As Nigeria’s economic recession bites harder on the local airline industry, experts have cautioned airline owners to take some drastic measures to cut down operational cost to survive the recession.
Nigeria’s recession has seen the local airline industry battling with the scarcity and high cost of foreign exchange to undertake the maintenances of aircraft at foreign hangers. It has also culminated in the scarcity of aviation fuel usually dependent on forex for its importation.
Some airlines have already announced that they will have to scale down operations in the weeks ahead, meaning fewer aircraft in the sky with more flight cancellations and delays on some routes. Such measures obviously will also imply less revenue for the airlines and also regulatory agencies like the Nigerian Civil aviation Authority (NCAA), Nigerian Airspace Manegement Agency (NAMA) and the Federal Airports Authority of Nigeria (FAAN). These establishments depend on taxes and levies paid by airlines operating in the country.
Use fuel economy aircraft
Aviation analyst, Alhaji Mohammed Tukur, who is also General Secretary of Airline Operators of Nigeria (AON), said the tough operating climate created by the recession demands that airline should deploy more fuel efficient aircraft on some routes.
Tukur identified the use of ‘jumbo’ aircraft ideally meant for flights lasting six to 12 hours by most domestic carriers on less than an hour flight on Nigeria’s domestic route noting that such trend if allowed or practiced in the past, was uneconomical in a recession period. “There is need for airlines to change their aircraft types,” said Tukur.
“They should get light aircraft not these Boeing 737s. If they have these less fuel consumption aircraft, it will reduce their burdens,” he added. Tukur, a former director of operations at Chanchangi Airline, said the B737 aircraft were costly to maintain and gulping so much fuel adding that there was no way an airline operator could survive under the present economic situation with such aircraft constituting the bulk of aircraft in its fleet.
Most airlines in Nigeria are private owned (one man businesses) and this creates a lot of room for unethical practices especially the misapplication and mismanagement of funds.
Analysts have often criticized the one man ownership structure of Nigeria’s local carriers as inimical to corporate governance practice and they have demanded that airlines get listed on the Nigerian Stock Exchange as part of measures to enthrone accountability in their management. Tukur who linked the poor culture of accountability and management by some airlines said it was part of the reasons why some domestic airlines collapsed within first ten years of their existence.
He said there is an indiscriminate pulling out of finances from operations accounts by airline owners which he described as the worst practice in the airline business saying any money taken out of the airline’s daily operations for other purposes was capable of crumbling the entire system of that airline.
“Most airline operators take money out of the system and put it in another business,” Tukur said on the poor management of airline finances by owners.
“In aviation, the moment you move money out of operation then you are killing the operation completely. In Nigeria this happens because the airlines are individually owned and somebody will just take the money without accountability,” he noted. The recipe therefore is strict adherence to all rules of accountability.
Staff salaries and other remuneration constitute a huge chunk of the overhead that airlines bear. While pilots and aeronautical engineers naturally earn what is perceived as fat salaries, the top management and executives of airlines also earn more than the rest of the workers. “The management of various airlines live expensive lives with monies meant for operations of airlines and management staff of some airlines received too much as salaries,” noted Tukur.
With recession comes a reduction in passenger traffic which means airlines earn less than they usually do. And in Nigeria, aside low passenger patronage, there has also been a reduction in aircraft fleet plying some routes.
The high cost or the scarcity of forex has made it rather difficult to carry out routine maintenances of some aircraft abroad, with stories being circulated about of how some airlines are postponing or not able to do C-checks and D-checks on some aircraft.
The outcome has been a great reduction in the earnings of airlines. Airlines should therefore consider cutting down on staff salaries , especially those considered to be the “highest income earners” under a recession if they must survive it. The affected staff must be made to realise that such pay cut is a better alternative to an outright loss of job.
A recession period is not also the best time to continue to keep expatriate workers whose salaries are paid in foreign currencies which obviously become scarce. Aviation expert, Captain Dele Ore, says “it is unwise to employ expatriates for jobs that can be done by Nigerians and still retained them during a recession.”
“It is clever to reduce expenses in order to remain in business as recession persists because they can never survive with the presence of expatriates in the sector. What you need to maintain an expatriate is enough to maintain about six Nigerians,” he added.
One way airlines can beat the problem associated with low passenger traffic which is very noticeable during a recession is for them to deploy a particular aircraft on two or three routes. Such a “combined flight” especially for airlines with jumbo jets would assist them maximise cost and manage fuel effectively. For instance, a particular airline taking off from Lagos can merge Owerri and Port Harcourt passengers on the same flight, rather than fly an half filled or empty aircraft on each particular route – like Lagos to Port Harcourt or Lagos to Owerri. Airline can also either merge or interline their operations during this recession as part of measures to remain alive and profitable.
ART demands time lines for aviation projects
The Federal Government should set down timelines that would guide the take off and completion of projects in the aviation sector, President, Aviation Round Table (ART), Mr. Gabriel Olowo has said.
Olowo, spoke with Daily Sun at the launch of Nigeria’s first electronic car park built by a Chinene firm at the Golfview Hotel in Lagos recently. He faulted the the slow pace of the implementation of the government’s programmes for the sector noting that the absence of a clear cut timetable would not in anyway help the government realise it’s goals and aspirations for the sector.
“The government cannot continue to be talking about what it wants to do in the aviation sector and this has been going on for the past one year and we don’t have any timeline,” he said. “We are not satisfied with the state of the airports and neither are we happy with the state of the airlines. Now for example, if the government says it wants to concession the airports, we need to set the timeline.
“What do we want to achieve in the next one year? What do we want to do in the next two years? By 2019 where do we want to be as an industry? So if we have to achieve anything, we need to work on specific targets with set times. We can’t be working on speeches and speeches without action and time is running out,” he added.
The electronic car park is cable driven and was installed under 15days to create space for more than 25 cars to be parked from an initial seven. The hotel is used by a lot of guests, with the bulk coming from the aviation sector.
Emirates slashes airfares by 50% for Nigerian passengers
Emirates Airline is offering its Nigerian customers return airfares of up to 50 per cent off to Dubai, one of the world’s most iconic cities.
The airline in a statement over the weekend said the special offer, which is available for both Economy Class and Business Class travel, must be purchased between November 30, 2016 for travels until May 31, 2017.
Known as a city of contrasts, from futuristic architecture to vibrant traditional culture and diversity, Dubai is a place that caters to all types of travellers. The city offers everything a visitor could want, from shopping at some of the largest malls in the region to dining options which will spoil anyone for choice, a trip to Dubai is a must for families, friends and individuals.
The city also offers visitors several new and exciting experiences, such as the recently-opened IMG Worlds of Adventure, the world’s largest indoor themed entertainment destination, and the soon-to-be-opened Dubai Parks and Resorts, which will offer a range of attractions and experiences. Other attractions in the city include the Burj Khalifa, the tallest building in the world, traditional souks and the clear water beaches of the Arabian Gulf.On all Emirates’ flights, customers can look forward to hours of entertainment on the airline’s ice system, which offers over 2500 channels of on demand audio and visual entertainment, from the latest movies, music, audio books and games, as well as family friendly products and services for children, including complimentary toys, kids’ meals and movies, priority boarding for families and the use of free strollers at Dubai International Airport.
In addition to the on-board comforts and products, customers will also experience the world famous hospitality from Emirates’ multinational cabin crew while enjoying chef prepared regional and international cuisine, using the freshest ingredients, accompanied by a wide range of complimentary wines and beverages.