aviation.
Human capital development must be tackled head on. The Nigerian College of Aviation Technology (NCAT) must be granted funds to train more professionals to address the shortages currently being experienced in the sector.
Strengthening of regulations that govern the aviation industry to achieve safer, more efficient airline operations, increased profitability, and the creation of more jobs is an urgent necessity. Government also needs to be consistent in policy implementation to see the desired growth. This calls for a harmonization of current administration’s five-point agenda with the previously existing aviation roadmap. Besides, a comprehensive industry masterplan, containing an updated Nigeria airports master plan must be developed and seen to have been developed.AM
