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Airlines jostle for Nigeria’s recovering domestic market

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Airlines jostle for Nigeria’s recovering domestic market

Many airlines have applied for operating licences, but majority fell by the way side even before they started, while others are at the verge of scaling the hurdles. WOLE SHADARE examines the projected over-capacity on the route if eventually the carriers get their Air Operator Certificate (AOC)

 

Enthusiasm

They came with the hope of getting the all-important AOC. The tedious process had made many of them to fall by the way side. That is the fate of over 26 prospective airlines that were eyeing the domestic aviation market.

 

A total of 32 airlines made up of scheduled and non-scheduled operators are currently listed as holding AOC and are on the register of the Nigerian Civil Aviation Authority (NCAA) as at January 10, 2017 till date.

 

Airlines are categorised into scheduled and non-scheduled on the strength of the type of operations they carry out. A scheduled flight is a trip by airplane that has been planned for a certain time and date. Airlines sell tickets for scheduled flights to help travellers get from one destination to another.

 

The eight airlines that operate scheduled passenger operations are Aero Contractors, Arik, Overland Airways, Medview, Dana, Air Peace, AZMAN and First Nation Airways. A country’s civil aviation authority gets the power to issue AOC to an aircraft operator to allow it use aircraft for commercial purposes.

 

This requires the operator to have personnel, assets and system in place to ensure the safety of its employees and the general public.

 

The certificate lists the aircraft types and registrations to be used, for what purpose and in what area – specific airports or geographic region.

 

Meanwhile, two of the airlines, out of the 32, ceased to be regarded as airlines, owing to the expiration of their certificates.

 

 

Carriers with active AOC

 

The 30 other airlines with active AOC are Aero Contractors with AOC number CAN/ AOC/12-12/08 valid till January 1, 2019, Allied Air AAL/AOC, 07- 13/003 valid till July 30, 2017, Air Peace APL/A0C/09-14/001 valid till September 7, 2018, Arik Air RIK/AOC/07-10/01 valid till July 11, 2018, Associated Aviation ASS/ AOC/06-15/001 valid till May 31, 2017.

 

Azikel Air AZK/AOC/07-16/001, AZMAN Air AAS/AOC/05-14/002, Bristow Helicopters BHL/AOC/12- 14/002, Caverton Helicopters CH/ AOC/11-14/001, Dana Airlines DAN/ AOC/11-1808/01 and Dornier Aviation DAA/AOC/06-15/002.

 

Others are Executive Jet Services ELS/AOC/03-15/002, First Nation FNA/AOC/10-11/02, Gyro Air Limited GAL/AOC/10-16/001, HAK Air HAK/AOC/04-12/001, Izy Air IZY/AOC/12-15/001, Jed Air JED/ AOC/06-13/002 and King Airlines AAX/C/024.

 

Also included are Max Air MAX/ AOC/06-13/001, Medview Airline MVA/AOC/03-14/001, OAS OAS/ AOC/03/14/002. Others are Overland Airways OAL/AOC/03/14/001, Pan African Airlines PAN/AOC/12-14/001, Skybird Air SKYBIRD/AOC/04-13/08, Skyjet Aviation Services Limited SKL/AOC/12-12/07, Skypower Express Airways AAR/C/018 and West Link Airways WLA/AOC/02-11/002.

 

Also on the list are Nestoil Plc NOL/AOC/03-15/002, OMNI BLU Aviation Limited OBA/AOC/12-15/002 and Top Brass Aviation Limited TBA/ AOC/11-11/03.

 

 

Hurdles

 

Spokesman for NCAA, Mr. Sam Adurogboye, disclosed that there were five phases an airline underwent before completing the certification process and many airlines faltered on the way.

 

There is the pre-application phase – when the airline makes enquiry about the processes, followed by the document compliance phase, which involves a certification team reviewing applicant’s documents for compliance acceptance/approval.

 

The others are AOC process, also called demonstration and inspection phase, which involves evaluation by a certification team and applicant’s demonstration of compliance evaluation of management effectiveness, inspection of station(s) facilities, flight operations, maintenance and records.

 

The next is called certification phase, which allows the intending operator for approval of AOC and Operation Specification with coordination with Director for Safety Oversight and DG NCAA.

 

 

Determination

 

While some have fallen by the wayside, others are forging ahead in processing their AOC. There are fears that there would be over capacity on a lean domestic air travel market if some of them succeed in seeing through the process that could land them the licence to operate. They would be jostling for a small air market of about 10 million passengers annually.

 

Many of the routes are very unviable except for the triangular routes of Lagos-Abuja and Port Harcourt and to a large extent, Enugu.

 

A leading airline official said it doesn’t add up in situations where airlines in a bid to woo passengers will have to charge airfares in naira that are as low as N18, 000 to N22, 000 on routes where you fly for almost 45-50minites.

 

“That’s already like running at a loss. In the United States, no airline does a 50 -60 minutes flight and charges $60 (about N25,000), which is what the airlines are doing right now in Nigeria,” he added.

 

 

Backlash fear

 

Fearing a public backlash should they come out openly to announce increase in air fares, most airlines have opted to such subtle measures as raising fares on competitive routes (such as the Lagos, Port Harcourt and Abuja) or those routes that they enjoy a sort of monopoly, while lowering fares on those with fewer number of passengers.

 

“We do aircraft maintenances in dollars, buy spares in dollars, pay for insurance in dollars, and even buy fuel in dollars. What the CBN supplies is still not sufficient for us. Most of us still get dollars at the parallel market. And by the time we are converting earnings in naira into the dollars, it becomes very obvious in simple economics that the current fares have to go up by more than 60 per cent if airlines must continue to fly and be profitable,” said an airline’s spokesman.

 

“To be honest, the cheapest or most realistic fare Nigerians should be paying on any route within the country should be N40, 000,” he added.

 

 

Expert’s perspective

 

Former Commandant, Murtala Muhammed Airport, Group Capt. John Ojikutu (Rtd) said, “Let us be honest, the Nigerian domestic airlines cannot be selling passenger flight tickets at N25,000 to Abuja if the dollar is selling at N360 to $1, the same price it was selling two years ago when dollar was at N200 to $1.”

 

“The present cost of aviation fuel, the high operational cost cannot justify the air fare of N25,000 for an hour flight anywhere in Nigeria. The high operational cost also cannot be sustained except the airlines short change service providers and the supporting agencies or there are inflows of cheap monies coming from sources to sustain their operations”.

 

 

Last line

 

New entrants would be worst hit because the current ticket prices are not in sync or responsive to current realities and this is due to unhealthy price wars and pursuit of market dominance at the domestic side of airline business.

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  1. Pingback: Airlines jostle for Nigeria’s recovering domestic market — New Telegraph - Naijaray Headline

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