Last week, the Honorable Minister of Aviation, Senator Hadi Sirika, announced that the Federal Government would be launching a new national carrier next year and the approval for the designated five gateway airports as Special Economic Zones (SEZs), These are both welcomed developments for our country and its future. As we may all know, this type of aviation driven initiatives can serve as the important engine for the Nigerian economy and become responsible for up to 15 percent of the Gross Domestic Product (GDP) and millions of new jobs.
The two ideas can bring about a legacy of vibrant national carrier, improved air travel in Nigeria and aviation contributing circa 15 percent of Nigeria’s GDP, improved air travelers to population ratio and decent airports in our five gateway cities all by the year 2023. Air transport; passengers or cargo is crucial for our country’s economic recovery.
In fact, the number of air passengers in Nigeria need to be increased from 17 million of today to approach 100 million in the next five years and 200 million by 2025, to make Nigeria the fourth largest aviation market in the world (behind the US, China and India). How do we do this?
As President Muhammad Buhari have always clearly outlined during his campaigns and afterwards, that we need to focus on specific targets in order for our country to climb out of the current economic instability, insecurity and corruption. I believe this recent move by the Federal Ministry of Aviation is in that regard and also fulfilling some of his political promises. He also made the modernization of our infrastructures as a cornerstone of his campaign, nowhere is this needed more than in our aviation sector, where a vibrant national carrier, modern airports and satellite-based navigation for increased capacity, timely flights, safer skies and economic growth.
Nigeria needs a vibrant national carrier with a scale, reach and financial strength needed to build a strong hub. The new national carrier should be allowed to function as normal businesses with freedoms as any other business entity. Nigeria is the most populous country in Africa, yet without a viable national carrier, that can compete effectively within the continent. Ethiopia and Kenya who are smaller countries have far more promising industries; both have vibrant airlines that fly to at least 50 destinations worldwide and carrying over five million passengers annually each.
Also, the SEZs will come handy to augment our national income if properly managed, because according to both ICAO and IATA, the estimated ratio of aeronautical to non-aeronautical revenue is 30:70 for commercial aviation settings and since the latter is purely from aviation related economic activities and with all the designated airports already or almost having over a million passenger movement per annum, so they should generate the require economic activities that ensure quadruple revenue as well, if we can eliminate or mitigate the corruption in the industry.
The Nigerian aviation industry can be transformed from serving a tiny fraction of the population as presently obtainable to becoming the mode of choice for long-haul passengers and freight. Going forward, we should impress on our aviation sector to provide the opportunity for economic growth, accelerate global economic links and increase contribution to national GDP. Since the partial liberalization of the Nigerian Aviation Sector in 1999, it has seen just an annual passenger growth of 12.5 million over 15 years, additional 15 airports, 12 airlines, and annual revenue of around $1 billion. We need to do more to improve the sector and its revenue.
The Nigerian aviation industry is well known for poor connectivity; reduced competitiveness of service and high costs. The solution to these problems is strong indigenous airlines improved air navigation infrastructure, strong regulatory oversight and policy-making by the government, modernization of airports and airspace, as well as delivering high-quality service to passengers. All these should take care of the present unpleasant experiences with the cost, safety and delays.
Also, because of our past experiences with public funding of enterprises, perhaps the ministry of aviation should consider an approach where airlines, airports and other aviation related infrastructures provide their services using the most efficient, market-based means of raising funds i.e. allowing them to charge consumers an amount commensurate with the value needed to develop them. In other words, they should finance their developments just like any other productive ventures do.
Public policy on airport spending should be more in line with the benefit principle i.e. the people who use a service should generally be the ones to contribute to that service, this approach allows projects to be approved or canceled on their own merits, by the people who will use the product of the projects and because they best understand their cost implications and benefits first-hand. Commercial airports in the United States are already using such a mechanism for infrastructure improvements, known as the Passenger Facility Charge (PFC), where there is a fee paid directly by users and tied to specific airport projects that they use.
We need to correct the anomaly of the relationship between our passengers, airlines and airports. Passengers, airports and airlines are entities, which share a common goal, at the same time, inextricable linked, and their relationship and progress should be so managed.
It is unexplainable if the passenger to population ratio continues to improve (annually), which consequently will improve the air transport service volume, yet our airspace and airports remain dilapidated with obsolete infrastructures and domestic airlines on the verge of bankruptcies. We will need to improve and expand more airline routes, generate travel demands, attract more foreign airlines; so we can have enough proceed to modernize our aviation sector to boost our economy, improve our airports, strengthen our airlines and serve our passengers safely and well.
This is the right time for our aeronautical authorities to devise a scheme for remote areas to access commercial aviation service; to provide the tier 2 and 3 airports with improved number of passengers, it will boost national economy and improve productivity through providing support for aviation services to these communities and other isolated areas of Nigeria, where air transport are not commercially viable but are essential for social and economic good. The improve access can be through subsidy for regular flights; that operate daily or weekly, and also cargo, in order to ensure that less viable and remote communities have reasonable access to air services.
Globally, all successful airports are heavily reliant on the non-aeronautical side of the business for revenue growth and we shouldn’t be an exception. The Federal Airport Authority (FAAN) continues to report aeronautical revenues the major sources in the past years unchallenged, I believe this can be changed and the standard norm restored. Another challenge will be the security of Nigeria and other neighboring nations. Aviation security and safety should be amongst our top priority so we could curb influx of criminals, illicit drugs and arms into our country.
These are all great challenges and opportunities, but I’m convinced that our country has the people with the skills to position it and ensure secure, profitable and environmentally friendly aviation if the intents are just about that. It will be in the interest of everyone in Nigeria to see the aviation industry flourish. Increasing our capacity to be able to serve 100 million passengers and nine million tons of cargo by 2021 will ensure that aviation becomes a pillar of Nigeria’s success—provided the expansion is carried out and funded wisely.
Mr Salihu can be reached at msalihu@gmail.com and @mssalihu
