Monday, 29 April 2013

Stakeholders urge merger of Nigerian airlines to survive

FOR Nigerian airlines to survive in the face of harsh economic reality, they have been told to shun the stand-alone ideology, as the idea is no longer realistic.

That was the verdict of experts from Europe, United States and Nigeria at the Nigerian Aviation Summit, with theme: “A dozen world airlines…Nigeria challenges”, held in Lagos at the weekend.

They explained that all over the world, bigger airlines are merging, forming alliances to remain in business and helping one another as global airline business has become competitive.

African airlines, particularly Nigerian airlines, are in serious financial dire straits as they are bogged down by heavy debts, harsh operating environment and sometimes, government’s policies that are not favourable to them.

The carriers’ precarious situation forced the Central Bank of Nigeria (CBN) to organise a N100 billion worth of rescue operation the airlines have not repaid.

The Managing Director of Sabre (Nigeria), Mr. Gabriel Olowo; Director of Studies, European Centre for Advance and Professional Studies, University of Cambridge and Chairman, Sabre Nigeria, a global distribution system for airlines, Dr. Anthony Kila and Director, Europe, Middle East and Africa for Sabre, Soroya Nosworthy, affirmed that Nigerian airlines urgently need to get out of the doldrums if they are to remain in existence in the next decade. They noted that African airlines are too small and fragmented, adding that they need to consolidate to remain afloat.

In his presentation, the Chief Executive Officer of Landover Aviation, Captain Edward Boyo, lamented that the growth of Nigeria’s economy does not reflect in the number of airlines in the nation’s domestic market.

Boyo, who was represented by the Executive Director of his firm, Mrs. Aduke Atiba, said in the past 10 years, there has been an average of 10 domestic airlines in operation at any particular time, with an average fleet capacity of about 10, adding that, ‘Today, there are only about seven licensed airlines operating in Nigeria”.

A breakdown shows that Arik has the largest fleet with 23 airplanes with 30 destination; Aero Contractors with 12 aircraft operating 12 destinations; Overland Airways, seven airplanes servicing six destinations; IRS, five aircraft with three destinations; Dana four aircraft with three destinations.
Others are Medview Airlines with three aircraft and four destinations and Chanchangi Airlines has three airplanes servicing two destinations. This brings the total fleet of these carriers to 57.

His words: “These aircraft owned by Nigerian airlines put together do not add up to the fleet individual airlines in the U.S., Europe or Asia. Nigeria also has no record of mergers till date. Closest examples of cooperation is the interline agreements, an attempt among now defunct airlines”.

According to him, Nigeria’s population is projected to hit 170 million by the end of 2013; with Malaysia, Indonesia, Nigeria and Turkey touted could be the next big investment opportunity.
He posited that Nigeria’s economic growth averaged 7.4 per cent over the past decade and remains robust now at about six per cent.

With this growth, he regretted that less than 10 per cent (representing 15 million passengers) of the country’s 160 million population currently fly.

Boyo disclosed that mergers would help Nigerian airlines to grow and expand, increase market share, increase credit worthiness and bargaining power, enhance image and market perception, encourage the chance of the merger to take on bigger markets, among others.

Speaking in the same vein, President, Aviation Round Table (ART), Captain Dele Ore, noted that the problem of the nation’s aviation industry “stems from inappropriate, not well-thought-out and inconsistent policies of government. Solutions to these problems, therefore, become feasible only with much needed to be newly formulated policies”.

The aircraft pilot averred that the existing, “Aviation Policy cannot take us to the Vision 2020:20 projects of the country and, therefore, a new Aviation Policy Framework capable of serving Nigeria in the 21st Century must be put in place urgently”.

Source: The Guardian

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