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Nigeria @ 60: The Aviation sector and its travails

After several decades since its inception, the Aviation industry continues to face some of its biggest challenges.

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Nigeria @ 60: The Aviation sector and its travails

The Nigerian Aviation sector is about 74 years old today, but it has always been plagued by an economic lull, mismanagement, corruption, and overstaffing, among others.

The industry earned its first identity in the days of West African Airways Corporation (WAAC), which was an airline that operated from 1946 to 1958.

WAAC was jointly owned by the governments of Britain’s four West African colonies—the Gambia, the Gold Coast (now Ghana), Nigeria, and Sierra Leone. The carrier was headquartered at the Airways House in Ikeja, Nigeria, and operated from its hub in Lagos Airport, which is now Murtala Muhammed International Airport.

READ: Arik Air bows to pressure, implements 80% salary cut for staff in April

On September 30, 1958, it was dissolved, as all the shareholder countries but Nigeria set up their own national airlines following their independence.

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As the sole remaining major stockholder of the airline, the government of Nigeria continued to operate it as WAAC Nigeria, and eventually rebranded it to Nigeria Airways Limited in 1971. It became the flag carrier of the country till 2003 when it ceased operations.

Managed by a number of foreign companies, including British Airways, KLM, and South African Airways, Nigeria Airways had its heyday in the early 1980s, just before the departure of a KLM team that had been hired to make the airline efficient and profitable.

READ: Local refining; A panacea for Nigeria’s reliance on imported refined products

At that time, its fleet consisted of about 30 aircraft, but the carrier was two years behind with its accounts, to the extent that the aircraft were acquired for cash.

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Plagued by mismanagement, corruption, and overstaffing, the airline at the time of closure had debts totalling $528 million, as its operative fleet comprised a single aircraft flying domestic routes, as well as two leased aircraft operating the international network. Nigeria Airways was succeeded by Virgin Nigeria, and the ground facilities were taken over by Arik Air.

READ: SAHCO, Arik Air renew contract to boost services 

Nigeria Airways retiree says

Mr. Francis, an ex-staff of the airline who retired from the printing section, recalled that there was a high number of personnel handling the printing of aviation documents of Nigeria Airways, which had its operations concentrated at the MMA in Lagos, such as flight documents, boarding passes, and papers for engineers of the aircraft, among others.

According to him, the printing section was shabbily managed by the officials, who were quacks employed by the military regime then.

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He said, “It got so bad that government officials fly their families without paying for the service rendered, believing that after all, it was government’s property. This kind of attitude was synonymous with Nigerian investments, which lacked professional management expertise. Where is the Nigerian Railway Corporation today, where are the likes of NITEL, NIPOST, among other government agencies?”

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READ: Nigeria’s air passenger traffic up by 2% in Q1 2019, as Lagos tops

Private airlines came, saw but were conquered 

Having realized the importance of engaging the private sector in economic development, the Federal Government opened the Nigerian airspace to private investors.

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This led to the emergence of Okada Air in 1982. Based in Benin City, Nigeria, the carrier started with a fleet of BAC-One Eleven 300s and started charter operations in September of the same year. In 1984, a Boeing 707-355C was acquired for cargo operations. By 1990, ten BAC One-Elevens were bought, and eight more were acquired in 1991. The company was granted the right of operating international flights in 1992, but in 1997, the company was disestablished.

From 1971 to date, about 61 airlines had operated in Nigeria. They all came, saw, and were conquered. Some of them are Okada Air (1982 – 2002); ADC Airline (1984 – 2006); AfriJet (1998 – 2009); Albarka Air (1999 – 2005); Bellview Airlines (1992 to 2010); Chanchangi Airlines (1994 – 2012), and First Nation (2010 – 2018) among others.

READ: COVID-19: Virgin Atlantic files for bankruptcy

When Arik Air took over the former Nigeria Airways facilities in Lagos, several industry watchers thought the nation had finally got it right, especially with the aggressive expansion plans of the airline, little did they know that the nation would not come out of the woods so soon.

For instance, on 14 June 2006, Arik took delivery of 2 new Bombardier CRJ-900 aircraft to fly domestic routes throughout Nigeria, and within the African continent from Summer 2006, two ex-United Airlines Boeing 737-300s and three 50 seat Bombardier CRJ-200 aircraft. The campaign of the ‘Tear Rubber’ aircraft was massive, and it boosted the profile of the airline, which was expected to change the face of the aviation sector in the nation.

However, the tale changed when the FG through the Asset Management Corporation of Nigeria (AMCON), took over Arik Air in February 2017, as the airline was said to have been immersed in heavy financial debt, that had threatened to permanently ground it.

READ: Nigeria @ 60: How the NSE evolved with key national policies

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AMCON alleged that the Airline, which catered for about 55% of the passengers in the country, had been going through difficult times, attributable to its bad corporate governance, erratic operational challenges, inability to pay staff salaries, and heavy debt burden, among other issues.

The ‘undertaker’ estimated the airline’s debt at over N375 billion, comprising domestic and foreign investors. Since then, the bad bank has injected over N1.5 billion into the airline.

However, since the government took over in 2017, the airline has been struggling to keep its head above the waters. Its staff have downed tools over the years, due to poor remuneration among other welfare issues.

The way forward, experts speak …

The Managing Director, Starburst Aviation Limited, Capt. David Olubadewo said:

To achieve a desired result in the sector, the government, banks, and union leaders have their own bit to do, but one must work in tandem with others for it to work. Banks believe that aviation is too difficult to invest in, but that is wrong because it is not different from other sectors. We are all in it to make a profit at the end of the day. I don’t obtain loans from Nigerian banks, because I will end up with -25% loss, but that is not happening in the United Kingdom where I pay 3% interest rate. If I take such loan in Nigeria, it means I am -28 % (interest rate) in red and by the time you get to the top, you are owing millions.”

Contrary to the allegation that most of the airline investors are reckless, he argued that people have forgotten that those people have invested immensely in the sector, and they will never let it die.

READ: Nigeria officially unveils national carrier in London

“In the last 13 years, we don’t appreciate what we have, we have a hub here that is waiting to be tapped. From anywhere in the world, you can get a flight to Lagos, but you can’t get such to Ghana from anywhere in the world, and that is an indication that we have a hub in Nigeria,” he said.

Lookman Animashaun, Director of Engineering at Medview Airline, suggested that the best option for AMCON and the Federal Government is to establish a national carrier with the airline.

He said because of the airline’s debt burden, no investor would be interested in the airline, and if AMCON decided to manage the carrier, it would take it about 30 years to recover the money it invested in the airline, considering the airline’s turnover.

Speaking at the Business Founders Coalition (BFC) in Lagos on Tuesday, Dr. Richardson Ajayi, BFC Coordinator, lamented that foreign investors are preying on Nigerian businesses, and are seeking to push their founders out.

This, according to him, threatens the nation’s dream to build and nurture vibrant private sector businesses capable of competing with global brands, and also reduce employment opportunities for the youth.

READ: British Airways pilots accept 20% pay cut to end job losses dispute

He stated, “The objective of this meeting is to draw the attention of key stakeholders, especially the Government of the Federation, and the business community to the plight of Nigerian entrepreneurs, who out of ‘sweat and grit’ started their business, but at some point in the pursuit of growth, have had to access venture capital funds or foreign investments. Our experiences have largely been tales of woe, which have the possibility of stunting the growth of indigenous businesses like ours. We are also hoping that through this coalition, our government can enact policies and laws that will correct that apparent lop-sidedness.”

Ajayi lamented that most local businesses have been struggling, due to unfavourable operating environment and lack of access to finance to grow their businesses, hence they approach foreign investors and venture capitalists to invest in their business.

While he acknowledged that there are many good private equity companies that have accomplished successful private equity transactions, as well as those that understand the challenges of the market and are patient with their local partners, Ajayi noted that some others seek controlling rights as a major condition to invest.

Abiola has spent about 14 years in journalism. His career has covered some top local print media like TELL Magazine, Broad Street Journal, The Point Newspaper.The Bloomberg MEI alumni has interviewed some of the most influential figures of the IMF, G-20 Summit, Pre-G20 Central Bank Governors and Finance Ministers, Critical Communication World Conference.The multiple award winner is variously trained in business and markets journalism at Lagos Business School, and Pan-Atlantic University. You may contact him via email - [email protected]

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Air Passengers to United States must test negative for Covid-19 before boarding flight

The United States Government wants all international passengers must provide a negative Covid-19 test before they board a flight into the country.

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The United States Government wants all international passengers to provide a negative Covid-19 test before they board a flight into the country. This is according to a report from the Wall Street Journal and confirmed by the Centers for Disease Control Prevention in the US.

The new rule will also affect United States citizens in the country.

According to the U.S. Centers for Disease Control Prevention (CDC) “Before departure to the United States, a required test, combined with the CDC recommendations to get tested again 3-5 days after arrival and stay home for 7 days post-travel, will help slow the spread of COVID-19 within US communities from travel-related infections. Pre-departure testing with results known and acted upon before travel begins will help identify infected travelers before they board airplanes.”

Based on this, all Air Passengers are required to conduct a test within 3 days before their flight to the US. departs.

“Air passengers are required to get a viral test (a test for current infection) within the 3 days before their flight to the U.S. departs, and provide written documentation of their laboratory test result (paper or electronic copy) to the airline or provide documentation of having recovered from COVID-19. Airlines must confirm the negative test result for all passengers or documentation of recovery before they board. If a passenger does not provide documentation of a negative test or recovery or chooses not to take a test, the airline must deny boarding to the passenger.”

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The order was signed by the CDC Director on January 12, 2021, and will become effective on January 26, 2021.

Last week the US imposed a testing requirement for travelers from the United Kingdom over cases of a new strain of the virus which has also been reported in the US.

What this means: New travel requirements for the negative Covid-19 test will negatively affect the global aviation sector which attracts over 340 million arrivals annually according to 2019 data seen by Nairametrics.

  • For third-world countries like Nigeria, travellers into the US will need to conduct the Covid-19 test before they depart from the United States piling pressure on testing centers across the country.
  • Though a requirement that most Nigerians are already familiar with, there will likely be pressure to avoid testing positive a few days before departure to the US.
  • Nigerians who travelled to Dubai during the Christmas holiday were also required to undertake covid-19 tests
  • Nigeria also requires visitors into the country to take the Covid-19 test before departing for Nigeria.

The global Covid-19 caseloads topped 90 million with the United States leading the pack with 22.7 million cases and over 379,000 deaths

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Just last week, the United Kingdom said that all passengers arriving in the country will be required to show negative Covid-19 test results taken within 72 hours of the commencement of their journey to prove they do not have the disease. Ireland also announced new travel rules which require visitors into the country to provide evidence of a negative Covid-19 test taken within 72 hours before arriving in the country.

Going further, the United Kingdom said on Thursday that it would extend a ban to international passengers from Southern African countries coming into the country, as part of the measures aimed at preventing the spread of a new strain of Covid-19 variant identified in South Africa.

Nigeria also requires travellers into the country to carry out a second Covid-19 test after arrival into the country or face consequences. Last week the Nigerian immigration service announced the suspension of 100 passports belonging to Nigerian passengers who refused to undergo second Covid-19 tests within 7 days of arrival into Nigeria from overseas travel.


This article was updated following new information.

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Nigerian Aviation: Exchange rate, 7.5% VAT suspension and other factors to determine survival – Experts

Stakeholders share their expectations and factors that must be addressed by the FG to aid the rebound of the sector in 2021.

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Aviation, Airline operators will pay $3,500 per passenger if they break protocols – PTF COVID-19, Global Air passenger slump to persists til 2023- Moody’s 2023- Moody’s

The aviation sector suffered setbacks due to the emergence of the COVID-19 pandemic in 2020, as the lockdown effected by many countries led to travel restrictions, reduced revenue and mass loss of jobs.

In the case of Nigeria, operators in the sector felt the impact of the pandemic more than their counterparts, as ‘old illness’ suffered by the airlines was exacerbated by the pandemic and left the operators writhing in pains.

READ: COVID-19: Over 70% of jobs lost in aviation, tourism industries in 2020 – AfDB

For the sector to survive in 2021 – in the heat of the second wave of the pandemic, stakeholders shared their expectations and factors that must be addressed by the federal government to aid the rebound of the sector.

They listed stable exchange rate, reduction of cost of operations, waivers on Customs tariffs for aircraft and spares and cost of aircraft insurance, a reversal of 25% remittance of earnings, amongst others.

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READ: Nigeria owes foreign airlines $53 million as proceeds from ticket sales – IATA

Unstable exchange rate

In an interview with Nairametrics, the Managing Director, Aero Mainstream Cargo Services, Ajibade Adewale, explained that the unstable exchange rate, especially for aviation stakeholders, has been a clog in the wheel of operations of the airlines, and most of them cannot afford to inflate their charges in line with the unstable rate.

READ: FG bars aides of VIPs from airport terminals, to grant loans to airlines, others at 5%

He said,

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“Operations of the airlines are largely dollar-denominated. Operations like aircraft purchase plus maintenance and training of staff amongst others can only be done in dollars. The only thing they do in local currency would be salaries. 

“Either airlines are allowed to access stable rates or the federal government creates an enabling environment for aircrafts maintenance or repairs here.

READ: Nigeria @ 60: The Aviation sector and its travails

“The rubber industry should be revived for investors to set up tyre manufacturing factories in Nigeria, in order to stop importing aircrafts tyres from other parts of the world. Most of the aircraft tyres are manufactured and imported from the United Kingdom (Dunlop), France (Michelin), United States of America (Goodyear), and Bridgestone (Japan).”

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He insisted that if enabling environment is created by the government, some of these companies will return to Nigeria and this will reduce cost of maintenance for the airlines.

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READ: COVID-19: Travel agencies beg FG for interest-free loans

Lack of skills to execute right policies

On creating an enabling environment, especially for maintenance factory, Capt. David Olubadewo, Managing Director, Starburst Aviation Limited and a Nigerian based in UK, explained that aviation in Nigeria is a very difficult business because the environment is unfriendly.

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He said,

“Aside from the role of the government, the industry has always been given a bad name in that light. It is not that we don’t have the people to fix it, but there are different aspects that have been compounded over the years. That is why we are where we are today.

READ: Nigeria generates N424.71 billion VAT in Q3 2020

“We have lots of very qualified people, there are lots of engineers in the United Kingdom and the United States who are Nigerians. We have people that are overqualified, but we lack the skills to execute the right policies to grow the sector.”

Cheaper loans

Olubadewo explained that most of the airlines and other industry stakeholders could not access cheaper loans because banks believe that the sector is too difficult to invest in.

“But that is wrong. It is not different from other sectors. We are all in it to make profit at the end of the day. I don’t obtain loans from Nigerian banks, because I will end up with -25% loss or more, but that is not happening in the UK where I pay far less interest rate.

READ: VAT collection edges higher but indicates weaker economy

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“If I take such loan in Nigeria, it means I am -28 per cent (interest rate) in red, and by the time you get to the top, you are owing millions. I cannot approach any of the banks to give me local money to do business in Nigeria. If I can go through that, you can imagine the experiences of the airlines.”

Suspension of 7.5% VAT

Recently, a member of the finance bill drafting committee and West Africa Tax Lead, PwC Nigeria, Taiwo Oyedele, disclosed via a tweet, that the federal government has again suspended the deduction of 7.5% Value Added Tax (VAT) on airfares and other air transport services.

READ: How businesses can leverage technology to survive uncertain times

According to him, the latest suspension order was scheduled to take effect on January 1, 2021, as it is contained in the 2020 finance act recently signed by President Muhammadu Buhari. Operators in the aviation sector are convinced that its implementation would ease the burden on them in 2021.

Media and Communications Manager, Dana Air, Kingsley Ezenwa, explained that his airline would be excited to plow back the proceeds of VAT removal to the business and ticket fares subsidy.

READ: COViD-19: Nigerian Railway Corporation to shut operations

He said,

“But that may not happen soon, the expected gains are subject to the actual implementation of the policy and the review of other multiple charges in the aviation industry.”

READ: COVID-19: The ‘New Normal’ for Nigerian aviation industry

What you should know

  • The FG in June 2018 issued an executive order on the suspension of VAT in air transport, but the Federal Inland Revenue Service (FIRS) claimed to be unaware of such a directive, hence it was never implemented.
  • Airline operators had complained that Nigeria is the only country that still charges VAT on air transport services. The VAT plus 36 other charges, according to the airlines, account for at least 40% of total revenue and N10 billion in taxes yearly, leaving the airlines heavily indebted and in financial distress or both in most cases.

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Human remains, plane wreckage of Indonesian Sriwijaya Air found at crash site

Wreckage of the missing Indonesian plane, Sriwijaya Air flight 182, a Boeing 737-500 has been found.

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Human remains, plane wreckage of Indonesian Sriwijaya Air found at crash site

Human body parts and parts of the wreckage have been found at the crash site of the Sriwijaya Air flight 182 which was reported missing yesterday, January 9, 2021.

The Sriwijaya Air Boeing 737 was carrying 62 people when it vanished from radar on its journey to Pontianak, crashing 10,000 feet into the ocean.

READ: America’s grounded Boeing 737 Max may return to the sky by December

Earlier, Indonesia’s National Search and Rescue Agency said it had found several pieces of debris believed to be from the missing plane but bad weather and poor visibility had hampered the search overnight.

Indonesian Navy divers on Sunday found wreckage from flight SJY 182 after locating a signal from the aircraft’s fuselage, CNN reports. The black boxes have also been recovered at the crash site.

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READ: Boeing partners with Kitty Hawk to develop a flying taxi

According to the coordinator of the rescue mission, Rasman MS, five body bags containing victims of the crash located by the National Search and Rescue Agency (Basarnas) have so far been handed over to the disaster victim investigation unit in Jakarta for identification.

The National Transportation Safety Committee (KNKT) teams have also begun an investigation into the cause of the crash.

READ: Air Peace addresses plane incident in Port Harcourt

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What you should know

  • The Sriwijaya Air passenger plane departed from Jakarta airport at 14:36 local time (07:36 GMT) on Saturday.
  • The Sriwijaya Air flight 182 – a Boeing 737-500 – was heading from Jakarta to the city of Pontianak,
  • At 14:40, the last contact with the plane was recorded, with the call sign SJY182, according to the transport ministry.
  • The plane, registered PK CLC, was a 26-year-old Boeing 737-500, according to Flightradar24.
  • Sriwijaya Air is one of Indonesia’s discount carriers, flying to dozens of domestic and international destinations.

READ: Nigerian airlines should patronise Aero MRO facility -AMCON

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