WOLE SHADARE x-rays three key areas of investments that would come under focus this Year as the country could reap over $50bn private sector FDI
$50 bn investment portfolio
Over $50 billion investment is required in Nigeria’s aviation sector to fully unlock its inherent potential for national growth.
Late last year, experts drawn from airline operators, regulatory officers, airport administrators, service providers and analysts, aired their views at a seminar.
They suggested that $50 billion should cover investments that would boost the infrastructure across the nation’s airports, establish a vibrant national or flag carrier with the right aircraft fleet to fly to all the continents of the world, and train the requisite manpower for both operators and regulators.
Chief Executive Officer of RTC Advisory Services Limited, Mr Opeyemi Agbaja, who presented a paper entitled: “Raising Capital to Finance a Vision 2050 Plan” at the event had suggested that with his wealth of experience, the injection of $50 billion into the aviation sector would be the magic wand that would effectively harness the potentials in the sector.
It was the view shared by other participants who said attracting such level of Foreign Direct Investment (FDI) inflows into Nigeria’s aviation would however require a stable macroeconomic environment, forward-looking and proactive policy.
It is clear and compelling vision for the industry shared by all stakeholders including government and the private sector and regulation that seeks to foster industry transformation and not just to collect revenues.
The investment should also span between 2017 and 2050 for maximum benefits to be realised.
Key areas of investments
As expressly stated by experts, key areas government, private sector would be focusing on is airport concession, floating of national airline, and the building of aircraft maintenance facility.
Efforts by past administrations to build a world class Maintenance Repair Overhaul (MRO) had not been successful.
New Telegraph learnt of the alleged complicity past and current administrators of aviation as not being transparent with things concerning the project that should have been up and running since 2013, by trying to annex the MRO project, portray it as their own brainchild and ask for cutbacks to pass the project through any form of approval.
Our investigations led to the revelation that a group, the West African Aircraft Maintenance Repair Overhaul (WAAMRO), were given approval to carry out feasibility study on an MRO, a Public Private Partnership (PPP) project with government acting as facilitator.
It was also learnt that the project coordinators have Aerospace EOMs, AfDB, USEXIM Banks and AFC waiting to put in the funding and financing.
It was gathered that the feasibility study was done and the report was submitted to government in February 2013 and again in August 2015 at the request of President Mohammadu Buhari through former Permanent Secretary Hajia Binta Bello and copied the Nigeria Civil Aviation Authority (NCAA).
The lack of aircraft repair facility over the years has cost airlines and government huge capital flight.
An aircraft engineer recently told New Telegraph that aircraft maintenance on C-check could cost between $600,000 to $1 million and there are other associated costs, including cost of ferrying the aircraft, pilot’s allowances and accommodation and loss of revenues when an aircraft taken overseas stays longer than necessary waiting for slot at the maintenance facility.
“You need to seek the over flight permit of the country. And then, depending on the distance, you have to pay for fuel. But I know it will not be less than $50, 000. You also will have to pay for landing and fueling, which is called technical stop, Ominyi said.
He explained that generally, MROs could charge $600, 000 for C-check, depending on the scope of work, but noted that at the end of the day, the airline may end up paying up to a one million dollars or more because there could be findings that would be beyond what was captured in the agreement in the C-Check and then the airline would have to pay for it.
Spring Fountain Infrastructure Limited in conjunction with the America-based aircraft manufacturing giant, the Boeing, indicated that they plan to invest over $20 billion in the country to set up an aircraft maintenance repair and overhaul centre, spares logistics and facilitate the lease of aircraft for the Nigerian airlines.
Uyo maintenance hangar
As cheering as the idea was to all the participants at the event, the reality dawned on all that the fresh move to invest this whopping sum on a new MRO in the country would have better been invested in an already established MRO base in Ibom International Airport, Uyo in Akwa Ibom State.
One other area that would need to focus on is on area of infrastructure. A private sector infrastructure investment in Nigeria’s aviation sector is envisaged to rise to 48 per cent next year from the current 46 per cent.
A former Managing Director of the Federal Airports Authority of Nigeria (FAAN) Richard Aisuebeogun, said Nigeria requires huge financial resources to be at par with other emerging economies in airports infrastructure development.
Aisuebegun noted that besides a total of $4.4 billion accrued to Nigeria in air transport sector in 2016 from Foreign Direct Investment (FDI); 7.49 per cent of $59.4 billion came to Africa.
His words: “In 2010, $6 billion came to Nigeria’s aviation industry, but started depleting since then due to Nigeria’s non-conducive investment climate. In 2012, it came down to $7.1 billion; 2013 $5.6 billion, while in 2014 it came down to $4.6 billion. It nosedived to $3.6 billion in 2015 and $4.4 billion last year”.
To him, the story of aviation infrastructure in Nigeria was a pitiable familiar tale – until the recent times that government began to take the sector seriously.
Aisuebeogun advised that Nigeria rebrand its airports because of current image, which he termed low, adding that for an improvement in passenger facilitation, security and safety, the only realistic way forward for Nigeria is to improve her airports infrastructure.
“The airport is a gateway to the country and the first impression a foreigner has of a nation. Hence, there must be massive investment in infrastructure,” he stressed.
The expert said he was happy that the present administration is focusing on issues that will rapidly develop the aviation industry within the shortest possible time.
One issue that dominated discourse in 2017 was whether to have a national airline or not. Government has put plans in place but not much has been heard about the project.
The Minister of State for Aviation, Hadi Sirika recently disclosed that the Federal Government has concluded plans to appoint a technical adviser for the proposed national carrier for the country.
The minister told journalists at the end of the Federal Executive Council meeting in Abuja that once the issue of the national carrier is resolved, Nigerians would no longer be at the mercy of foreign airlines as it would bring airfares down. The new national carrier is expected to take off next year.
Sirika also explained that unlike in the past when the Federal Government wholly owned the Nigeria Airways, the planned new national carrier would be run by the private sector with government owning only a paltry five per cent stake. This is not the first time a Nigerian government will moot the idea of having a national airline since the liquidation of the defunct Nigeria Airways some years ago.
Apart from engendering national pride, a thriving national airline will create jobs and partake in the lucrative African aviation sector. Nigeria used to play a leading role in African aviation industry but it appears other less-endowed African countries have overtaken us. We believe that a strong Nigerian national airline can compete globally as well. We have done it before and we can still do it again.
Therefore, the plan to appoint a technical adviser on the project shows that government wants to get the best out of it.
However, we advise that government should do proper homework and consider the pros and cons of such venture at this point in time. Government can also study other models that have worked for other countries as well.
AIS authorisation: All motion, no movement
Since 1998, it has been more of rhetorics than actualisation of yet-to-be-completed Aeronautical Information Service (AIS) automation. WOLE SHADARE writes that the project may end up as another white elephant project
Today, we live in a world in constant motion where time and information are becoming more precious. No one wants to lose a minute at doing nothing. It is by integrating this reality that the International Civil Aviation Organisation (ICAO) is developing daily, the critical role of AIS to meet global challenges.
The objective of the AIS is to ensure the flow of information necessary for the safety, regularity and efficiency of international air navigation. When completed, it will enhance air to ground and ground to ground information and boost interconnectivity between aircraft and air traffic controllers.
The AIS is installed in 11 locations and is planned to go on stream at the end of the year but would connect every part of the country by the end of 2017.
To achieve success, all the key agencies or data originators including the Nigerian Civil Aviation Authority (NCAA), Federal Airports Authority of Nigeria (FAAN), Nigerian Meteorological Agency (NIMET), Accident Investigation Bureau (AIB), Nigerian College of Aviation Technology (NCAT), National Emergency Management Agency (NEMA), Nigerian Air Force, etc would need to enhance their data collation, origination, processing, storage and exchange system.
Other deliverables, according to the NAMA boss, would include the enhancement of e-NOTAM, e-Flight Planning, e-AIP, e-TOD, e-Charts, e-Flight briefing and also boost capacity for voice and data communication for both air to ground and ground to ground communication. ICAO Annex 15 states that the AIS shall use automated pre-flight information systems to specify that pre-flight information must be made available at each aerodrome /or heliport normally used for international operations.
This includes all aerodromes/ or heliports designated for regular use by international commercial air transport as listed in the relevant ICAO regional plans and any aerodromes/ or heliports serving as alternates to these regular aerodromes/heliports.
The greatest challenge now lie with the NAMA, the NCAA, aviation institutions especially, the NCAT to accelerate the rate of AIS development to keep abreast of the new requirement arising from global demands as Nigeria cannot afford to continue to queue behind surrounding smaller African countries.
Nigeria has over the years remained stagnant with the automation of AIS. While Nigeria has remained stuck in the same position, many have or are moving towards Aeronautical Information Management (AIM).
The aeronautical information/data based on paper documentation and telex-based text messages cannot satisfy anymore the requirements of the ATM integrated and interoperable system and therefore the AIS is required to evolve from the paper product-centric service to the data-centric aeronautical information management (AIM) with a different method of information provision and management.
For that purpose, ICAO has developed a roadmap to reflect the importance of the evolution and to address the required changes and is being referred to as the transition from AIS to AIM.
The roadmap identifies the major milestones recommended for a uniform evolution across all regions of the world, the specific steps that need to be achieved and timelines for implementation.
The transition to AIM will not involve many changes in terms of the scope of information to be distributed. The major change will be the increased emphasis on data distribution, which should place the future AIM in a position to better serve airspace users and ATM in terms of their information management requirements.
It would be recalled that the global aviation regulatory body, ICAO had since 1998 sensitised all contracting state on the need for the services of AIS to be automated. Ever since 1998 in Nigeria, it has been more of hearing and reading on the pages of newspapers of AIS automation and it yet to be completed.
In the last five years, a lot of progress had been made in this regard. Before now, fund had been the recurrent impediment of this project. However, since 2016, the story has changed. Immediate past President of Aeronautical Information Management Association of Nigeria (AIMAN), Mr. Shittu Babatunde, stated at the just concluded delegate conference/World AIS Day Celebration held in Ibadan, Oyo State last weekend that he was at a seminar in 2015 where he said they were told not to expect the completion of the project even in 2017.
His words, “That has come to pass. At the user’s end of AIS nationwide, the effect of the project is yet to be seen in our day-to-day operations. While we appreciate the progress so far made by the Ministry, NCAA and NAMA management in this regard, I appeal to once again the Federal Government to see that this project does not become an elephant project”. Not a few are impressed. The international world is not going to wait for the country.
The world is now transiting to System Wide Information Management (swim). November 2015 was the deadline for contracting states to implement Electronic Terrain and Obstacle Data (ETOD), which is far more expensive than the automation and Nigeria is yet to start this.
A must-do for NAMA
Managing Director of NAMA, Capt. Fola Akinkuotu reiterated that the agency is aware of the critical deliverables of the Aeronautical Information Management (AIM) project such as the enhancement of e-NOTAM, eFlight Planning, e-AIP, e-TOD, e-Charts, e-Flight briefing and so on.
He said given that the digitalisation represents migration to a dynamic data-oriented aeronautical information management system that facilitates the real-time exchange of aeronautical information in an accurate and standardised format from anywhere to everywhere globally, “the automation project is a must-do for NAMA.”
He said notwithstanding the scarce resources, NAMA would leave no stone unturned to ensure that the AIS Automation process remained on course and completed. The NAMA helmsman lauded staff of the AIS department for their diligence, hard work and dedication to duty.
AIS remain one of the most critical departments in the agency even though they are hardly given the prominence they deserve, because their job most often, is behind-the-scene. The absence of AIS in the system will bring about chaos in the entire civil aviation.
Tourism-transport summit garners support from aviation agencies
Aviation agencies have expressed commitment to participate in the Tourism Transport Summit/Expo being anchored by the Institute of Tourism Practitioners (ITP) for the Ministries of Transportation and Ministry of Information, Culture and Tourism.
Agencies such as Nigerian Civil Aviation Authority (NCAA), Nigerian Airspace Management Agency (NAMA), Nigerian Meteorological Agency,Nigerian College of Aviation Technology (NCAT), Zaria and the Accident Investigation Bureau (AIB) will participate in the summit with theme: ‘Tourism and Transportation: The Key Sectors for Sustainable Resilient Growth and Development’.
In a statement signed by the organizers of the event, Institute of Tourism Practitioners (ITP), the two-day summit is the first edition in a series to be organized annually and is scheduled to hold at the International Conference Centre (ICC), Abuja from 21st – 22nd May, 2018.
The statement highlighted that transportation and tourism is predicted to be one of the world’s highest growing sectors in the new century, creating more jobs and increasing the Gross Domestic Product (GDP) of most countries of the world.
The organizers stated that the Summit and Expo are created to build strong synergy and chart the way forward to grow and enhance the two sectors. Other Sub themes of the Summit that includes Potentialities of Developing Regional Inter-Connectivity in Transportation and Inter-Modal Connectivity, Traveler Safety and Security; Licensing Regulations and Oversight–Meeting the International Standards for Sustainable Development of the Transportation and Tourism Industries; and Building Capacity for Global Best Practices in the Tourism and Transportation Sectors.
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)
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.
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.
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.
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.
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”.
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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