By Blame situation on corruption, poor management of sector
By Nsikan Ikpe
An expert in the Nigerian aviation industry has decried news that Nigeria has presentily lost its aviation hub status in the West African sub-region to Ghana, as most painful.
According to the well-heeled practitioner who declined being named, the situation is most regrettable given that industry players had continued to warn that this was a very likely consequence of the monumental corruption, rash of bad developmental policies and the total disregard for national interest by the authorities in the maintenance and promotion of the sector.
‘This news is most painful but some of us saw it coming. A few years ago for instance, the American Boeing Corporation was ready to help us standardize and co-manage our natural hub structure. Corruption and bad policies made them discontinue talks. We have indeed been our worst enemies,’ he lamented.
Another likely loss from the current situation, commentators are hazarding, is that even with the common pan-African passport reportedly being scheduled to come on-stream in Africa’s second largest economy by GDP in the next few months, the presently anticipated surge of visitors would likely be serviced from better-run co-ordinate aviation centres in the continent, with revenues that should naturally come to Nigeria being lost.
Already, with the loss, analysts are confirming that, the revenues that had been accruing to the country Nigeria from, among others, the fuelling of aircraft and accommodation of cabin crew of foreign airlines have now been taken over by Ghana, which now provides these services.
Foreign exchange reversals in Nigeria are equally culpable and the situation is partly attributable to the 100 per cent increase in the price of aviation fuel in Nigeria, while Ghana slashed the cost of the same product by 20 per cent.
Specifically affected in the downturn are regulatory agencies like the Nigerian Civil Aviation Authority (NCAA), Federal Airports Authority of Nigeria (FAAN) and Nigerian Airspace Management Agency (NAMA) which are also seeing their 2016 revenue projections swiftly heading south.
Checks reveal that the price of Aviation Turbine Kerosene (ATK) in Nigeria, also called aviation fuel or Jet-A1, rose from N120 some months ago to N240 per litre since the Central Bank of Nigeria (CBN) introduced the flexible foreign exchange policy.
At the moment, aviation fuel is 100 per cent imported into the country, which subjects it to the vagaries of foreign exchange, especially the United States dollar. With the exchange rate around N350 to $1, aviation fuel in Nigeria has become one of the most expensive on the continent.
Due to the price increase, coupled with irregular supply of the product, foreign airlines experienced difficulties refuelling during their trips. For instance, Emirates Airline, which recently reduced its two daily flights from Lagos to just one, last week made a re-route to Ghana, to buy fuel for its Abuja-Dubai flight.
It was learnt that Nigeria’s customer of many decades, British Airways, had started buying fuel from Ghana to power its airplane carrying Nigerian passengers to the United Kingdom.
Air France last week announced that from 2017, it would commence three weekly flights to Accra in Ghana from Paris-Charles de Gaulle. These flights will be operated by Airbus A330 with a capacity of 208 seats until 27 March 2017, then by Boeing 777-200 with 312 seats.
Within the new climate, Ghana had become the new bride of the foreign airlines due to efforts by the government of that country to make the Kotoka International Airport in Accra, the aviation hub for West Africa.
A source, who is one of the facilitators that negotiated the 20 per cent cut on aviation fuel in Ghana, said the West African neighbour might have succeeded in beating Nigeria to being the regional hub for international airlines.
He said unlike Nigeria, Ghana already had a robust connectivity plan in place, which opened the country’s airspace to African and international carriers with so much reciprocity.
“What they have done with the fuel price cut is to further attract the airlines to Accra,” the source said. Aviation fuel is central to the operations of an airline as it constitutes between 35 and 40 per cent of business cost.
“Fuel in Ghana used to be one of the most expensive with government tax being one of the main factors for the cost. But with the support of the Civil Aviation Authority (CAA), and the airport authority in Ghana, we made proposals to the government to take off the 20 per cent tax accruing to government to make Ghana more competitive.
That was what they did. Their fuel is now on the same level with that of Ivory Coast, which is their biggest rival, and even lesser than what we have in Nigeria.”
Commenting on the implications, the Executive Secretary, Major Oil Marketers Association of Nigeria (MOMAN), Obafemi Olawore, said that besides the loss of revenue, the development was bad for the country’s image.
Olawore reckoned that the development could have been avoided if the Federal Government had given the oil marketers the needed assistance, like forex, to facilitate the import of aviation fuel and sell in the country at affordable prices.
He said MOMAN was in talks with the Nigerian National Petroleum Corporation (NNPC) for weeks to provide them forex at interbank market rate.
“Nevertheless, we are continuing with our private arrangements to bring in the product (Jet-A1). Between this week and the next, we are expecting 40 million litres of aviation fuel. By the time that arrives and NNPC also brings in its own, things will start looking up. Those airlines that have gone will start coming back to Nigeria. Because it is easier to refuel in Nigeria than elsewhere,” Olawore said.
Industry watchers noted that unless such optimism becomes reality, regulatory agencies like NCAA, FAAN and NAMA that have been complaining of low revenue may face more hardship amid Federal Government’s demand for improved turnover.
The agencies are currently moving to retrieve the over N30 billion from domestic airlines indebted to them in the last 16 years.
No comment has come on the subject from Minister of Aviation, Captain Hadi Sirika.
Analysts also say that, except other specific variables are added to the mix even now, the proposed coming on-stream of the Dangote Refinery in the next few months may not even give the country the needed reprieve in this critical area as the refinery is essentially a private sector operation, that is located in an Export-Processing Zone, and which necessarily would endeavour to recoup its investments in line with to market pulls and profit expections.
Comments