August 25, 2023
By Chinelo Obogo, talktonelo@yahoo.com
When the new Minister of Aviation and Aerospace Development, Festus Keyamo, was sworn in last Monday, one of the first things he promised to do was to continue with the implementation of the Aviation roadmap developed by his predecessor, Hadi Sirika.
This may not have come as a surprise considering that both men had served as ministers under President Muhammadu Buhari.
At the inception of Buhari’s administration, an aviation roadmap which included the establishment of a Maintenance, Repair and Overhaul (MRO) facility, an Aviation Leasing Company (ALC); Agro-Allied Cargo Terminals; Airport City; National Carrier; Africa Aerospace and Aviation University (AAAU), Concessioning of Airports was set in motion.
Sirika, who till date remains the first aviation professional to head the ministry, vowed that before Buhari’s tenure elapsed, a national carrier, a world class MRO among others would have been established through a Public Private Partnership arrangement. But after eight years, none of those projects was fully realised, promoting industry think-tank group, Aviation Safety Round Table Initiative (ASRTI) to rate the master plan from 2015-2023 below par using campaign promises as key performance indicators ( KPI) to judge the system in that period.
Despite Sirika’s inability to implement the roadmap, Keyamo has expressed confidence in the structure of the project, saying: “I have read the roadmap, the one developed in 2016, I read it thoroughly, our intention is not to disrupt things that have been done so well, if there are things that have not been done so well we will look at it thoroughly. We may have to add to the roadmap but not pull it down totally because I know it was a product of a roundtable held in 2016, so if it was well thought out, I like the structure that I saw.”
National carrier
Bearing the resolution of the new aviation minister in mind, industry insiders are keen to see how he would navigate the turbulence surrounding the national carrier, Nigeria Air, one of the signature projects in the road map.
To recap, there was strong pushback from industry stakeholders when Sirika announced some of the modalities for a national carrier deal: Carrier would be driven by the private sector and the Nigerian government would retain only 5 per cent stake in it, while Ethiopian Airways will have a 49 per cent stake, with 46 per cent of the airline owned by Nigerian investors (MRS and SACHOL). The government also said it would raise $250 million from the private sector, adding that 20 aircraft with petrol engines had been ordered for training purposes with nine of which had been delivered.
After it was revealed that ET will have 49 per cent stake, making it the largest shareholder, industry experts pushed back strongly, expressing their discontent with the model, saying that having a competitor as a major shareholder in the country’s national carrier would completely annihilate Nigerian airlines from the onset. They also argued that the partnership would only help ET achieve its target to dominate the African market as it had formed similar agreements in eight other African countries. Experts say the deal will create cabotage and destroy the industry, citing the case of Virgin Nigeria, which had a similar model that eventually fizzled out.
The Airline Operators of Nigeria (AON) were the first to take a definitive action against Sirika, as eight domestic airlines dragged the Federal Government to court late last year, listing Nigerian Air, Ethiopian Airlines, Sirika, and Attorney-General of the Federation, Abubakar Malami, as defendants. They prayed the court to squash the deal, saying it will completely destroy Nigeria’s fragile industry. But Sirika defended the choice of ET, saying that he had held six meetings with Nigerian airlines on the need to buy shares in the new carrier but that his overtures were rebuffed.
The case is still in court and it is left to be seen if the Federal Government, through the aviation minister would go ahead with the deal or if it would be scrapped. However, the CEO of Ethiopian Airlines, Mesfin Tasew, told Bloomberg earlier in August that the deal is still on course and that the carrier would be commence operations in October. According to Tasew, the airline will begin operations with two wide-bodied planes and six narrow-bodied aircraft. He said, “We are eager to see the airline start flying and connecting the local market to the international market”
Airport concession
Another contentious issue Keyamo has to deal with is the concession of some airports by his predecessor. Nigeria’s international airports in Lagos, Abuja, Port Harcourt, and Kano were put up for concession by the administration of former President Buhari and in May this year, the Federal Government announced that it had successfully concessioned the Nnamdi Azikiwe International Airport, Abuja, and Mallam Aminu Kano International Airport, Kano.
However, in July, 2023, the House of Representatives has asked the Federal Government to put on hold the concessioning of four international airports pending the outcome of an investigation by the House. Adopting a motion, the House resolved to investigate the concession of the airports to protect public infrastructure.
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A legislator, Kama Nkemkanma told the House that the most viable airports were concessioned to foreign firms through Federal Executive Council (FEC) resolutions that deviated from due process, public accountability, and established laws of the land. According to him, the eventual outcome of the opaque concession is the enrichment of a few Nigerians and their foreign allies at the detriment of Nigerians and the eventual enslavement of these public infrastructure to foreigners for many decades.
He said the airports in Lagos, Abuja, and Kano have remained subjects of controversies due to entrenched personal interests that have undermined the laws of the land, irrespective of the occasional efforts of the anti-corruption agencies like the Economic and Financial Crimes Commission (EFCC) and Independent Corrupt Practices Commission (ICPC).
Notwithstanding the directive of the House of Representatives, the head, of Media and Publicity, Infrastructure Concession Regulatory Commission, Manji Yarling, revealed that the concession process of two of the airports were already nearing completion. She stated that while the Abuja and Kano airports concession projects were nearing commercial closure, that of Lagos airport had been delayed. She also revealed that for the Port Harcourt airport, there was still no investor yet.
Blocked funds, forex scarcity, cost of aviation fuel
Other issues that the new minister has to contend with include the crisis generated by foreign airlines blocked funds still in the custody of Nigerian banks.. At the moment, more Nigerian air travelers now travel to neigbouring countries like Ghana and Cotonou to book international flights after being forced to pay thrice for flights compared to other countries to same destinations. For over a year, foreign airlines had removed lower inventory tickets on their website for travelers from Nigeria , citing their inability to repatriate funds generated from sale of tickets deposited in Nigerian banks.”
These airlines insist on getting their funds in foreign currency but due to forex scarcity, this has been difficult. They then took the decision to remove lower inventory tickets from their website, making cost of flights expensive for Nigerians.
Fares advertised on the websites of foreign airlines show that Nigerians now pay three times what travelers in other countries pay to the same destinations. Nigerian travelers now pay as high as N3,000,000.00 to purchase an economy ticket while date changes on some airlines go as high as between N1,500,000.00 to N1,800,000.00. For business class tickets, passengers pay about N7 million. To combat this, many Nigerian passengers now prefer travelling to countries like Ghana to book tickets at lower costs and this development has almost crippled the Nigerian travel industry as many travel agents have lost clients over the high cost of flight tickets from Nigeria.
The International Air Transport Association (IATA) said the inability of international airlines to repatriate their ticket sales for over a year and said the blocked funds have contributed to the high airfares on Nigerian routes. In June, IATA said that blocked funds belonging to foreign airlines trapped in Nigeria had hit $812.2 million, warning that rapidly rising levels of blocked funds are a threat to airline connectivity in the affected markets.
At the twilight of his administration, Sirika met with IATA and foreign airlines’ representatives, to discuss the issues affecting the travel industry. While stating Nigeria’s commitment to the Bilateral Air Service Agreement, he assured them that the ministry is concerned, and will do its best to resolve the matter of blocked funds as soon as possible. Despite his efforts, the issue was not resolved and till date, Nigerians are forced to pay hefty sums for international flights.
The president of the National Association of Nigeria Travel Agencies (NANTA) which is the umbrella body of all travel agencies operating in Nigeria, Susan Akporiaye, told Daily Sun that Nigeria’s travel market has lost over $500 million due to exploitation by foreign airlines and that unless the government intervenes and ‘put its foot down’, foreign airlines will continue exploiting Nigerians. Akporiaye said that the travel market contributes billions to Nigeria’s economy and that if these issues are not resolved, it will create more problems as the sector has already lost between $450 and $500m including 720,000 job losses in 2022 alone.
“As we speak, it is only in Nigeria that a traveler is made to cough out over two thousand dollars for an economy ticket and also change the date of the flight itinerary for whatever personal reasons with about 1.5 to 1.8 million naira. To put this in perspective, all low-fare inventories of the airlines have been deliberately blocked to our members and to this market. This now means, Nigeria is at a disadvantage since the airlines seems to have mastered the art of exploiting the forex issue to their advantage.
“Agencies are now forced to fold, leave the country or trying to use other neighboring countries to sell to their customers. Nigeria Travel market continues to be at the losing end with the airlines being indifferent to the plight of travelers and as a body we are left with no option than to call on the government to be more strategic, deliberate and direct in resolving this multifaceted dilemma,” she said.
On the issue of forex scarcity, which has been a sore point for domestic operators, the spokesperson of AON and chairman of United Nigeria Airline, Obiora Okonkwo, said local airlines need a special window to access foreign exchange from the Central Bank of Nigeria. In a recent interview he also called on Keyamo, to partner with other government agencies to fish out the bad eggs in the system, who specialise in making things more difficult than it already is.
He said “You have naira and you can’t convert it to dollar. So, the solution to this is for our minister to understand that we need a special window with the CBN to access foreign exchange. The new minister should work with other agencies of government to rid the sector of speculators. There is no reason, no matter the international price of crude oil, which the aviation fuel should be delivered to the pump for more than N500. Everything you see on top of it are speculations and I am calling out on NNPC staff to let this country free.” (The Sun)
