THE crisis plaguing the aviation sector has worsened, exacerbating the country’s economic woes. With jet fuel prices skyrocketing and flights being grounded and disrupted, the situation has never been worse. Because many of Nigeria’s highways and train routes have been made unsafe by terrorists, the transportation system is in trouble, fueling inflation and disrupting business and social activities. The federal government must think outside the box and find sustainable solutions.
Worse, unable to repatriate their dollar earnings and other restrictive conditions, international airlines are cutting flight frequencies to the country or suspending flights outright.
Sold so far for less than N300 a liter, jet fuel is now an outrageous N900 a liter and there is no respite in sight for the beleaguered operators. Airfares have subsequently been priced out of the reach of many. This has had a negative impact on businesses and dealt a major blow to the struggling economy.
Operators say the ongoing scarcity of jet fuel and forex, which has forced some airlines to shut down, will lead to further job losses and dwindling capacity. Typically, the president, Major General Muhammadu Buhari (Retd.), and his aviation minister, Hadi Sirika, have no effective response.
The liquidity crisis in the dollar has further aggravated the situation. According to the International Air Transport Association, about $600 million in foreign airline revenue is tied up in Nigeria. Emirates, unable to repatriate its $85 million revenue, has cut its flight frequency to Nigeria. All flights there will also be suspended from 1 September. This exacerbates the crisis. The job of the Central Bank of Nigeria is to solve the liquidity problems and facilitate the repatriation of stalled income.
The benefits of the aviation sector for the economy cannot be overemphasized. IATA data offers an illuminating perspective on the importance of air transport; from jobs to the flow of trade, tourism, investment and connections between cities.
Airlines, airport operators, airport enterprises (restaurants and retail), aircraft manufacturers and air navigation service providers employ 20,000 people in Nigeria. By purchasing goods and services from local suppliers, the sector supports an additional 35,000 jobs. In addition, it is estimated to support an additional 16,000 jobs through the wages it pays its employees, which are then largely spent on consumer goods and services.
Foreign tourists who arrive in Nigeria by air and spend their money in the local economy also support an additional 169,000 jobs. A total of 241,000 jobs are supported by air transport and tourists arriving by air. Research shows that the air transport industry, including airlines and the supply chain, adds $600 million to Nigeria’s GDP. Expenditure by foreign tourists supports another $1.1 billion of GDP, totaling $1.7 billion. In total, 0.4 percent of the country’s GDP is supported by inputs to the air transport sector and foreign tourists arriving by air. This is quite low.
Air transport uniquely contributes to building bridges between cities; therefore, the flow of goods, people, investments and ideas that stimulate economic development must flow unimpeded to maximize their contribution to consumers and the economy at large.
Rather than Sirika’s obsession with operating a state-promoted ‘national airline’, the government should bolster the sector and make Nigeria’s main regional aviation hub in West and Central Africa. Previously state-owned airlines in Europe and America have been privatized and many airports have also been sold to private investors. With its horrendous track record, the Nigerian government has nothing to do with owning or partially owning an airline.
Instead, government should facilitate a favorable business environment and strengthen regulatory bodies to perform their duties effectively. Currently, Nigeria is losing the aviation advantage and opportunities to Ghana, Ethiopia and South Africa. The air transport industry contributes $5.2 billion to South Africa’s GDP, and foreign tourists visit another $4.3 billion, according to IATA.
Due to its low capacity, passenger facilitation in Nigeria is rated at 1.8/10, below the African average of 3/10. In the World Economic Forum’s Travel & Tourism Competitiveness Index, the country ranks 127th in visa openness and 69th out of 136 in cost competitiveness. Nigeria’s facilitation of air freight through customs and border regulations ranks 68th out of 124 countries on the Air Trade Facilitation Index and 36th out of 135 countries in terms of the e-Freight Friendliness Index.
The Enabling Trade Index ranks Nigeria 127th out of 136 countries for facilitating the free movement of goods across borders and to their destination. The Nigerian air transport market is set to grow by 174 percent over the next 20 years under the “current trends” scenario, generating an additional 9.4 billion passenger journeys by 2037. 555,700 jobs.
Unfortunately, budget constraints, failure to employ professionals, scarcity of foreign exchange, durability of aircraft and spare parts exemptions, decaying and aging infrastructure and obsolete equipment, deplorable airport facilities and equipment, as well as blocked aviation funds, can turn the 2037 forecast into a mirage. to make .
While the aviation industry roadmap was unveiled in 2016, implementation has been slow, as is common in these climates. Sirika’s ill-advised Nigeria Air project has failed to fly despite reportedly swallowing N14.6 billion since 2019, 14 percent of which was reportedly funneled into “working capital, consultancy and transaction advisor fees”.
Closing the gaps in the industry requires the right manpower, skill acquisition and effective partnerships, experts say. When fully developed and equipped, the aviation sector in Nigeria could become the regional hub strategically positioned to take advantage of the expected growth in the African market due to its proximity to Europe, the Middle East and the rest of Africa.
Smaller Rwanda, which recognizes air transport as crucial to its development, has positioned itself to become a regional service and tourism hub. It will invest $789 million from 2019-2030, Aviation Benefits Beyond Borders, a branch of the Air Transport Action Group (Geneva, Switzerland) revealed.
Such a visionary response should be the focus of the government and not chase the elusive ‘contrails’ of a doomed Nigeria Air.