On flying in Nigeria…

"Plane departure times are just suggestions in Nigeria. Arrive 30 minutes late and you'll easily make your flight." — Nebo Iwenofu

The inspiration for this post is from my air travel experiences during my most recent trip back home. All my air travels during this last visit — there were 6 of them — were all so frustrating that months after leaving, I vent about my experiences to anyone who cares to listen and I still feel the need to write a post to address my frustrations. After some thought, I think the best way to do this is to share my experiences, spell out the issues I see with the major stakeholders in the industry and then offer up some solutions that will make the air transportation industry in Nigeria really take flight.

My experiences…

I'll start off by listing my flights and the different issues I encountered:

• Abuja to Owerri: This flight was operated by Air Peace and was delayed for over an hour. This was my first domestic flight in a while so I assumed the delay was due to peak travel traffic on a Friday afternoon.
• Owerri to Abuja: The return leg of this trip was also to be operated by Air Peace. This flight was cancelled and I only found out after arriving at the airport. There was a ground collision of 2 Air Peace planes and that meant there were no available planes to run this route for the next couple of days. I was able to get a full refund on my tickets.
• Abuja to Lagos: This flight was operated by Dana Air with the customary hour long delay.
• Lagos to Accra: This was an early morning flight with Air Peace and was only delayed 30 minutes.
• Accra to Lagos: The return leg was operated by Air Peace and was right on time! I know this isn't necessarily a domestic flight but Ghana is about an hour away from Lagos so…
• Lagos to Abuja: This Dana Air flight was delayed for over 2 hours. No explanation or apology given, just a regular ol' 2 hour flight delay.

I think the uniformity of the delays shows that there is a problem with the infrastructure in the air industry. One flight delay somehow causes a domino effect and delays flights all around the country.

About half of all flights are delayed in Nigeria.

The issues…

One of the most important issues in the air transportation industry in Nigeria is the ownership of the airports. All the major airports in Nigeria are owned and operated by the Federal Airports Authority of Nigeria, FAAN. This means the federal government, through FAAN, is solely responsible for the efficient movement of people and goods through the Nigerian airports. Added to the fact that the Nigerian government has never been known to do anything efficiently, there is no real incentive for FAAN to ensure an acceptable level of efficiency in its operations. It isn't beholden to any shareholders (technically it is and it's us, the Nigerian people, but we aren't really checking for FAAN) and it faces no competition to improve its services. This lack of competition and incentive to be competent has led to the regular delays I experienced, and poor management and maintenenance of critical air transportation infrastructure. These issues lead to a bad passenger experience and also prevent maximum and efficient use of aircrafts — affecting the bottom lines of airlines operating in Nigeria.

Another big issue affecting the airline industry in Nigeria is that the policy environment within which the airlines operate is not one that encourages investment. Greater airline competition is better for the Nigerian passenger because more customer segments are served and prices go down but the current climate airlines operate under in Nigeria is very prohibitive and makes entry into the air transportation industry even harder. The cost of operating aircrafts in Nigeria is very high as there's no guarantee of aviation fuel supply; the cost of said fuel is higher than it is in other comparable markets; and airlines regularly have to transport their aircrafts overseas for maintenance (meaning they also need access to foreign exchange and that's a whole other issue). As if these operating costs aren't enough, domestic airlines pay about 35–40% of their ticket sales in taxes and levies to the Nigerian government. These taxes include: a registration fee, ticket sales charge, cargo sales charge, Value Added Tax (VAT), Passenger Service Charge, charter sales charge, aircraft inspection fees, simulator inspection fees, Landing charges, parking charges, terminal navigational charge, enroute charge, fuel surcharge, airport space rent, electricity charges, apron pass, and ramp access charges.

All of these infrastructural and operational issues lead to a difficult business environment causing airline failures. According to Captain Nogie Meggison, The Chairman of Airline Operators of Nigeria (AON), over 27 airlines operating in Nigeria have gone under in the past 25 years. Among those failures include Richard Branson's Virgin Nigeria, Bellview airlines and Sosoliso airlines. Arik and Aero Contractors, who together account for over 55% of all domestic passenger traffic, have recently been taken over by the Asset Management Corportation of Nigeria, AMCON, due to their failure to meet their exorbitant debt obligations.

Possible solutions…

The air transportation industry in Nigeria will not move ahead without a serious effort to improve the environment within which the airlines operate. The current policies and regulations have caused a blackhole for money and any new investment will surely be lost. That said, AMCON's take over of Arik, the countries largest airline, and calls to create a new national carrier is not the way forward. The reincarnation of Nigerian Airways and Arik-under AMCON's management- will still have to operate under this strangling environment and will likely fail. A better move for the government is to take temporary minority positions in the failing airlines to ensure these airlines are properly run while providing them with a much needed cash injection. The government at the same time needs to work with air industry stakeholders to create an enabling environment for them to thrive and improve competition and entry. Once the industry is in better shape or on an upward trajectory, the government can exit its positions in the industry at a profit. Airlines will be in better financial shape and will be operating under more favorable regulatory conditions and customers will have better service and travel experiences — winners all around. A somewhat similar model was used by the US government to bail out the auto industry during the most recent economic depression.

Also, the government has to take a back seat from owning and operating the country's airports. Service at these airports will only improve when owners of the airports have a financial incentive to make the airports run efficiently. A non-profit partnership can be created with airlines and other industry stakeholders to operate and manage these airports. This way airlines have a say in the way airports are run and they are counterbalanced by the government who can prevent any predatory practices on air passengers. A similar model is used to operate airports in Canada to great success.

What airlines need to do…

While government needs to do their part, airlines need to do theirs too and improve on the way they're run. An improved business environment should encourage airlines to innovate and take risks with their business models. Airlines in Nigeria have used a sort of one-size-fits-all approach in pricing seats on flights because it's the most risk averse option available and it provides some degree of certainty in a very uncertain environment. An improved business environment will allow airlines to target different market segments and tailor services accordingly. For example, Ryannair and Spirit airlines target budget travelers in Europe and the USA respectively, and JetBlue and Virgin America have pricier tickets for passengers requiring a better travel experience. As the air transportation industry in Nigeria improves, airlines should work to better understand the different market segments and create services to cater to them.

In conclusion…

The common theme between all the stakeholders in the air transportation industry in Nigeria is mismanagement! Mismanagement of the airports and air travel infrastructure, operational mismanagement of the different airline businesses and mismanagement of industry regulations. With continued mismanagement of existing infrastructure, the problems experienced today will be exacerbated when demand for flights, number of flights flown in the country and number of air routes in the country all increase.

The onus is on the government to create an enabling environment for entrepreneurship and investment in the sector. This will undoubtedly lead to better management and improved operational efficiency in the air transportation industry. The government's role in the sector should be laying down regulations to improve safety standards and working with interested private investors to mitigate the risk of entry into the industry. These actions will attract entrepreneurs and investors, create jobs, increase competition and improve the overall customer experience — winners all around! This proposed role for government in the sector means divesting current stake in the country's airports and relinquishing management of these airports to a non-profit board created in partnership with other industry stakeholders. It also means the government has no business creating another national carrier!

I believe the market for air travel will only grow because the Nigerian population will swell to about 413 million by 2050, according to the Economist and the UN, and the percentage of people in the key 15–59 year old demographic will be about 59% as opposed to the 52% it is today (i.e. 244 million in 2050 vs 95 million in 2015). A failure to greatly improve on the infrastructure and management in the airline industry, by both government and private sector stakeholders, will lead to a missed expansion opportunity for the Nigerian economy by 2050 because the market for potential air fliers will be grossly underserved.