By Chinelo Obogo, [email protected]
During a recent meeting with the National Association of Nigerian Travel Agents (NANTA), the Director General of the Nigerian Civil Aviation Authority (NCAA), Capt. Chris Najomo, said that a substantial decline in operational aircraft is one of the major reasons why domestic airfares has continued to skyrocket.
He said Nigeria’s domestic air travel boom is straining the industry’s capacity and this surge in passenger traffic has exposed gaps that need to be filled to meet demand and the high airfares are a symptom of this capacity shortage. He called for urgent action to bridge the gap, lower fares, and improve service quality and is encouraging investment in the domestic airline market to achieve these goals.
At the time he made this assertion, Dana Air had been grounded over safety violations, and on July 30th, the Minister of Aviation and Aerospace Development, Festus Keyamo, directed that three aircraft belonging to Arik Air be grounded following a judgment by a Federal High Court sitting in Abuja which ordered the sale of the airline’s aircraft to offset the $2.5 million debt owed to Mr. Arthur Eze by the founder of Arik Air, Johnson Arumemi-Ikhide.
Grounding of airlines’ fleet
Some experts are of the view that the grounding of Dana Air and the seizure of Arik Air aircraft significantly impacted the sector and led to a decline in operational aircraft. While some argue that the reduced number of aircraft created a capacity shortage, leading to higher ticket prices, others believe that economic challenges, such as foreign exchange shortages and high operating costs, are the major culprits.
Aviation unions, including the National Union of Air Transport Employees (NUATE), Air Transport Services Senior Staff Association of Nigeria (ATSSSAN) and the National Association of Aircraft Pilots and Engineers (NAAPE), in an open letter to President Bola Tinubu, which was signed by Ocheme Aba; General Secretary, NUATE, Frances Akinjole, Principal Deputy General Secretary, ATSSSAN and Olayinka Abioye, General Secretary, NAAPE, raised concerns about the impact of these actions on over 2,000 direct staff and their dependents. They warned of economic hardship for numerous industry stakeholders.
In the letter, they said: “Under the current severe socio-economic upheavals, throwing such large number of citizens into economic quagmire can only worsen the forbearance strains. This is apart from losses of the other third party vendors and service providers – airports, aviation agencies, ground handlers, fuelers, caterers and many more. This will also have a significant negative impact on the earnings of aviation agencies.
“Against the background of the negative consequences of the earlier similar grounding of Dana Air for which the industry is still counting the losses, we consider this avoidable situation to be truly worrisome.”
The President, Aircraft Owners and Pilots Association (AOPAN), Dr. Alex Nwuba, echoed these concerns, emphasising the impact on air travel, particularly during peak seasons. He told Daily Sun that the removal of over 2,000 daily seats from the market by Dana and Arik significantly impacted air travel, particularly during the peak season when demand was high and the imbalance was one of the factors that drove up airfare prices.
“Dana and Arik removed over 2000 seats daily from the market and it had a significant impact on supply. However, this is the summer travel period and demand has risen. The basic law of economics states that prices will rise and generally add to the already double- digit inflation. Airplane seat costs and aircraft cargo space affect the prices of goods in the market, so the impact was negative,” he said.
The national president of NAAPE, Galadima Abednego, told Daily Sun that there was no way the grounding of Dana Air and the confiscation of aircraft belonging to Arik Air would not have impacted travel.
“The grounding of Dana and the confiscation of aircraft belonging to Arik Air diminished the capacity of domestic airlines and definitely had an impact on passengers negatively in terms of higher ticket prices, flight disruptions and cancellations. The few airlines that still have operational aircraft frequently cancel their flights or delay them beyond even two hours,” he said.
But aviation expert, Amos Akpan, offered a contrasting view. He suggested that the decline in operational aircraft is more linked to economic challenges than a capacity shortage. He told Daily Sun that he doesn’t believe the grounding of Dana Air by the regulatory agency and the confiscation of three aircraft belonging to Arik Air, automatically meant a higher demand for air travel than there is passenger traffic. He says the decline in domestic airlines’ aircraft is due to challenges like foreign exchange shortages, high interest rates, and increased operational costs. Akpan highlighted the need for data-driven analysis to accurately assess the situation.
Akpan also says that the question of whether there’s a genuine capacity shortage on domestic routes is complex as peak-hour demand doesn’t necessarily reflect capacity needs. He points that morning flights which is usually 7-8am between Lagos and Abuja often operate at full capacity while airlines adjust flight schedules throughout the day to maximise profit.
“Airlines aim to optimise aircraft utilisation across the entire day, not just during peak periods. We should focus on finding solutions for peak-hour congestion rather than assuming a general capacity shortage,” he says.
Solutions
Nwuba said there are multiple solutions to the challenges faced by domestic airlines. First is that he says the Federal Government, through agencies like AMCON and the Ministry of Aviation, could provide financial support to Arik in various forms.
“There are many solutions. The FG, which is both AMCON and the Ministry, can provide closely guarded financial assistance to Arik. In the case of Dana, the identified issues need to be speedily resolved to save jobs in both cases and improve the market conditions. This is how we should be thinking, not just sitting and waiting for magical outcomes,” he said.
Galadima said that to strengthen our local airlines, robust policies that ensure a consistent fleet of operational aircraft are needed. He advocates for strong and efficient Maintenance, Repair, and Overhaul (MRO) facilities which he said are crucial to improve aircraft turnaround times as the current situation where many airlines send their aircraft abroad for maintenance, significantly hinders their operational capacity.
“Building airline capacity to attract investments and secure leases is paramount. The industry’s high trust deficit, exacerbated by uncertainties, has impacted our ability to obtain leases from international partners. These challenges collectively threaten the industry’s survival. Our primary focus should be on airline sustainability, as their success directly correlates with the industry’s overall health,” he said.
To accurately assess capacity and proffer solutions, Akpan told Daily Sun that the industry needs data on passenger demand and airline capacity for each route which will help identify gaps and plan strategically.
“Airline pricing is influenced by factors like operating costs and demand. Peak-hour fares are often higher to offset losses during off-peak times. We need data to determine if capacity is truly insufficient or if other factors, like operational costs, are driving up fares. We need data-driven analysis to understand the true capacity situation. Focusing on solutions for peak-hour demand, rather than assuming a general capacity shortage, is essential for the industry’s growth,” he said.
Relief for Arik Air
Arik Air was able to get some reprieve following the intervention of the the Minister, AMCON, the management of the airline (in receivership) and stakeholders in the industry.
The Chief Executive Officer of the airline, Capt. Roy Ilegbodu, said in a statement on August 8, that the airline has resumed its flight operations.
“Arik Air is excited to announce that we have today, August 8, 2024, resumed our flight operations. During our brief pause, we have been dedicated to ensuring a smooth and seamless return to service, preparing to welcome you back
“We extend our gratitude to all the stakeholders who played a crucial role in resolving the recent impasse. Your support and cooperation have been instrumental in our return to the skies,” he said.
