TIME FOR TAKE-OFF

Nigeria 2015 | TRANSPORT | FOCUS: NIGERIA’S INDIGENOUS CARRIERS

Nigeria's government and domestic carriers are looking for ways to boost competitiveness in a bid to embrace a larger share of revenue in Nigeria's aviation industry.

As the Nigerian aviation sector is experiencing a boom in revenues, its contribution to national GDP has grown at a rate of 32% from $179 million in 2010 to $263 million in 2013. With the number of airlines operating on the nation's different routes having increased, travellers nowadays can choose between 10 airlines as opposed to four at the beginning of 2013. The total aircraft fleet has increased to over 60 planes, and ticket prices have fallen in line with these developments.

However, the major flight routes out of Nigeria to international destinations are largely dominated by international carriers from Europe and the United States that are responsible for transporting 75% of the daily amount of passengers bound for international destinations. While carriers from other African countries make up 20%, domestic carriers take a rather meager slice of the cake in the form of 5% of the daily number of passengers flying to foreign destinations. Aviation experts have noted that the capital flight that Nigeria is faced with as a result of this is significant.

Two main reasons lie at the root of the lack of competitiveness on behalf of Nigeria's indigenous carriers. First, indigenous carriers are characterized by a high percentage, sometimes up to 75%, of foreign employees, as most pilots and engineers are expatriates. The costs of employing these expatriates, which is in the millions of dollars per annum per carrier, is a heavy burden on the carriers, and seriously hampers their ability to turn a profit. However, they have no choice, as there is a serious lack of skilled Nigerian pilots and engineers. Second, the country lacks Maintenance, Repair and Overhaul (MRO) facilities that would enable domestic airlines to carry out maintenance checks in the country itself. Instead, carriers have to fly their planes to Europe, the US, or destinations such as Cairo and Addis Ababa to have their planes checked at prices varying from $1 to $2 million depending on the type of aircraft.

The road forward, then, involves a dual track of building local manpower to have qualified personnel take over at least certain activities from their expensive foreign counterparts on the one hand, and the construction of MRO facilities to cut back on maintenance costs for domestic carriers on the other. The government, having realized this, has engaged in concerted efforts with the nation's airlines to curtail the overreliance on foreign staff, and stimulate the growth of indigenous manpower. Hence, the National Assembly is currently prospecting revolutionary local content legislation for Nigeria's aviation industry, in the hopes that replicating the regulatory framework of the oil and gas industry will generate said benefits for the aviation sector. Once passed into law, this would oblige domestic and foreign carriers that operate in Nigeria to employ a set amount of indigenous personnel to ensure local capacity building.

Some airlines operating in Nigeria have already started to enlarge the pool of indigenous workers by initiating training programs. For example, Arik Air, which is Nigeria's largest domestic carrier, has announced the investment of about $2 million in the training of 40 pilots at the CAE Training Facility in London. Another Nigerian carrier, Medview Airline, has also embraced local content and has started to train Nigerians accordingly.

Ultimately, the creation of domestic MRO facilities and the establishment of a highly skilled indigenous workforce could sustain a Nigerian national carrier, and overall strengthen the country's domestic carriers. A national carrier and stronger, more competitive indigenous carriers would enable Nigeria to cope with the increasing volumes of cargo and passengers, and thus allow the government to firmly key into the revenues generated in the nation's aviation industry.