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.
Threat amid runway risks
With every tragic high profile crash, the general public’s feeling about airline safety takes a punch. WOLE SHADARE writes
The recent incursion of Akure airport runway by cows that prevented Air Peace aircraft to delay landing for about 20 minutes has again brought to the fore the need to improve aviation safety through ensuring that airport runways are clear of obstruction.
A runway incursion is an incident where an unauthorized aircraft, vehicle or person is on a runway. This adversely affects runway safety, as it creates the risk that an airplane taking off or landing will collide with the object. It is defined by the International Civil Aviation Organisation (ICAO) as any occurrence at an aerodrome involving the incorrect presence of an aircraft, vehicles or persons on the protected area of a surface designated for the landing and take-off of aircraft.
While aviation has been getting safer of late, runway incursions by aircraft or vehicles remain a weak spot. After all, during each flight, the passengers literally put their lives in the hands of complete strangers.
Although general aviation accidents have been decreasing over the past few years, incursions with all dangers attached to them have been increasing at an alarming rate. It is merely a matter of time for these incursions to become tragic accidents. Last week Saturday, scores of cattle made incursion into the runway of the Akure Airport, in Ondo State, preventing an Air Peace flight, which left Lagos for Akure from landing immediately until they were dispersed by security men.
March 8, 2011, the Hawker 850 aircraft carrying the then Vice-Presidential candidate of ACN, Mr. Fola Adeola, experienced scenario of runway incursion by goats and sheep at Bauchi airport.
Sources at the airport said the incident, which has become a regular feature at the airport premises occurred around 12:00 am, causing initial disturbance to the airline and passengers, forcing the former to hover mid-air for some minutes.
“The herdsmen foraged into the runaway causing some disturbance and preventing the aircraft from landing around 11:30am. The incident lasted for about 10 minutes until Aviation Security personnel, (AvSec), arrested the situation,” a source at the airport told New Telegraph.
Rising to the occasion
The management Air Peace said that flight P4 7002 from Lagos had to delay landing into Akure Airport when the pilot-in-command sighted cows on the runway at about 12.15pm. “On being alerted by control tower, aviation security personnel of the Federal Airports Authority of Nigeria (FAAN AVSEC) quickly intervened and cleared the runway. “The flight was eventually cleared to land after about seven minutes.
Our guests on board were all calm while the delay lasted. The aircraft departed for Lagos at about 11.06 with full escort from FAAN security personnel. Confirming the incident, Air Peace Corporate Communications Manager, Mr. Chris Iwarah said: “We confirm that flight P4 7002 from Lagos had to delay landing into Akure Airport today (Saturday) when the pilot-in-command sighted cows on the runway at about 12.15pm.
“On being alerted by control tower, aviation security personnel of the Federal Airports Authority of Nigeria (FAAN AVSEC) quickly intervened and cleared the runway.
“The flight was eventually cleared to land after about seven minutes. Our guests on board were all calm while the delay lasted. The aircraft departed for Lagos at about 1.06 with full escort from FAAN security personnel.”
Last week’s incident is reminiscent of what happened in 2005 when Air France plane, with 196 people on board, ploughed into the cows as it touched down at Port Harcourt.
No-one on board was hurt, but the collision left seven cows dead and the runway was soaked with their blood. The embarrassment led to the Minister of Aviation at that time, Mallam Isa Yuguda to summon airport officials to explain the security breach.
Runway incursions are today one of the major factors affecting flight safety. In India, there are numerous cases of small accidents involving runway incursions every year, with the potential always present for a major disaster, such as the Tenerife airport collision on March 27, 1977, when two Boeing 747 passenger aircraft collided on the runway of Los Rodeos Airport (now known as Tenerife North Airport) on the Spanish island of Tenerife.
A total of 583 passengers died in that incident, making it the deadliest accident in aviation history. Even if accidents are avoided, incursions often cause costly flight delays.
Animals on the Runway
Animals on the runway are a particularly pervasive problem at many airports in India. There are numerous examples. In 2005, an aircraft taking off from Pune International Airport ran over a stray animal, which resulted in a two-hour delay for flights.
In 2008, an Air India aircraft narrowly escaped accident when it hit an Indian blue bull during landing at Kanpur Airport in Uttar Pradesh. Also in 2008, a Kingfisher Airlines aircraft hit a stray dog on the runway at the HAL Bangalore International Airport, resulting in the aircraft’s landing gear collapsing.
The aircraft skidded off the runway and its nose collapsed; four passengers were injured. Maharashtra Chief Minister Prithviraj Chavan recently ordered an Airport Environmental Committee (AEC) enquiry into the recurring mishaps – hundreds every year – caused by stray animals on the runway at Babasaheb Ambedkar International Airport in Nagpur.
Perimeter absence at most airports
The absence of perimeter fences at most of the country’s airports has always posed a challenge to FAAN because of the huge capital outlay required in constructing perimeter fences, some of which are as long as 40 kilometres, across the 22 network of airports across the country. Some of the perimeter fence projects commenced in 2014 while the remaining ones were expected to be executed in 2015.
Bushes around the runways, particularly, airports that are not busy like the Akure, Ibadan, Jigawa and many others that were built by state governments but forced down the throats of FAAN, do not give full view of the perimeter, to allow both the control tower, FAAN Fire and Rescue observation posts and aviation security patrol teams have a sweeping view of the entire perimeter of an airport from their duty posts.
Static observation posts are yet to be erected at strategic locations within the perimeter fence of many of the airports to forestall premeditated and inadvertent unauthorized access to the airside.
What will really put the fear of flying into the hearts of passengers is when they personally experience an incident on the runway. Safety first is at the core of flight crew and air traffic control alike, still runway incidents and accidents keep occurring.
Gulfstream G500 Jet launches in Nigeria
The all-new Gulfstream G500 business jet made its Nigerian debut this week, with Gulfstream Aerospace Corporation’s senior executives visiting Nigeria to give current and potential customers an opportunity to experience first-hand the new aircraft’s cutting-edge technology, unparalleled comfort and superior craftsmanship.
The Gulfstream G500 business jet was on display for private viewing at the ExecuJet Terminal of the Murtala muhammed International Airport in Lagos on February 16 and 17. At a networking event attended by senior leaders from diverse sectors of the Nigerian economy, Commercial Counsellor Brent Omdahl, according to a statement, reaffirmed the strong economic ties between the United States and Nigeria.
“The U.S. Foreign Commercial Service continues to facilitate long term business relationships between companies from the United States and Nigeria. We are excited to welcome this stellar group from the Gulfstream Aerospace Corporation to share their experience and expertise with Nigerian business executives,” Omdahl said. Private aviation is a growing industry in Nigeria, which is home to more than 20 Gulfstream business aircraft, most of them large-cabin, long-range jets capable of connecting companies and business owners with their corporate interests around the globe.
The Gulfstream G500, for example, can fly 8,149 km at nine-tenths the speed of sound, easily carrying passengers from Lagos to London or Moscow. At Mach 0.85, the aircraft can travel 9,630 km, linking Lagos with Caracas or Mumbai.
Long road to national carrier
Anxiety mixed with uncertainty could best describe the slow pace of work to establish a national airline. WOLE SHADARE writes
Can Nigeria pull this through? Many are very desirous of a national airline for Nigeria but the slow speed of actualising the dream is beginning to dampen the spirit of many who thought by now, the issue of a national carrier would have been put to rest.
Just last weekend, Minister of State for Aviation, Hadi Sirika rekindled hope that in the next couple of months, “we should be closer to having a national airline. He noted that the country was very close to getting a national airline.”
Luthansa project flops
The Lufthansa saga seriously looked as if the entire project had collapsed before it even took off, leading to insinuations in some quarters that the government was not serious about one of the key things it promised to do in 2015.
Lufthansa Consortium’s contract that was expected to mid-wife a national carrier was terminated with the government explaining that the decision was taken in the best interest of the nation.
The minister alleged that the firm changed the term of contract it had with the government by demanding that aside asking for 75 per cent of N341 million upfront payments, which he said was not in line Nigeria’s procurement law, also alleged that the firm wanted the money to be converted to Euros, which was also not acceptable to them.
His words, “What transpired at the Federal Executive Council (FEC) meeting, which I explained very clearly is that we substituted Lufthansa Consulting as part of the consortium to provide transaction advisory services for the establishment of a national carrier.
“The reason is very simple and clear. We thought that Lufthansa Consortium is an arm of Lufthansa Airline Group and this may compromise the process. They might be interested party latter in the day of this procurement and this may compromise the system. We want it to be transparent, as fair and equitable as it should be.
“They wanted about 75 per cent to be paid of the sum ab nitio and this is not in line with procurement laws. The contract was in Naira N341million but they wanted to change it Euros and this was not acceptable to us. This was neither in our request for proposal. What we did was there were many in the consortium; we substituted them with another company that is even fair, that is no appendage to any other company that might be interested. So, they are more of a neutral company to take over the place of Lufthansa “, he added.
Although, Lufthansa Consortium is yet to speak on the matter, a source close to the firm said it has a reputation that would not want to be tarnished because of the way the Federal Government went about the whole bidding process which was less than transparent.
Many, who spoke to New Telegraph, said the failure of flag carriers in Nigeria has made the government to look inwards with a view to making air transport easier for the teeming Nigerian public who have been short-changed over the years with bad services, unreliable schedule and many other customer related problems.
Many flag carriers have collapsed over the years. Many do not know where to turn to. While the lamentation continues, foreign airlines have perfectly filled the void and providing seamless air travel needs to very mobile populace.
While airline collapses have become commonplace with Aero and Arik going under during the past few years, the loss of flag carriers is a frequent phenomenon.
For sure, we ‘ve seen high profile bankruptcies; Arik and Aero immediately come to mind. But in both cases, the government worked hard to get them rescued.
Both Rwanda and Zimbabwe are good examples of why small countries need their own airlines. Big nation such as Nigeria needs it more than ever before.
With not enough space on the tarmac for a host of home-grown competition, countries need their own airlines to stimulate trade, boost tourism and in many cases, assert their sovereignty.
Conventional wisdom suggests that states have no business running airlines. Indeed, the past few decades have seen most major economies sell their flag carriers to other airline groups or list them on the local bourse-often keeping minority stakes for sentimental purposes. The results have been mixed, at best.
An aviation consultant, who spoke on condition of anonymity, said he also believes there’s a need for the governments to offer essential services to their citizens. In the case of countries with small populations or lacking strategic hubs, this also means underwriting the national airline.
Consultants might argue that this is wholly unnecessary, as other airlines will swoop down to soak up demand. But there is considerably more at stake than just ensuring every flight boasts 80 per cent load factor. On a good day, a national airline is an embassy with wings-transporting culture, cuisine, commerce and goodwill around the world.
Ethiopian Airlines is a flying example of resourcefulness and ingenuity. A flag carrier that instils a sense of pride when its tail is spotted on the runway of a far-off land; when it brings home the winning team or when it flies out of to evacuate citizens stranded in a conflict or disaster zone.
In an increasing globalised world, smart governments recognise the importance of having their flags fluttering on as many routes as possible. It is a mileage that certainly hasn’t been lost on Singapore, whose government owns the highly respected Singapore Airlines, or Dubai, home of Emirates. In both cases, these small states have made their airlines part of their national identity and growth strategy.
As governments around the world continue to tighten their belts, they also have the to remember there are some things you simply have to protect such as education, national security, banks and infrastructure are fundamental. An airline to call your own is also useful to get your citizens around the world and bring in visitors to invest and marvel at your achievements.
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