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Airport concession, MRO, national carrier top aviation investment haven

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Airport concession, MRO, national carrier top aviation investment haven

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.

Feasibility study
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.

Airports rebranding
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.

Technical adviser
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.

Last line
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.

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  1. Pingback: Airport concession, MRO, national carrier top aviation investment haven | The home of all your replacment parts needs!

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