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| Is the Sun about to set for Nigerian Aviation? |
On the continental level, there are certain
affiliations that at best weaken Africa's chances of a multilateral plan by airlines
and governments to guard against losing strategic control of their aviation
sectors.
For a start, North African carriers have a
stronger bond and a greater sense of loyalty with the Middle East & North Africa (MENA) than
with Sub-Saharan Africa. Emirates, Etihad and Qatar are some of the Middle EAst carriers that are presenting serious
competition to African carriers.
Secondly, most of the strong carriers in Africa
are government owned who some level of protection as well as access to national funds. Most of them also enjoy the benefits of being IATA members.
However, within IATA itself African carriers account for less than 3 percent of
it's activities and earnings.
Thirdly, though both camps (MENA and Government owned carriers) are members of
AFRAA (African Airlines Association), which really just serves as a backup plan for them,
as AFRAA has only 40 members out of the over 190 registered airlines in Africa.
Fourthly, the ideal platform for a renaissance
of African Aviation; AFCAC (African civil aviation commission) an arm of the
African Union (AU) has not been able to provide the leadership and assert it's
legitimacy in recent events. Both AFCAC and the AU need to hone their diplomatic skills in charting a course that will see the Pan-African vision become a reality.
Finally, ICAO the ever present enduring arm of
the UN (United Nations) lacks both the funding and the legitimacy to engender
the high level political co-ordination needed to harness the synergy within the
54 African member states. I have to mention that IATA has been doing some impressive work to enhance aviation safety on the continent. A win-win for them as they are able to both fortify and protect the interest of their 240 plus global members on the continent as well as support the quest for safer African skies.
Unless the African Ministers of Transport/Aviation
are able to get a grip on reality and move swiftly, they should expect a more
vindictive blacklist from the EU. Which will soon Followed by increased
co-operation among the foreign carriers (based on their IATA alliance
memberships); a sort of re-partitioning of the African aviation market, which
will leave Africa's strong carriers most of which are IATA members namely;
South African Airlines, Ethiopian, Kenya Airways, Egypt Air, Royal air Maroc,
Tunisair, etc, in a quandary.
On the Nigerian scene, the local airlines are
under the illusion that if they can undermine each other, they will eliminate
the competition, increase market share and control the (local) market.
Unfortunately, this will only weaken the entire group and make it easier for
the real competition (coming soon) to waltz in without encountering any real
resistance. The regulator (NCAA) has been deluded in thinking that by providing
weak economic regulation, it is giving the airlines some respite and maybe a
lifeline. Sadly, it is unwittingly delivering them the hangman's noose. News of
their poor credit history and lack of financial discipline (tolerated by the
NCAA) spreads beyond national borders and jeopardises the reputation of
the whole group (Country) in international circles. This becomes a real
hindrance in taking advantage of the Cape Town convention and securing
favourable lease and insurance conditions. It breeds complacency among the
operators and leaves them operating without robust business plans or financial
discipline. The result is the obvious low life expectancy and high failure
rates of airlines in the Country.
The major threat will present itself in the guise
of a private-public-partnership (PPP) where the funds and technical partner
will originate from foreign entities. This is backed the usual excuse that it
is a requirement to help Africa’s carriers secure favourable insurance
premiums, maintenance contracts and unquestionable training standards. If the
management control and MOU are not scrupulously checked against violating
bi-laterals, cabotage or both, these new regional entrants will consummate
strong commercial agreements with European and/or Middle East carriers (who
currently have nearly 70% share of the international traffic) to provide
feeder-traffic. The local populace will be lured with new improved loyalty
programmes. The regional market that is currently in the hands of the local
industry will become dominated by external majors through this new unguarded
regional PPP.
If the NCAA and the Nigerian Government (Aviation
Ministry) have any inkling of perception they should:
1. Immediately commence the required
level of economic regulation and shut down any operators that are not able to
operate within the financial guidelines.
2. Give the local industry 90 days to
come up with sensible strategic consolidation options that will see the
Nigerian aviation industry emerge with between 3 to 5 formidable airlines.
3. Revisit and assess the current
invasion of airports by a plethora of private jets to ascertain their benefits
or otherwise to the local industry and the nations security.
Sometimes people forget that Kenya Airways is
still 26% owned by KLM and Comair in South Africa is a Franchise of British
airways. Then you will not wonder why the profits are repatriated outside the
African continent rather than invested in the much-needed infrastructure. A
word of caution about our dear Chinese investors; they know how to play
hardball even when they are smiling.
In the current economic environment, monopoly
of the Africa's international traffic is not enough. This time, it may start
"Easy"(pun intended) but it is going to mutate into total local
takeover, with a sleight of hand. Watch this space. To be precise, Stelios and the
Rubicon group have bought over Fly540; a budding East African low cost carrier
and they intend to create a low cost carrier based in Accra Ghana. Currently
Nigeria provides over 65% of aviation traffic in the West African sub-region
