Reduced travels’ economic impact on air transportation

In recent times, the skies above Nigeria seem to be soaring to new altitudes, not just in terms of flights but also in the cost of air travel, writes, WOLE SHADARE

Empty terminals

Air travel is one of the barometers to gauge the health of a nation. Whenever a country is doing well, it will reflect on the number of people that travel by air. Nigerian aviation is not a stand-alone. It is part of the bigger economy of Nigeria and contributes to the Gross Domestic Product (GDP). Aviation is the quickest barometer to check any economy.

A visit to the domestic wings of the Lagos airport last week revealed how seriously the impact of the economy on every facet of businesses in the country including the aviation sector has taken a serious hit as very few people are now taking to air travel.

The terminals were empty even at supposedly busy hours.

The numbers are shrinking, which greatly impacts the airlines’ bottom line. Capacity is shrinking to a shallow level as people seek alternatives to air travel.

The economic impact has made frequent travellers cut down on trips within the country.

Airlines in dire straits

The country’s airlines are in a precarious situation as the carriers are battling on so many fronts, ranging from the astronomical rise in the cost of operations occasioned by the high cost of jet fuel, high and multiple taxes and charges, instability of Naira which until now makes planning very difficult for the operators.

The carriers are bleeding and are in urgent need of assistance. Virtually all the airlines are in the Intensive Care Unit (ICU) or better still on life support. Every attempt at the airlines to reinvent themselves to adjust to the new reality and their business model has been rubbished because of economic volatility.

Time seems to be running out on the carriers and the government’s urgent assistance is needed to stave off the catalytic impact the folding up of any airline at this period would have on the economy despite the shrinking capacity.

Not a few stakeholders had called for the industry to re-examine itself through a thorough cleaning, as the policies of the past years set the sector backwards.

As it is, there is no unity among the airline operators; scheduled, chartered or helicopters. They are all working in isolation. The aviation ministry too is not helping the industry to grow.

Urgent govt’s support

The Chief Executive Officer of King Airlines, Senator Musa Adede at a forum last year admitted that Nigerian airlines are in a precarious situation and need the support of the Federal Government to remain in business.

Airline business is at the centre of aviation with many arguing that without the airlines, there won’t be anything referred to the aviation industry not only in Nigeria but around the globe. They opined that the airlines the geese lay the golden egg but at the same time carry the heavy yoke of sustaining all other businesses in the industry.

The carriers are pummeled from every angle imaginable ranging from multiple taxes, charges from the government which also claims that it needs to sustain its operations and facilities, and ground handling charges which have equally doubled in the past few years just as the two major aviation ground handling companies, Skyway Aviation Handling Company Plc and the Nigerian Aviation Handling Company Plc claimed that the current charges are no longer sustainable.

Aside from the mounting debts hanging on the neck of the airlines, skyrocketing aviation fuel may have eaten all the airlines’ revenues.

Exorbitant fares, high operations cost

Nigerians, accustomed to a certain range of airfare prices, are now grappling with the shock of exorbitant costs for domestic flights. The price of air tickets, especially for routes from Lagos and Abuja to other parts of Nigeria, has witnessed an alarming 100% increase in the past few months.

Passengers are feeling the pinch in their pockets as air ticket prices hit an all-time high, leaving many to wonder about the factors driving this upward trend.

While operators appear constrained, aviation experts emphasize the need for proactive solutions to address the challenges and alleviate the burden on travellers.

While many waited to see a drastic solution to ameliorating the pain of high fares, the problem appears to be festering.

The action taken to cut down on frequent travel is travellers’ resolve to live within their income and manage their resources prudently as the economy has taken a toll on them as well.

Nigeria boasts of a population many say is over 250 million. This, however, does not translate to huge traffic due more to the prevailing economic situation.

Depleting traffic

Nigeria’s total passenger traffic for 2023 stood at 15.89 million compared with 16.17 million in 2022. There are indications that the figure could further reduce in 2024. The ‘Japa’ wave may boost international air travel but domestic travel may see a significant reduction.

Airlines in Nigeria, as in several places, are mostly passenger movers, hence, the focus on passenger traffic.

The country has a working population of over 90 million, which, in addition to the fact that there are substantial inter-city distances, should favour the propensity to travel by air. The low Gross Domestic Product (GDP) per capita probably provides some explanation for the low propensity to fly.

Abuja and Lagos are Nigeria’s political and commercial capitals respectively, while Port-Harcourt is a major oil-producing city. The cost of airfares naturally excludes a large share of Nigeria’s travelling public.

Much of the movements recorded in Lagos pertain to corporate travellers in the middle and high-income categories; Lagos houses much of this group in Nigeria given its status as a megacity.

In Abuja, passengers are mostly top government and private sector workers, while Port-Harcourt travellers thrive on the oil economy. The lower middle class where a great market potential exists generally does not find airfares affordable. They, therefore, resort to corporate road transport services.

The implication of low traffic densities in several nodes is that many city-pair routes are not commercially viable to the degree that active airlines will increase their service frequencies in these sectors.

Stakeholders’ views

A frequent traveller and an airline owner, who preferred anonymity, said: “If you check the Nigerian travelling populace, 70 to 80 per cent of those travelling are business people, as compared to the outside world where only 40 per cent are business people, 30 per cent tourists and the other 30 per cent are students and others.

Pix from left Eng Kayode Ajiboye, former Director, Airworthiness Standards, Nigerian Civil Aviation Authority NCAA; Mr. Allen Onyema, Chairman Air Peace; Dr Gbenga Olowo, Former President, ASRTI/ART Network; Senator Musa Adede, CEO, Kings Airlines, Mr Kabir Muhammed, Former MD, Federal Airports Authority of Nigeria and Eng Taoheed Odunowo, Former MD, Nigerian Airspace Management Agency at the Aviation Roundtable Q2 2023 Brunch Business Meeting themed: Aviation Reset: Agenda for A New Administration (Increasing the Numbers) held in Lagos

“In Nigeria, if you check the flights going to Abuja, 80 to 85 per cent are on business purposes and once these people don’t have a business to do, it is obvious that there won’t be any movement because if you are not going to do business, no travelling. So it is a clear quick indication and barometer for the economy.

“So, if the economy is not performing as expected and businessmen are not moving, the airlines will not find the passengers. Once the economy begins to jump, business starts to move; then you see movement in our airports. Where 80 to 85 per cent of the passengers are doing business, most of them are not seeing any business to do now. So it is the politicians that are moving.”

Chief Executive Officer of Topbrass Airlines and a former Managing Director of Nigerian Airspace Management Agency (NAMA), Roland Iyayi said the Nigerian aviation sector has remained largely reactive rather than proactive with no clear direction or strategic plan, stressing, “We have formulated policies based on either personal interests or knee jerk reactions to developments in other climes, without necessarily considering their relevance or appropriateness or even the context for which they were formulated from. We fail to recognize the dynamic nature of the sector.”

The Chief Operating Officer of Ibom Air, George Uriesi stated that over the years, successive governments have erroneously considered aviation to be elitist rather than the economic catalyst that it is.

“For this reason, aviation is unduly taxed to a point now where the operating environment has become increasingly toxic and volatile. Until a proper rethink of the pivotal role the sector plays in the socio-economic and political development of the country, we shall forever remain in the woods.”

Last line

Nigerian domestic air travel will continue to witness low numbers as people do not have enough personal income to afford vacations. Having enough money for travel requires a strong economy reflected in healthy growth in GDP.

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Reduced travels’ economic impact on air transportation

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