By Chinelo Obogo, [email protected]
Despite promises made by successive governments to develop policies to strengthen the aviation industry, not much progress was recorded in 2023.
In our characteristic manner, Daily Sun gives an overview on the key developments that shaped the industry in the outgoing year.
Multiple charges, taxation, levies persist
The exorbitant industry taxes, charges and high cost of air fares remained some of the major challenges Nigeria’s aviation sector contended with during the year, as very little progress was made in the course of the year to stem them.
At different fora, domestic airlines operators have had to defend the high cost of ticket fares charged passengers, blaming it on multiple charges they are forced to pay aviation agencies including the high cost of jet A1, forex scarcity, devaluation of the naira among other issues.
At a recent breakfast meeting for intance, the chairman of the Presidential Committee on Fiscal and Tax Policies, Mr. Taiwo Oyedele, lamented some disturbing reports that indicated it was more expensive to transport imported goods from Apapa ports to the hinterland than it is to bring them from China.
He noted how the export processes have become equally arduous, with prolonged clearance and certification procedures, coupled with an array of levies, prompting some exporters to opt for alternative routes through neighbouring countries.
The recent revelations from IATA ranking Lagos and Abuja airports as the two most expensive facilities in the world, due to their endless levies, taxes, fees and charges, also pointed out that whether or not this assertion was accurate, the mere perception of it was detrimental and demands urgent attention.
“Some reports have indicated that carriers often opt to fly outbound cargo planes empty rather than incur exorbitant charges for loading goods from Nigeria to other countries.
Similarly, expensive overnight parking has led to some airlines favouring neighbouring countries. To remain competitive regionally and on the global stage, we must address the burden of multiple agencies, complex paperwork, and a plethora of taxes and levies. As a nation, we cannot aspire to be competitive while at the same time burdening businesses with complex processes. We must cease taxing seeds and instead, foster an environment that encourages businesses to thrive, bearing fruits that we can tax,” he said.
Blocked airline funds/expensive international flights
The issue of international airlines unable to repatriated funds earned from sale of flight tickets in Nigeria worsened in 2023 and the trend caused foreign airlines to block their lower inventories to Nigerian travelers, making their cost of flight very expensive. The International Air Transport Association (IATA) said the inability of international airlines to repatriate their ticket sales for over a year, noting that the blocked funds contributed to the high airfares on Nigerian routes.
During the 55th yearly general assembly of the African Airlines Association (AFRAA), in Entebbe, Uganda, IATA’s Regional Vice-President for Africa and Middle East, Kamil Alawadhi, told AFRAA delegates that as of September 2023, $1.68 billion of airline funds were blocked across Africa and $2.36 billion globally.
As of August, foreign airlines’ fund trapped in Nigeria stood at $793 million amid foreign exchange scarcity.
Of this figure, $300 million was said to be legacy debt, which the Central Bank of Nigeria (CBN) has taken, but were yet to be remit to IATA on behalf of the airlines.
National carrier fiasco
One of the major issues that remained a subject of controversy in the sector till date was the failed launch of Nigeria Air by the former Minister of Aviation and Aerospace Development, Hadi Sirika, who got a backlash after an aircraft belonging to ET which had Nigeria Air colours was unveiled at the Nnamdi Azikiwe Airport, Abuja, two days before his tenure elapsed.
Nigeria Air, was founded in 2018 with ownership stakes divided among Ethiopian Airlines (49 per cent), Nigeria Sovereign Investment Authority (NSIA) (46 per cent), and the Nigerian Federal Government (5 per cent).
The Chief Executive Officer of Ethiopian Air, Mr. Mesfin Tasew, who also spoke on the issue to aviation reporters in Addis Abba, the Ethiopian capital in October, said they had no intention to set up any airline in Nigeria but that it was the Federal Government that asked ET to help it set up a strong national flag carrier.
Tasew had denied allegations that the government paid ET billions to bring in a plane, saying it was the leadership of Nigeria Air that asked ET to bring an aircraft painted with Nigerian Air logo to facilitate the progress of the Air Operators Certificate (AOC) and that they agreed took one of their aircraft, painted it with Nigerian logo and flew it to Abuja for demonstration.
Last year however, the Airline Operators of Nigeria (AON) dragged Sirika to court asking it to stop the national carrier deal and withdraw the Air Transport License already issued to Nigeria Air by the Nigerian Civil Aviation Authority (NCAA). The AON also claimed that the firm which served as transaction adviser for the transaction was incorporated in March last year and alleged that the company was linked to the aviation minister. The local airlines further alleged that the ATL issued to Nigeria Air did not pass through the normal security clearance. According to them, the federal government’s partnership with Ethiopian Airlines on the project would send domestic airlines out of business by opening up the domestic air travel market to Ethiopian Airlines.
In defence of his actions, Sirika in an interview, said the Federal Government earmarked N5 billion for the Nigeria Air project and that out the amount, N3 billion was released from which expenses were made. “From 2016 to 2023, all the money that was voted for Nigeria Air was N5 billion. What was released was N3 billion and that is where money for transaction advisers, salaries and others, was spent and all of it had not been utilised before I left,” he said.
He also denied having any direct involvement in the unveiling, saying that it was the decision of the shareholders of Nigeria Air to unveil an aircraft as a marketing strategy. On the amount that the shareholders have paid as equity into Nigeria Air, he said, “The business plan had $200 million as capital, once they finish the documentation of the shareholders agreement and they sign, then they will pay what they are supposed to pay.”
His defence didn’t help much as during a tour of the airports in Lagos in September which is a few months after Festus Keyamo was appointed the Minister of Aviation and Aerospace Development, he announced that the Nigeria Air has been suspended pending a thorough review of the terms and conditions of the deal.
In November during a Federal Executive Council meeting. Keyamo said Sirika’s deal with Ethiopian Air would’ve ruined domestic airlines because among the terms of agreement between the Nigerian government and Ethiopian Airline, which was the major investor in Nigeria Air, was that the national carrier would be given a five-year tax waiver, a move he said would have destroyed domestic airlines. Besides the issue of tax waivers, Keyamo pointed out a proposal in the agreement allowing Ethiopian Airlines to appoint personnel at all levels within Nigeria, which could lead to a scenario where ET controls top management positions.
Nigeria failed to meet 70 percent benchmark in ICAO audit
For the first time in 15 years, Nigeria’s aviation sector failed to meet the 75 percent benchmark after the mandatory ICAO audit was conducted between August 30 and September 11, 2023. The audit focuses on a country’s regulatory agency’s capability to provide safety oversight by assessing whether it has implemented the critical elements of a safety oversight system effectively and consistently.
The Nigeria Civil Aviation Authority (CAA) under the leadership of Capt. Musa Nuhu, scored 70 per cent in Effective Implementation (EI) at the end of the audit and was found wanting in training. The regulatory agency scored 90 per cent in legislation, 83 per cent in organisation, 84 percent personnel licensing and 62 per cent in operations. The former rector of the Nigerian College of Aviation Technology (NCAT), Capt. Alkali Modibbo, told aviation journalists that the 70 percent score Nigeria got is not a pass mark by ICAO and aviation standards because it is well known that 75 percent is the benchmark.
“Since we started flying, 75 per cent has been the minimum and in aviation, anything below 75 per cent is a fail. An audit is not a witch hunt, but to help you to put things right. Most of the problems we have are implementation of policies that we have on ground. Our policies are very good, but implementation of the policies is what we lack, but NCAA has woken up for the corrective action plans.
“All I will tell Nigerians and every stakeholder is that it is good to have audits and if you have some open items, it will help you to close them and even do better. If you get things easily on a platter of gold, you will relax. The ICAO auditors will come back in another 18 months to come and see if we have closed the gaps noticed. In a nutshell, Nigeria is doing very well,” he said.
Appointment Heads of agencies
The Managing Directors and Directors-General of agencies in the Ministry of Aviation and Aerospace Development were sacked in December and new appointments were made. The affected agencies were the Federal Airports Authority of Nigeria (FAAN), Nigerian Airspace Management Agency (NAMA), Nigerian Safety Investigation Bureau (NSIB), Nigerian Meteorological Agency (NiMET), NCAT and the Nigeria Civil Aviation Authority (NCAA).
Mr. Kabir Yusuf Mohammed was removed as the Managing Director of FAAN and replaced with Mrs. Olubunmi Oluwaseun Kuku, while Mr. Tayib Adetunji Odunowo was removed as the MD of NAMA and replaced with Umar Ahmed Farouk. Akinola Olateru was removed as the DG of NSIB and replaced with Mr. Alex Badeh Jr, while Prof. Mansur Bako Matazu was removed as the DG of NiMeT and replaced with Prof. Charles Anosike. Capt. Alkali Modibbo was removed as the rector of NCAT from and replaced with Mr. Joseph Shaka Imalighwe, while Capt. Musa Nuhu was suspended as the Director-General of the NCAA to enable the Economic and Financial Crimes Commission (EFCC) to conduct an unfettered investigation into his activities and other senior officials in the agency and he was replaced with Capt. Chris Najomo. The FG also sacked and appointed 46 new directors to oversee the agencies.