How Govt Can Revitalise the Aviation Sector

A two-day conference organised by the International Air Transport Association highlighted key issues that must be addressed to improve, develop and make aviation a major revenue earner for African nations. Chinedu Eze examines the issues raised

Three key issues were raised at the just concluded International Air Transport Association (IATA) conference held in Abuja last week. These issues were liberalisation of the airspace for Africa; curbing the high taxes, which stifle air transport growth in the continent and the development of modern and friendly airports in the continent.

The theme, ‘Driving African Economies through the Power of Aviation’ served as the main focus of IATA’s Aviation Day Africa Conference Agenda and industry experts poignantly brought to the fore the challenges facing air transport development in the region.

FG’s Stance

For the federal government, it has joined the 22 countries that embraced the liberalisation of Africa’s airspace and by 2017, this commitment is expected to enjoy full implementation. But in addition to that, government has shown readiness for the concession the four leading airports in the country for improved efficiencies after their rehabilitation this year.

Although there were not such deafening but loud voices that insisted that full privatisation was the way to go, the popular consent was that government should concession the facilities in order to bring in the private sector to modernise the airports and run them efficiently.

The Managing Director of Arik Air, Chris Ndulue at one of the panels during the conference insisted that concession or privatisation must be the way to go in order to provide the country befitting airports that could meet the need of over 170 million that have a knack to travel.

The government also said that it realised the importance of aviation industry in the economic national planning policy and so would ensure its growth and viability.

The Minister of State for Aviation, Senator Hadi Sirika explained that the airports to be concessioned include the Murtala Muhammed Airport (MMIA), Lagos, the Nnamdi Azikiwe International Airport (NAIA), Abuja, Aminu Kano Airport, Kano and Port Harcourt International Airport in Rivers State.

Also speaking at the event, the Minister of State, Budget and National Planning, Hajia Zainab Ahmed, disclosed that the government had already earmarked some amount of money for the rehabilitation and eventual concession of the airports.

She insisted that the government could no longer handle some of the critical sectors like aviation and it was pertinent for it to handover the running of airports to competent and capable hands. The federal government had earmarked the sum of N1.06 billion for the rehabilitation Abuja Airport alone in the 2016 budget released about three weeks ago.

The sum was part of the N202.43 allocation for transportation industry in 2016 budget, which also included rail and maritime. Government in its breakdown of the spending for the sector in 2016, said that airside rehabilitation of Abuja Airport became necessary in order to upgrade the facilities at the airport, adding that this would also enable the airport, which is the second busiest in Nigeria in terms of passenger traffic after the Lagos Airport to compete favourably with its counterparts anywhere in the world.

The government also noted that the airside’s rehabilitation was a project designed to improve the security of the nation’s airports and airspace and these include the rebuilding of the runway, the review of the landing aids, airfield lighting and others.

Although nothing was said about the building of second runway at the Abuja airport, which President Muhammadu Buhari hinted would be attended to urgently last year, but Ahmed explained that the objective of the aviation master plan and roadmap was to unlock the airports for better performances, stressing that the sector had been underfunded over the years.

“The consideration of the government is to schedule Lagos, Abuja, Kano and Port Harcourt Airports for concessioning after their rehabilitation. The intention of the government is to bring the nation’s aviation industry at par with its counterparts anywhere in the world, but we can’t do this alone.

“So, we want to invite IATA and other critical organisations around the world to be part of the growth in the Nigerian aviation industry.”

Political Interference

Also speaking at the occasion, the former Director-General of the Nigerian Civil Aviation Authority, NCAA and the Chief Executive Officer, CEO, of Harold Demuren Consulting, Dr. Harold Demuren remarked that airline operators could not be neglected in the economic national planning policy of the government.

He said in addition to giving full support to aviation development, one of the significant roles government could play also was to ensure good corporate governance in the industry and the elimination of government interference in the running of aviation agencies.

Demuren supported government’s plan for the concession of airport facilities, recommending that Private Public Participants (PPP) would be the way to go in the sector in Nigeria, but warned that the controversies surrounding the PPP with Bi-Courtney Aviation Services Limited (BASL) should be resolved in order to attract private investors into the system.

“We must think outside the box on how we can benefit from the multiple entries for foreign airlines flying into the country. The domestic airlines must sit down together and see how they can benefit from the system.

“There is need for PPP in aviation in Nigeria, but with the experience of PPP in MMA2, the government has not shown good faith. Such crisis in the MMA2 PPP must be resolved or else investors would not invest their money in such an industry,” he said.

The Vice President, Africa for IATA, Mr. Raphael Kuuchi charged African governments to take a cue from United Arab Emirates UAE) and Singapore that have used aviation industry to develop their economies.

The Managing Director, Aero Contractors, Capt. Fola Akinkuotu, on his part, said that for Nigeria to drive “a go to point,” the government must ensure that the airports are “a go to point” in the areas of infrastructure and policies.

A Call to Action

However, IATA has called on African governments to prioritise the development of aviation nationally and at a pan-Africa level to bolster economic growth and development.

Africa is set to be one of the fastest-growing aviation regions over the next 20 years, with annual expansion averaging nearly five percent.

This opens up incredible economic opportunities for the continents 54 nations. By transporting some 70 million passengers annually, aviation already supports some 6.9 million jobs and $80 billion of economic activity on the African continent.

“Aviation has the potential to be a much greater strategic catalyst for growth if governments would stop milking the industry for taxes and enable it with smarter regulations focused on safety and the development of connectivity. The commitments are already there with the Abuja Declaration and the Yamoussoukro Decision. It’s time to achieve them in partnership with industry,” said IATA Regional Vice President Africa and Middle East, Hussein Dabbas.

Sirika also noted: “Enhanced Air Transport Connectivity is unarguably the key condition for any State’s progress and transformation. Studies have shown that there is clear correlation between connectivity and economic performance. In addition, improved connectivity attracts inward investment, which enables access to export markets and opens countries up to competitive forces. Air transport is a facilitator of international business and trade. Improved connectivity means more access to cities, markets, business and people as well as the integration into global supply chains, an important factor to attracting inward investment into any country”

Connectivity and Infrastructure Development

IATA said it welcomed the recent signing of a ‘Solemn Declaration’ by 21 African heads of state re-affirming their commitment to breaking down the artificial barriers obstructing air transport service expansion between African nations by implementing the Yamoussoukro Decision. IATA urges all African nations to expedite its implementation, which will stimulate economic growth and development with at least 5 million more passenger journeys a year on the continent.

The world body also said cost-effective and appropriate infrastructure development is critical to the sustainability and expansion of African aviation and recommended consultation and collaboration among airlines and their infrastructure partners during planning and development, which it described as crucial.

”No one knows better than the airlines the level of airport charges that enable a route to be viable, and the kind of amenities they need to support their passengers and aircraft efficiently. All too often in Africa there is no real engagement with the airlines prior to development. This leaves airlines burdened with excessive development cost that are not sustainable,” Dabbas said

IATA said the International Civil Aviation Organisation (ICAO) has very clear guidelines on infrastructure funding; that development should be guided by principles of non-discrimination, consultation, transparency, cost-benefit and no pre-financing.

“IATA is concerned about the viability of some planned airport developments, including Ndjamena in Chad, Addis Ababa in Ethiopia and Dakar in Senegal. IATA calls on the governments in these countries to take the lead in consulting the users of the infrastructure to ensure that the end product provides maximise benefits and rationalise costs for all.”

So without government’s commitment and critical decision to move from its old ways and adopt a more dynamic style in attending to aviation issues, the air transport sector cannot grow in Nigeria and in Africa. So government’s role for the growth of the sector cannot be emphasised. For Nigeria, lack of funds makes it inevitable to bring in the private sector to develop airport infrastructure and fund operations with articulated benefits for government and investors. This may be the time to think out of the box.