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Hospitality & Travel

How Air Peace, other airlines restrategised to cut costs for survival

There is a paradigm shift, as airlines are beginning to realise they can’t use some aircrafts for short flights.

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Operators in the Nigerian air space have witnessed several difficulties due to some operational challenges, precipitated by what most of them describe as an unfriendly business environment.

While some of the challenges like scarcity of forex and high maintenance cost are still creating holes in operators’ pockets, most of the airlines have made smarter moves to reduce some of their operational costs.

This was disclosed by the Nigerian Civil Aviation Authority (NCAA), and the airlines. According to its Director-General, Captain Musa Nuhu, the airlines have re-strategized by using cost-effective aircraft for business.

READ: Why new airlines find it difficult to get certified, fly in Nigeria – NCAA

He said, “Already, there is a paradigm shift. People are beginning to realize you can’t use Boeing 737 aircraft for short flights. I can see Air Peace has got an E-195, and he plans to replace all the B737 in the long term. United Nigeria is using Embraer 145. Green Africa is using ATR 42, 72.

“There is one that has started processing its documents; he wants to use Embraer 145. Chanchangi wants to come back and they want to use ATR. The demand is there. The thinking is changing because this B737 business is not working for us. It is going to take a while but it is a positive change in the industry.”

Green Africa, NG Eagle adopt cheaper means

Green Africa Airways, NG Eagle and other airlines coming up are already thinking smarter than their counterparts, as some of them have adopted cheaper administrative costs.

Instead of setting up glamorous offices in major commercial cities across the country like some older airlines, the new ones have decided to only set up offices in a few cities.

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They plan to open offices in Lagos and Abuja, while they operate through contract agents, who would earn commissions on patrons, across other cities.

READ: The man singlehandedly changing the aviation industry narrative

A source in Green Africa who prefers anonymity told Nairametrics that the airline did not plan to employ more than 15 staff across the country.

“We are only employing less than 20 direct staff but will get more contract staff to do more work. Most of the other jobs will be outsourced.  The era of employing scores of staff and paying them fortunes for the same jobs agents and temporary workers can do is gone. To survive during difficult times, we must implement certain measures,” the source revealed.

When will the sector come out of the woods?

One of the major challenges frustrating operators is the cost of maintaining their aircraft, especially as they have to fly them to Europe for servicing.

To address this, the NCAA boss said the government was working on setting up a Maintenance Repair and Overhaul hanger (MRO) in Nigeria.

He said, “You know airlines go to Europe for maintenance, but when we have MRO, it creates employment. You just roll in your aircraft and do your maintenance in there in Naira.

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You don’t have to go to CBN looking for $100,000. It takes you six to seven biddings and your aircraft is on the ground for two months while you are waiting for money. These are part of the processes and strategies that are being put together to help the industry grow.”

READ: How air passengers can save more as Nigerian fares rise by 100% in 30 days

What you need to know about airline operations

A week ago, Nairametrics reported that the Nigerian Aviation sector had witnessed the good, the bad, and the ugly. It had changed from a sector that could boast of about 40 active domestic airlines, to an ailing sector with only 23 active domestic airlines.

A great number of them either folded up due to operational pressure or were taken over by the Asset Management Corporation of Nigeria (AMCON) due to illiquidity.

Some of the challenges are lack of good corporate governance, bailout funds, unfriendly business environment, high cost, and nature of maintenance, among others.

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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Hospitality & Travel

FG says private investors to invest about N102.75 billion on national carrier

The Federal Government has said that some private investors are going to raise about N102.75 billion ($250 million) for the take-off of the proposed national carrier for Nigeria.

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Emirates Airlines, airport reopen, domestic flights, aviation, The nature of Nigeria's ban on Boeing 737 Max 8, FAAN commences renovations of Enugu Airport , Land dispute threatens reopening of Enugu Airport , Here is reason Turkish Airlines was allowed to land in Abuja, Aviation industry's 2019 GDP contribution hits N198 billion but 2020 will be worse

The Federal Government has said that some private investors are going to raise about N102.75 billion ($250 million) for the take-off of the proposed national carrier for Nigeria.

This is coming after the initial failed attempt almost 3 years ago to launch the proposed national carrier for the country.

According to a report from Punch, the disclosure is contained in a document on the updated status of the government’s aviation roadmap at the Federal Ministry of Aviation, Abuja on Wednesday.

The Aviation Ministry stated in the document that the project development stage for the national carrier has been completed and as such, the procurement stage is the next step to be taken.

READ: FEC approves N10.5 billion for Airport Management Solution for Lagos, 4 other international airports

The statement from the document says, “The next set of steps will involve the commencement of procurement phase by placing an advert for a request for qualification in the national dailies and the foreign media.

$250 million approximately is to be raised to start up the airline by private investors.

According to the aviation roadmap which is contained in the document, the Federal Government explained that the establishment of a national carrier would enable Nigeria to gain optimal benefits from Bilateral Air Service Agreements (BASA), take full advantage of the Single African Air Transport Market and introduce competition.

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It states, “The national carrier project will be private sector-driven, with the government holding not more than five per cent of the shares.

The private sector consortium may comprise reputable international airlines (such as Qantas), leasing companies, aircraft manufacturers (OEMs), financial and institutional investors.

The government said it was providing the required support by creating the enabling environment in terms of sustainable policies, allocation of BASA routes, provision of financial guarantees and ensuring fiscal incentives to sustain the success of the airline.

READ: South African Airways to cancel more foreign routes, as revenue loss bites 

What you should know

It can be recalled that in July 2018, the Minister for Aviation, Hadi Sirika, at the Farnborough Air Show in London, unveiled the proposed new national carrier called Nigeria Air and stated that it would be inaugurated by the end of 2018.

This generated a lot of controversies as many Nigerians questioned the use of public funds to set up a private business and had doubts over the ability of the government to manage the airline after the liquidation of government-owned Nigeria Airways.

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The Federal Government in 2018, announced the immediate suspension of its widely publicised national carrier due to the alleged non-approval of the airline by the Economic Management Team (EMT) when it launched.

The EMT was also reported to have recommended that public funds should not be used to set up the national carrier.

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Hospitality & Travel

NGX lauds Transcorp Hotels over operational efficiency

Transcorp Hotels Plc achieved business continuity by enhancing the organization’s operational efficiency.

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COVID-19: Transcorp Hotel loses about N1 billion every month- CEO

The Nigerian Exchange (NGX) Limited has lauded the efforts made by the Board and Management of Transcorp Hotels Plc towards achieving business continuity by enhancing the organization’s operational efficiency.

NGX also congratulated the Group on the successful unveiling of new product lines and efforts towards repositioning the organization, thereby reassuring investor confidence in the company.

This was disclosed by the Divisional Head, Listings Business, NGX, Mr Olumide Bolumole, when the management of the Hotel led by the Managing Director (MD)/Chief Executive Officer (CEO), Transcorp Hotels, Mrs Dupe Olusola, presented its Facts Behind the Figures to capital market stakeholders.

READ: Nigerian hotels count revenue losses due to pandemic-induced plunge

Speaking at the event, Mr Bolumole said, “Recently, NGX hosted the CEO, Transcorp Hotels Plc, Mrs Dupe Olusola to a digital Closing Gong Ceremony to commemorate the formal listing of their ₦10Billion rights issue.

We are pleased that Transcorp Hotels has again chosen to utilise our platform to engage the market about the financial performance as well as strategic and operational developments within the organization.

The Exchange recognizes the efforts made by the Board and Management of Transcorp Hotels Plc towards achieving business continuity by enhancing the organization’s operational efficiency. We congratulate you on the successful unveiling of new product lines and efforts towards repositioning the organization, thereby reassuring investor confidence in the company.”

READ: Transcorp records N6.7billion Profit After Tax in Q3; maintains a positive revenue outlook

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What Transcorp is saying

Olusola noted that “Despite the adverse effect of the COVID 19 pandemic on all our business segments, Transcorp Hotels Plc remained resilient and took a critical and fundamental decision to remain open and maintain operations at both the Transcorp Hilton Abuja and Transcorp Hotels Calabar.

Our primary goal was to survive as individuals and as a business, to adapt and to thrive in a new, changing, and unprecedented environment. Post-COVID-19 starting from September, we recorded an improvement in all our KPIs as compared with the industry performance.

Today, leisure has become very important to us more than ever. As a hospitality business, we will constantly continue to challenge ourselves to ensure that we meet the diverse customer needs and provide excellent experience across all touchpoints.”

What you should know

Given that information asymmetry affects the decision-making of investors, NGX continues to encourage more issuers to take advantage of its platform to deliver timely, relevant, and accurate information to the market.

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