From the Ground up

What is the potential for private involvement in airport renovations and ownership, and where do you see Nigeria’s airports in the near future?

There has been modest investment by government to develop the sector. In terms of airport terminal buildings, Nigeria had to source some funding through an import-export bank loan to build or rebuild terminals at four of our airports. Entrepreneurs will find that there is huge potential for investment, especially in the general aviation infrastructure, including terminal buildings, runways, communication and navigation equipment, and security systems. The entire sector is greenfield, waiting for suitable investors to come in. It is important for interested investors to act now because the doors will be closed once we have all of the investors that we can find.

Airfares in Nigeria are high compared to other emerging markets. From a regulatory and policy perspective, how might airfares fall?

The first and most important step is to create competition, which is the whole idea behind the national airline we are about to create. This way we can leverage all the bilateral and multilateral agreements between us and other nations that are bringing in their planes. Emirates flies to Nigeria 21 times per week, and British Airways has a similar number of flights. If we create an entity that has the capacity to leverage those 21 flights and offer better service, then that will force those airlines to bring down their fares. The second factor is that we seek to get the government to either fund or allow the Nigerian National Petroleum Corporation (NNPC) to find investors to refine jet fuel here to help bring down costs. Jet fuel accounts for about 40% of the operating costs of an airplane, and when its cost goes up, so do ticket prices. Furthermore, the more an airline does business with Nigeria and increases traffic on a certain route, the more passengers it has and the more that airline can afford to bring down the cost of tickets.

What are your ambitions for the national airline and toward what time frame are you working?

The time frame is uncertain because it is dependent on a number of factors, such as how quickly we are able to form partnerships and agree on terms and conditions for potential investors. The ambition is to create an airline through private participation that is able to take advantage of the vacuum that exists due to the absence of a national carrier. That national airline could become a source not only of revenue and pride, but also for developing the wider pool of aviators in Nigeria. When Nigeria Airways existed, nearly 80% of aviators here were developed by it. One of our ambitions is to see over time our new airline similarly contributing to building local skills capacity. We can look at the case study of Ethiopian Airlines, which is owned 100% by the government, but operates with no government interference in its management. That airline has now developed the capacity for engineering, flying, support services, and so forth. It has reached the point where it was viable to create its own maintenance, repair, and overhaul (MRO) center, which is sustained by Ethiopian Airlines’ operations. It then sells the excess capacity to other airlines to leverage them to come in and partner in the country. Our ambition is to create an airline that can bring Nigeria that same level of MRO business. If we have excess capacity to sell, Nigeria is well positioned to attract client airlines. Nigeria is a shorter distance for airlines to bring their aircraft for MRO compared to Ethiopia, Europe, or the US. Our goals in creating a national airline are to create more MRO business, more capacity, take advantage of routes and the voluntary air services agreement, bring in revenue, and fly our flag all over the world.