Domestic airlines grapple with revenue losses and job cuts, caused by economic doldrums
By Jeph Ajobaju, Chief Copy Editor
Domestic airlines are caught up in a triple whammy of a huge drop in passenger traffic, revenue, and fear of the inevitability of cutting the jobs of skilled and specialised personnel that cost large sums of money to train.
The negative impact of low passenger traffic on income is of great concern to operators as gleaned from Nigerian Civil Aviation Authority (NCAA) data which shows that 8,176,722 people travelled locally by air between January and July 2023 (M7), a 13 per cent drop versus 9,473,813 in M7 2022.
Figures collated by the Federal Airports Authority of Nigeria (FAAN) show a decline in non-revenue and revenue travels at the domestic wing of Murtala Muhammed International Airport (MMIA), Nigeria’s busiest airport.
According to FAAN, MMIA recorded 781,894 (non-revenue and revenue passenger) travels in 2023, against 1,021,429 in 2023, a reduction of 23 per cent.
Passenger traffic through MMIA in M7 totalled 332,817.
Contributing factors
Aviation stakeholders blamed low passenger engagement on factors that include inadequate government provision, rising airfares, poor living standards, and a lack of disposable income, per Vanguard.
Ado Sanusi (Aero Contractors Managing Director)
“The emerging middle class is dwindling. For the average Nigerian, the power to purchase an air ticket is becoming difficult. So, when passengers want to travel from Lagos to Kano or Lagos to Calabar, they have to think twice.
“They will ask: what are they going to do? Can they do it over the phone or via Zoom or over other means of communication without buying tickets? Second, security concerns. People don’t want to travel to other parts of the country for security reasons.
“Tourism is not much done at all because of security concerns. So, that also reduces the number of passengers travelling. The economic downturn has a direct impact on airfares. If naira is not stable, that means your budget as an airliner won’t work.
“Let’s say your budget is $1 to N1,500; tomorrow, it becomes N1,600. That means you have to start looking for where to close the gap of the N100 difference, and that will translate into buying your spare parts, buying the other consumables that you would use to keep your fleet flying, and that will also translate into jet fuel price.
“So, it is directly proportional to the cost of the ticket, but for us (Aero Contractors), we have not seen a decrease on any of our routes. On the contrary, we have seen a very strong load factor which is the number of passengers seated on an aircraft versus the seats available.
“In any business, when you are operating in an environment where the economic conditions are very hostile, very turbulent, you must readjust your operations to suit the environment in which you are operating.
“Inflation is high, the economy is slowing down, economic activities are slowing down. As an airline, you should strategically look at your costs and reduce them. And then strategically place yourself in the environment in which you find yourself.
“With the slow economy and high inflation, it is important to find a common ground on how you can still sell your product while going through the turbulent times till all is clear.”
Olumide Ohunayo (Aviation Safety Roundtable Initiative Secretary General)
“Rather than capitalising and making good use of retainer passengers, we have rather marred them with cancellations, delays and you-can-go-to-hell-attitude. That is why passengers have not increased.
“It is those who have been flying and can afford the flight that are still flying. Let us not misplace these high fares to say we have more passengers. No, it is the capacity that has been reduced. And those who were flying before are the ones still flying.
“Most people, even those who could afford a flight, are avoiding doing so because of insecurity. So, this has generally impeded travel. When you observe road transport, there is more cargo than people because people are no longer interested in travelling. So, it has also affected air transport.
“Rather than have a reduction, it is the same static passengers.
“All efforts by the ART and NCAA in the past to broker a collaboration that could allow passengers who missed their flight or had a delay to go on another airline failed because you can’t legislate it.
“It’s for the airlines to agree and cooperate. However, they have not been able to accept or agree on that, and that has kept passengers in the airport to suffer the menace of delays and cancellations.
“What my organisation, ARTI, has pushed and we are still pushing is that there’s need to legislate and license a new set of airline operators with a lower cap – a lower cap below what we have right now where the present methodology of getting AOL is a bit expensive.
“We are looking at operators that will get in 30-seat aircraft and maybe maximum seats in their fleet should not be more than 120 so they can operate the airports we have called unviable airports.
“When these set of people come in, just like we have it in the United States, Part 135 is for commuter and chartered airlines, while Part 121 is for regular airline operations.
“So, we are looking at that and we should replicate that in Nigeria so that when these airlines come in, they start operating these airports we have also termed unviable. It cannot be done in Benin and Port Harcourt only.
“When you have a 30-seat aircraft, you can easily do short routes and operate the airports. And that will increase more flights, more usage of the airspace.
“You have more professionals now being employed. You have more revenue to the agencies and there is also a good ground of training professionals in the industry.”
Alex Nwuba (Aircraft Owners and Pilots Association of Nigeria)
“Costs are out of control and revenue is below projects as high fares are required to address the revenue gaps naturally resulting in passengers’ resistance and reduced demand. No one is winning. The airlines have not been pressured to fill airplanes due to the reduced capacity being experienced in the industry.
“Less planes are flying due to lack of forex to maintain fleet size, the available aircraft are full, but the only challenge is matching capex and scale.
“The economy is the primary culprit as it is managed by government. The government is the culprit. Rather than provide real solutions, we are managing it via palliatives. It is like drinking free garri once a week and remaining hungry for the rest of the week.
“The economy needs real solutions; Nigerians can’t starve while looking forward to a better future. There must be balance. We need to engage those with viable ideas to contribute to policy, the pattern now is trial and error, reversals and somersaults.”
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