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Louis Ibah
Five years without a record of an air crash on a commercial aircraft in Nigeria certainly speaks volumes about the state of safety of the country’s aviation sector.
The last air accident witnessed in the Nigerian sky was the Associated Airline flight 361 of October 3, 2013 which claimed the lives of 15 out of the 20 passengers plus crew on board the flight. Investigators from the Accident Investigation Bureau (AIB) had linked the crash to a fault in one of the Embraer120 Brasilia aircraft engines which culminated in its stall and crash few minutes after take-off from the Murtala Muhammed Airport in Lagos.
Without a doubt, there is no denying the Nigerian Civil Aviation Authority (NCAA) the bragging rights on the zero-accident rate that the industry enjoys at present. It is a feat made possible by the NCAA’s enforcement of a regime of safety regulations on all operating airlines in the country, in line with global standards set by the International Civil Aviation Organisation (ICAO).
A spate of air crashes spanning more than a decade (2002-2013) had led to the dubbing of aircraft flown by Nigerian carriers as ‘flying coffins’ by some commentators. It was an era where fear and insecurity enveloped air travellers each time they made their way to board domestic flights.
But improvements in the industry safety records in the last five years have no doubt boosted passenger confidence with a corresponding increase in patronage for local airlines. According to data by the Federal Airports Authority of Nigeria (FAAN), passenger traffic has maintained an upward swing in recent years; from about 8.2million in 2014 to 10.9million in 2017 and 15.3million in 2018 and the figure is projected to hit 16 million by end of 2019.
Although safety regulations have guaranteed safe flights for operators and passengers, some concerned stakeholders in recent weeks are beginning to demand that the same code of strict safety regulatory oversight be extended to economic regulations of the industry by the NCAA.
According to the President of the Aviation Round Table (ART), Mr. Gabriel Olowo, placing so much emphasis on safety regulations with little or no attention paid to the financial health of operators could prove counter-productive in the immediate future. Regulators, Olowo said, should begin to take interest in what happens with the financials or balance sheets of industry operators, particularly the airlines. Only financially stable airlines can afford to foot the exorbitant bills (in foreign exchange) required to purchase and maintain aircraft fleet; pay the statutory taxes to government, regulatory, navigational, air traffic, airport, meteorology agencies, as well as remuneration to staff.
In Nigeria what regulatory agencies focus more is making sure that airlines meet up to the minutest of the safety standard requirements of their operation, and the next target is meeting up their monetary remittances taxes and charges as demanded by relevant agencies. It does not really matter to regulators if the airlines, for instance, are grappling with fiscal policies that have encumbered their profitably to meet those taxes/charges, conduct regular checks and maintenances on aircraft fleet and still remain a going concern.
“Running an airline business for instance is very capital intensive; it is not for the faint hearted,” noted Olowo. “The cost of fuel is highest in Nigeria and takes up about 40 per cent of operational overhead; taxes are also high, and there is also the problem of low utilisation of aircraft as most airports lack the equipment to support flights after 6.30pm,” he added.
Speaking at a seminar organised by the League of Airports and Aviation Correspondents in Lagos recently, Olowo noted that unlike in other jurisdictions where regulators take pride in working towards the sustainability of airlines given the inherent benefits to the economy, the Nigerian experience has been one where regulatory policies appear to be targeted at the liquidation of operators.
“The essence of regulations is not only about safety; in Nigeria, we have passed that safety test. But we have failed in the economic regulations,” said Olowo.
“The investment climate remains very harsh and there are issues of multiple taxation and if you were to complain, the best you will get from the regulatory agencies is ‘I will shut you down’. If we don’t take time the local industry will be wiped out,” Olowo stated.
Why regulate the economics of operators
In Nigeria, the aviation industry supports about 300,500 jobs. It also contributes $940 million (about N184.7 billion) to national GDP, according to a 2015 industry data.
Of this sum, 49 per cent (which is $462 million or N90.8 billion) is a direct output of the aviation sector (via airports, airlines and ground services) while 51 per cent constitutes indirect jobs (via the supply chain). Additional $464 million (N91.2 billion) is derived from tourism, which raises the overall contribution to $1.4 billion (or about N275.9 billion).
The Nigerian Civil Aviation Authority (NCAA) is saddled with the statutory responsibility of licencing operators and regulating their activities in the Nigerian aviation industry. Globally, aside boosting transport, trade, and tourism, aviation serves as a barometer of measuring the economic growth of countries.
What operators want is to see is the NCAA regulating the sector to create more jobs and increase contribution to GDP from the present abysmal 0.6 per cent to about 12 per cent.
Calls for economic regulations have become necessary as there abound cases of airlines and airports granted NCAA licences to operate, only for such ventures to turn out as big business flops due largely to issues bothering on lack of corporate governance, mismanagement and misapplication of funds. With the Nigerian government pursuing an economic diversification policy given dwindling revenues from the petroleum sector and agriculture, aviation and tourism sectors are expected to make significant contributions to complement income from traditional revenue sources . This makes a strong case for greater economic regulations by the NCAA on existing and prospective investors in the aviation sector. The aim should be the growth and survival of businesses.
