Director-General, Nigeria Civil Aviation Authority, NCAA, Captain Mukhtar Usman says in the last two and half decades, revenue flow to airlines globally has dropped substantially in the face of discontinued State funding, sustained de-regulation/liberalization, privatization and intense competition.
Delivering a paper entitled,”THE ACTS OF PROMOTING A SUSTAINABLE AIR TRANSPORT ECONOMY WHILE MAINTAINING HIGH LEVEL OF AVIATION SAFETY STANDARDS”,at the Airport Business Summit and Expo in Abuja, Captain Usman said human and cargo traffic at many airports have also dwindled with declining purchasing power of passengers and shippers.
According to him, “On the other hand, the cost of providing standard air transport services has continued to rise with the continuous innovations in the facilities and increasing demand for customer satisfaction, as a result, most airlines presently are faced with high and rising cost of operation”.
The NCAA boss noted that in Nigeria, for instance, aviation fuel constitutes 40%-50% of the airlines’ direct operating costs, adding that high cost of funds and the steady devaluation of the local currency in which the airlines’ income is mostly denominated, against the foreign currencies on which their major expenses are based, and many others, no doubt, aggravate the challenge.
Within the period in reference, he said a lot of small and average airlines around the world have either collapsed or gone bankrupt, while most, if not all the world’s major airlines have recorded losses or sharp falls in profit.
However, one of the few areas in which significant performances have been recorded is the operation of low-cost airlines, which have benefitted from a shift to cheaper travel. This is because they use smaller and more fuel-efficient aircraft and extend their networks to small and remote aerodromes thus taking their operations to the grassroots and aiding the distribution of goods and services to, as well as the development of the hinterlands.
Usman disclosed that the big challenge at the moment for Nigeria and many other countries is creating a friendlier and more enabling environment for airlines and indeed other economic activities to flourish and hence ensure a sustainable air transport industry.
He listed the country’s challenge to include;
- The continuing attempt, mainly by the political leadership, to “domesticate” the global minimal standards and recommended practices that sustain aviation worldwide in a way to align with Nigeria’s local politics and local economic minima. This has led to reduced autonomy for the regulator and key Organizations and their inability to a large extent, to determine and “control” their manpower programmes, for instance: number and quality of staff, placement, training etc, thereby negating professionalism.
- Lack of internal leadership succession plan. The managements are not groomed from within but based on political appointments, and this affects consistency and continuity of policy implementation, career progression in the industry.
- Lack of political will to firmly and fairly apply the available policy and regulatory instruments in a consistent manner; and this tends to erode steady growth, integrity and professionalism in the industry.
- Inconsistency in policies and policy enforcement has further eroded investors’ confidence in the industry and this inconsistency stems from the influence of different political interests that hold sway at different times; so industry development partnership with third parties are hindered.
- The combination of unwholesome political and moral (corruption) influence have been the reasons why operators would not remit the statutory charges they receive from service users to the regulatory and service organizations, thereby undermining industry development and defrauding the service users.
- The national political leadership should ensure that square pegs are put in square holes, giving the regulatory body the necessary autonomy by resisting unnecessary interference in the latter’s statutory operations.
- Government’s interference should be limited to ensuring an enabling political and economic environment to engender economic viability and sustainability of the aviation industry.