Stories by Louis Ibah
Ever wondered why several Foreign Airline operators left Nigeria for Ghana last year under pretext that there was foreign currency scarcity arising from the economic reseccsion?
It is simply because Ghana, Nigeria’s neighbour with a population that is barely the size of Lagos State is pulling them over with business incentives they can not resist.
It was perhaps against this background that stakeholders in Nigeria’s aviation sector are making fresh demands on the Federal Government to come up with policies that can make Nigeria an aviaation hub for West and Central Africa. Those who hold such view cite the fact that the Central and West African sub-region boast of a population of over 700million people over 1billion population of the continent, with numerous domestic carriers and accounting for over 60 per cent of air travelers, yet without a hub in any of the countries in the two sub-regions. At present, Kenya, South Africa, and Ethiopia remain the three most vibrant hubs in Africa, transiting millions of aircraft and passengers to numerous countries in the world. But, it is not just the feat archived by Kenya, South Africa, and Ethiopia which no doubt leveraged on thriving national carriers and aircraft Maintenance, Repair and Overhaul (MRO) facilities to crate hubs in their international airports thus boosting national revenues that is creating headache among Nigerian aviators, rather, it is an emerging threat from Ghana whose government in recent months appear to be taking proactive steps in creating an aviation hub out of the Accra International Airport even without a national carrier.
Already, by slashing the price of aviation fuel and abolishing numerous taxes, Ghana has been able to attract South African Airways to transit out of Accra to Dallas and Washington DC, thus boosting national earnings and job creation for its citizens. “The threat from Ghana should no longer be viewed lightly because everyday they come out with clear and deliberate government policies. Today,IATA is working with them to create a hub, and Accra has suddenly become a preference for a lot of investors. Sadly, 60 per cent of the human traffic that patronise the airlines at Accra airport are Nigerians,” said a top airline official who wouldn’t want to be named.
“Failing to challenge the move by Ghana might spell doom for Nigeria in the years ahead. With our population, 22 airports, and eight local carriers, we have all it takes, more than any other country on the African continent to create a hub,” the official said.
Nigeria’s potential
At a meeting held in Lagos over the weekend, Airline Operators of Nigeria (AON) expressed the fear that Nigeria was sleeping while it’s neighbour was awake and taking steps to harness the aviation potentials in the sub-region. Chairman for the AON, Capt. Nogie Meggison, who spoke at the event noted that Nigeria has huge potential as a country to play a pivotal role in the sub-continent. Among them, it is blessed with a natural God given geographic location at the centre of Africa (4.30hrs to most parts of Africa); with most of its airport at approximately sea level, being the six largest producer of crude oil (JetA1), a human population of 190 million, and skilled manpower in various aviation fields, yet Nigeria is not a hub for aviation activities on the African continent.
“Making Nigeria the hub for Africa can easily make aviation the 4th largest contributor to the Nigerian economy and a major contributor to the GDP as well as create 200,000 new jobs for our teening youths through its direct and indirect link (airlines, airports, ground handlers and catering companies) and will increase revenues also for FAAN, NCAA and NAMA,” said Meggison.
“This was the step that Ghana took recently and the benefits are there for all to see. Today, Accra is now positioned as the hub for West Africa. Investors are moving there, conferences previously held in Nigeria are now held in Accra. We have to act fast because we have been sleeping for country whose population, size, and human capital is not comparable to Lagos state like Ghana to be moving ahead of us,” he said.
Meggison said it was important to bring it to the public knowledge that a lot of foreign airlines, travel agents, and investors were keying into the vision of the Ghanaian government, while there was the lack of such vision by those who design aviation policies for the country.
“Doing business in Nigeria’s aviation sector is not easy and has never been easy as the policies we have are hostile and unfriendly to investors who have to make profit,”he said. “There is an urgent need for a deliberate economic policy that will eliminate the many challenges that adversely affect the sector in a bid to guarantee the survival of domestic airlines in the country and to also make Nigeria the hub for Africa,” he said. With about 88 Bilateral Air Service Agreements (BASA) not effectively reciprocated, Abuja, Lagos, and Enugu Airports if equipped to international standards all have the capacity to operate as hub with designated Nigerian airlines made to serve as hub brands at such airports. Just as Delta Air Lines is the face of the Atlanta Airport; and British Airways operates the Heathrow airport hub; Ethiopia Airways does same at Addis Ababa airport; Nigeria can designate its existing local carriers to its international airports and allow them operate as the hub brands. For instance, Azman Air can be made to operate from the Abuja airport; Arik Air from Lagos airport; and Air Peace from Enugu. Nigeria’s population offers the traffic that these airlines can airlift to any part of the world.
The challenges
Some of the major issues that need to be addressed to grow the sector, create strong local airlines, and evolve a hub out of the airports include: Removal of Value Added Tax (VAT) given that at present domestic airlines are the only mode of transport paying VAT – marine, road, rail and even the international airlines don’t pay VAT); review of 5 per cent Ticket Sales Charge (TSC) to a flat rate (in line with the global best practices; harmonisation of over 35 multiple charges which add huge burdens on local airlines, reviewing immigration laws to ensure that certain nationals get visa on arrival at our international airports; restructuring the international airports to ensure the transit of international passengers from one airline to another without existing the airport; manpower training of multilingual professionals that would handle the influx of foreign passengers speaking various languages and transiting through the airports.
Others are: investment in the upgrading of the poor navigational and landing aids that limits operations to daylight operation for most airports (Nigerian Airlines fly an average of only 5 hours as against the average of 10 hours worldwide per airplane); resolving the challenge of high cost and epileptic supply of aviation fuel JetA1; investments in the upgrading of all obsolete infrastructure that hampers the ease of doing business at the airports; and proper consultations with investors before introduction of new charges and policies which throws off the initial feasibility studies of investors out the window. Tax rebates, tax heavens, are sometimes the key to attracting investments in any pioneering venture like an aviation hub.
For instance, IATA recently conducted a quick impact analysis of a potential removal by the Nigerian government. of the domestic VAT of 5 percent.