Expert Advocates Merger For Nigerian Airlines

As Nigerian airlines continue to moan over multiple charges, high cost of Jet A1, hostile investment environment and the absence of industry developmental policies, among other challenges, a frontline aviation industry expert, Gbenga Olowo, has advised the airlines to come together under one Air Operator Certificate (AOC) to become a strong player.


Speaking at an industry forum in Lagos, Olowo, who is the president of Sabre Network West Africa, and Aviation Round Table (ART), a think-tank body in the industry,  said that in 2010, Nigerian airlines had 54 commercial operating aircraft, but that the number reduced to 39 by 2013.

Olowo said that the systematic operational merger would be the only way for the airlines to remain in business in a short while from now.

“This is the only way to rescue market share from foreign airlines that must repatriate up to 95 per cent of their income back to their home countries in dollars and continue the weakening of the naira. Truth be told, the airlines as we have it today cannot be described as strong schedule players. All the existing seven operators should pool their resources together, operate under one AOC, harmonise their schedule and stop the ongoing unhealthy competition among themselves. Then we will be having two near-strong players,” Olowo advised.

He noted that with a declining fleet size, route expansion would be limited, robust schedule very difficult and down time for maintenance would impact negatively on schedule.Attributing  the local airlines’ problems to lack of policy focus and hostile operating environment, he decried the high charges indiscriminately leveled on the airlines. Charges on domestic airlines include charges on Common User Terminal Equipment, landing and parking charges, passenger service charge, avio-bridge charge, rent and service recovery charge. There are also on-duty card charge, toll access payments, airside operator vehicle permit and electricity charge.

“Airline user charges, for example, are as high as 15 per cent. User charges are revenue collected for other organisations factored into the fare. Also, high cost of fuel, high cost of funds, exorbitant airport rent, and airspace movement charges at home require government serious attention.  On the other hand, poor management decisions and corporate governance by the airlines’ owners have resulted to high mortality rate in the industry,” Olowo noted.

The convener of the periodic aviation industry forum, Olowo stressed that local airlines cannot cope with the charges and the harsh operational environment unless government takes actions to reposition the domestic carriers, which are critical to the economic development of the country.

“The airlines are relatively small, weak and vulnerable to competition. They are faced with so many operational issues without government attention and there is no corporate governance in most of the airlines,” he observed.

(culled from leadership.ng)