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Business News of Friday, 14 January 2022


Why Nigeria’s aviation sector quickly recovered from covid –Adewale

Seyi Adewale Seyi Adewale

The impact of coronavirus on the world’s aviation sector had been so devastating that some airlines were either forced to file for bankruptcy or entered into voluntary administration. Because of the effects of the pandemic, operators like Philippine Airlines, the country’s flag carrier, filed for Chapter 11 bankruptcy last year. Virgin Australia was another airline that suffered a significant loss as a result of coronavirus as it entered voluntary administration on Tuesday, April 21, 2020 due to financial difficulties.

Flybe, one of the largest regional airlines in Europe, accounting for more than half of all domestic flights in the United Kingdom at its peak, was one of the most noteworthy companies to go bankrupt as a result of the epidemic and on Thursday, March 5, 2020, the airline filed for bankruptcy protection. This was the story of many airlines across the world as the devastating impact of the virus hit.

But in a recent interview, the Director General of the Nigerian Civil Aviation Authority (NCAA), Capt. Nuhu Musa, said the country’s sector has recovered to the pre-coronavirus levels and this assertion is also shared by Seyi Adewale, the chief executive officer of Mainstream Cargo Limited.

Adewale believes that there are indices to indicate that Nigeria’s recovery process has been fast and says that the reasons may include the very strict travel entry and departure protocol set by the Presidential Task Force (PTF) on coronavirus. He says the quick ‘red-listing’ of highly infected countries like Turkey, Brazil and India and the actions of state governments like Lagos, helped in limiting the coronavirus spread.

He also assess the industry in 2021 and highlights what the sector would be like in 2022.

Nigeria’s recovery post-coronavirus

I believe that our recovery process was fast. The reasons may include the very strict travel entry and departure protocol set by the Presidential Task Force (PTF) on coronavirus. The quick ‘red-listing’ of highly infected countries like Turkey, Brazil and India during the ‘heat of the coronavirus moment’ assisted us in limiting the coronavirus spread. Also, many state governments, especially Lagos State, the coronavirus Epicentre , stopped middle-junior workers from physical attendance in offices and many companies followed suit. Similarly, the high restrictions, penalties for violators of PTF regulations especially as it affects social and religious gatherings were effective. All these summed up, led to the relatively low transmissibility of coronavirus within Nigeria and this aided our quick recovery process.

Aviation in 2021

The sector was largely positive in 2021 and it included the lower impact of coronavirus as compared with Europe, UK, USA, Turkey, Brazil, India and many other countries. The NCDC figures revealed this and this has impacted positively on our travel industry. Many countries have eased their travel restrictions against Nigeria and flight schedules and frequencies were gradually getting back to the pre-pandemic figures. Similarly, cargo volumes were returning to the pre-pandemic figures and our passenger travel figures were at least 50.7 percent higher than the 2020 (pandemic) figures.

Importantly, our local airlines improved their fleet with new aircraft such as A320s and E-195s and some with newer ATRs aircraft that are more fuel efficient and we began to witness the entry of low-cost carriers into the sector. The passenger began to be the beneficiary of these good developments with increasing options, choice, destination, on-time-departures and reach. We did not record any commercial airline mishap and kudos to the Nigeria Civil Aviation Authority (NCAA) and they appeared to be more independent in their regulatory functions in 2021.

Furthermore, the Federal Government procured and invested in critical assets and infrastructure and new airports were built and commissioned by state governments. Also, the Federal Government came up with a five-year development plan as it affected the industry. That included the inauguration of a national carrier and the planned concession of at least four international airports.

We witnessed a few negatives which included the diplomatic row with United Arab Emirates (UAE) and the implied Bilateral Air Services Agreement (BASA) issue that appeared skewed to the detriment of the country. Also, the intervention of the National Assembly in the tariff issue between airline operators and ground handling companies, which is within the scope of economic regulation of the NCAA, is a negative from our standpoint.

National carrier, new terminals, airport concession, Maintenance Repair Overhaul (MRO)

In my view, three of the highlighted projects stand out and my order of priority is first, airport concession. International airports are major gateways to any country and country perception via the gateway is impactful and it sticks. Our international airports are significantly below par when compared to airports in Egypt, South Africa, Kenya, Ethiopia, and even Ghana. The concession will gain us the opportunity to rebuild, develop, improve, upscale and upgrade all aspects of our international airport infrastructure. We should be the West African Aviation Hub and Gateway. Second is the national carrier. The positive and beneficial impact on our Bilateral Air Service Agreement (BASA) is huge. We will also reduce forex outflows due to foreign airline fund repatriation. Others include job creation to reduce unemployment among the youth. Third is the MRO. This also will reduce capital flight from aircraft repairs, maintenance and overhaul.

The Federal government could close out on airport concession, and national carrier early enough in 2022. It proposed the national carrier to take off Q1 2022 and airport concession follows a similar timeline. The closeout and commencement of the two priorities will be a catalyst for growth and development of the sector, create new jobs, upgrade/upscale our infrastructure including ICT, the implied knowledge transfer embedded, new or improved revenue lines (opportunities) for government, regional hub status, development of adjourning airport areas and potential innovation and new business modeling by entrepreneurs who take advantage of opportunities.

Purchase of new aircraft

There are great advantages regarding our local airlines procuring new aircrafts. The advantages or benefits include cost of aircraft maintenance being significantly reduced, delight to passengers that should be willing to pay for increased fares noting qualitative services, attracting further investments and development into the sector and encouraging aircraft manufacturers to build MRO stations in Nigeria. Embraer is already mulling building one in partnership with a local airline and state government. The acquisition of new planes will also reduce carbon emission and fuel efficiency and up skill and enhanced training for airline workers/staff.

Parking space

This is the reason we need new investors in the industry/ sector. They will bring new funds to build or expand runways, develop unoccupied airport (land) spaces to build aircraft parking space or hangars, introduce slot management in order to manage imminent traffic and remodel the airport for better efficiency etc.

Air freight will increase this year

I foresee an increase in air freight. This will be driven by e-commerce, new manufacturing plants, creation of special economic zones including the proposed agro-processing zones and FG/ CBN/ NPC supported Agric produce or product exportation.

Air cargo

Already the African Development Bank (AfDB) is supporting the Federal Government by committing funds ($520million for Phase 1) into the creation of Special Agro-Industrial Processing Zones in the six geo-political zones of Nigeria. This will bring Agric producers, aggregators, and distributors to operate within the same vicinity and reduce transaction costs and share business development services for increased productivity and competitiveness. We will begin to export local produce/ products in a good, accepted, traceable and validated manner.

Mainstream Cargo

For us at Mainstream Cargo Limited, we use our vantage or privileged position to educate our client-customers on the right and proper ways of doing importation and exportation of their cargoes in a cost effective, safe and secure manner.