NIGERIAN AVIATION INDUSTRY - artng.orgartng.org/eventfile/Nigeria aviation challenges and prospect...

NIGERIAN AVIATION INDUSTRY:Challenges and Prospects

Presented by

Executive Chairman, Airline Operators Of Nigeria(AON),Captain Nogie Meggison

2nd September 2015

NIGERIAN AVIATION INDUSTRY:Challenges and Prospects

Presented by

Executive Chairman, Airline Operators Of Nigeria(AON),Captain Nogie Meggison

2nd September 2015

OVERVIEW• Africa been the last frontier for aviation development in the world (Europe and

America are fully matured. Asia is booming today)• Nigeria geographical position gives us the advantage to rival these other great

aviation nation.

• Before the turn of the millennium, Bombay was the hub between the East and theWest.

• At the turn of the millenniumEmirates took advantage of Dubai natural geographical location.Borrowed oil from their neighbor Abu Dhabi,Took manpower from their neighbor India,Skills from Europe and now they have made themselves the hub between theEast and West.

Nigerian Aviation industryNigerian Aviation industry

OVERVIEW


• Today, Emirates Airline has one of the largest and fastest airplane fleets and airportinfrastructure in world with a revenue of $26.7 billion (2013) contributing 27 % to Dubai’sGDP.

• Nigeria have all these catalysts.-We have the manpower of over 180 million people,-We also have the natural gas and oil for fuel.-Nigeria has a natural geographical position at the centre of Africa with an average of 4hours flight to any destination making us the pivot for African Aviation.

AVIATION:IMPACT ON GDP• Ethiopia Airlines contribute 28.5% into their country’s GDP taking second after

Agriculture 60% percent of its passengers are from Nigeria.

• Kenya Airways contributes a large chunk into Kenya’s GDP. 50% of passengers arefrom Nigeria.

• It is sad that with all the Nigeria’s potential the aviation industry is been stagnatedby epileptic seizures.

• The Nigerian aviation industry currently contribute 0.4% to our country’s GDPand capital projects are still been funded by the government.


Failed Airlines in Nigeria• Concord Airline• Okada Airline• Kabo Airline• Gas Airline• Oriental airline• Hold Trade Airline• Intercontinental Airline• Savannah Airline• Freedom Airline• Sosoliso Airline• Easy Link• Nigerian Airways• Virgin Nigeria• EAS• Flash Airlines• ADC• Bellview• TRIAX Airlines• Slok Airlines• Afrijet• HAKO AIR

CHALLENGES

The following are the factors that contributed to the failures of Airlines inNigeria :

FUNDINGCost of funds is very high and interest rates are over 28% compared to theInternational rates of libor +2%.

There is no dedicated fund to the Aviation Sectors as obtained in other sectorslike Agriculture and Manufacturing

Despite the challenges confronting the aviation industry for ages, Governmenthas never dedicated any fund to the sector by way of ‘’Bail Out’’ as it also donein other sectors .e.g. Banking sector


CHALLENGES• MAINTENANCE REPAIR OVERHAUL (MRO)

Apart from Aero contractors, there's no established maintenance facility inNigeria since Nigeria Airways ceased operations. It is difficult and almostimpossible for any operator with more than 5 aircraft to succeed without anMRO.

• Research has shown that one of the major reason for the bankruptcy ofNigeria Airways, Okada Airlines, Chanchangi airlines etc. was that ofcontracting Maintenance to 3rd party .

• A National maintenance hangar is highly needed for sustenance of the airlinesand skilled training of local manpower.


CHALLENGES• FUEL

Cost of Jet A-1 is very expensive apart from the difficulty of procuring thecommodity costing 40% to 60% of operating cost depending on airplane

• It is sad that among OPEC members, Nigeria has the most expensive aviationfuel, otherwise known as Jet A-1.

• Government should adhere to its resolve

• Government should adhere to its resolve of reviving Warri refinery as a wayof bringing back the capability of producing kerosene(ATF) JET A1.


CHALLENGESINTERFERENCE

Frequent meddling, mostly on the functions of the regulatory agencies in Aviationridicules airlines’ Feasibility Studies, and makes their financial projections almostunattainable


CHALLENGES• VAT

Aviation is the only mode of transportation that is been charged VAT in Nigeria.

• Airline are being forced to pay Vat real time at the point of sale , even theNigeria gives you 21days to pay

• All over the world there is no VAT charged on air transportation .

• While the International Carrier flying into Nigeria are not charged VAT


CHALLENGESINSURANCE

• The Nigerian Aviation insurance cost is over 7% of the value of the airplane,when over 85% of the countries in the world are paying less than 1% to thesame market at Lloyd's of London .

• In trying to put out local content laws in place, the senate passed a bill thatOil and Gas Companies should go through NAICOM for insurance but thishas been smuggled into aviation through the back door thereby makinginsurance exceptionally high with over 7% compared to the internationalrate and making operators/owners prefer aircraft registered offshore.


CHALLENGESFOREIGN REGISTERED AIRCRAFT

• Due to the meltdown of the economy in Europe and USA , Foreign airlines haveflooded our local market without proper documentation and added value tothe economy but are here to generate personal income ,create jobs for theirexpatriate staff and capital flight at the end of the day .

• These aircraft have ended up crippling our workforce (Nigerian Pilots andEngineers. Over 500 of them are currently unemployed)


CHALLENGESLANDING AIDS AND NAVIGATION EQUIPMENT

• Runway lights and Navigation aids are not functioning properly and mostlyoutdated.

• Airlines are not flying to their capacity and are restricted to daylight operationsonly 7am to 6.30pm

• In marginal weather aircrafts are grounded and flights cancelled, whereasairplanes have been landing with zero visibility worldwide for the past 3 decades.1.5km visibility is an issue for aircraft to land in almost 90% of airports in Nigeria.

• The world has gone digital and we are still lagging behind with analog equipment


CHALLENGESCABOTAGE

The world identify this way back to the fifth freedom which was set-up torestrict foreign market.

• In 1944 the world got together to sign the Chicago Convention identifiedthis to restrict foreign carriers , land , sea and Air transportation,restricting multiple entry to carry passengers to and fro as is presentlybeen done to in Nigeria .

• The opening of Enugu, Kano , Port-Harcourt to foreign airlines is at theexpense of our local carriers when they should have been made to inter-line with our domestic airlines. If we are not careful, this may end upcrippling the Nigerian aviation market .


CHALLENGESACCESS TO LAND FOR DEVELOPMENT

• Access to landing in Nigeria Airports is five times the price compared toJFK, Heathrow, Paris, making it impossible for true investors to invest inhangars, AMO and Aviation Support Services.


CHALLENGESTRANSFER OF SKILLS/TECHNOLOGY

• Over the years, British Airways celebrated over 70 years operations in Nigeria.Regrettably, there is still no transfer of skills. Foreign are taking jobs from localpilots and Engineers .

• We have over 300 unemployed Nigerian pilots and we project 500 end ofyear(2015). The same applies to engineers. We have over 1000 foreign pilots inNigeria

• Foreign airlines, instead of setting up a Maintenance base here they would ratherput flying engineers on business class to fly on Nigeria trips instead of training ourNigerians licensed engineers to do turn around maintenance.


Past Ministers of Aviation1982 -2015

• 1. Hon JJ Kadiya 1982-1983 21. Hassn Hyat 2007-2008• 2. Alh. Ibrahim Abdullahi 1984 22. Babatunde Omotoba 2008- 2010• 3. Rear Admiral Patrick Koshoni 1984-1985 23. Mrs. Fidelia Akuabata Njeze 2010- 2011• 4. Maj. Gen Jeremiah Usseni 1985-1987 24. Princess Stella Adaeze Oduah 2011-2014• 5. AVM Anthony Okpere 1987-1989 25. Dr. Samuel Ortom (Supervising) 2014• 6. Alh. Bunu Sherrif Musa 1989-1990 26. Chief Osita Benjamin Chidoka 2014-2015• 7. Alabo Tonye Graham Douglas 1990-1992• Permanent Secretaries : 2013-2015 ( 18 months )• 8. Engr. Olawale Ige 1992 1.Mr George Ossi• 9. Chief Oluwale Adeosun 1993 2. Dr. Jemila Shuara• 10. Alh. Bashiru Dalhatu 1993 3. Mr Remi Adelakun• 11. Alh. Aremu Yahaya 1993-1994 4. Alh Mohammed Abbas• 12. Ebenezer Babatope 1994-1995 5. Dr. Binta L. Bello• 13. Air CDRE Nsikkak Eduok 1995-1996• 14. Air CDRE Ita Udo-Ime 1996-1998• 15. Capt. Benomi Briggs 1998-1999• 16. Dr. Olusegun Agagu 1999-2000• 17. Dr.(Mrs.) Kema Chikkwe 2000-2003• 18. Mallam Isa Yuguda 2003-2005• 19. Prof. Babalola Borishade 2005-2006• 20. Chief Oluwafemi Fani Kayode 2006

• Appointing trusted, tested and proven Professional as Minister ofAviation. If the present ICAO President is a locally trained Nigerian byname of Dr. Aliyu. I see no reason why we cannot find a competent handsto oversee the Nigerian Aviation sector. The agricultural sector is a goodsuccess story which is making waves in Nigeria and around the world,winning awards because the Government has finally engaged atechnocrat to head the sector. This also applies in the Ministry of Healthand the Ministry of Justice.

THE WAY FORWARDNigerian Aviation industryNigerian Aviation industry

THE WAY FORWARD• The Nigerian government should disengage from Aviation business and

implement a robust policy that will create an enabling environment andPrivatize like in telecommunication, Power ….

• The policy must be designed for Aviation Sector to contributes positively tothe Economy by raising the GDP from 0.4% presently to 15% within thenext four years

• The policy should be directed towards the creation of employment forteaming unemployed youths, 10,000 direct and 100,000 indirect jobs

• Government has no Business in BUSINESS !!


Thank youThank you


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