No doubt, Nigerian aviation is underperforming relative to its capability. For instance, relative to Nigeria’s gross domestic product (GDP) of N80.3 trillion ($509.9 billion), Nigerian aviation contributes a meagre $0.7 billion or 0.4 per cent to the GDP, though it has the potential to contribute in excess of 5 per cent to the GDP and can support in excess of one million jobs.
Aviation experts say for Nigeria to really tap significantly its potentials in aviation business, it must attain its position as a regional hub, connecting more destinations across the globe. This will attract huge traffic and investments into its fledging aviation industry.
Experts agree Nigeria has the capacity to be a regional hub because of its strategic location. Indeed, Nigeria is strategically located and can naturally connect to Europe, the Americas and Asia in relatively short time – in an average of eight hours. In some of the countries, Nigeria connects them in just six hours. This relative short travel time should attract a lot of travellers into Nigeria for business, leisure or connect flights to other destination.
For instance, Nigeria connects the United Kingdom in 5.5 hours, Brazil in about nine hours and the United States in 13 hours, while the UAE is seven hours away. Within Africa, Nigeria is at the heart and can connect to almost all parts of Africa in less than two hours.
But experts maintain that being a regional hub in the aviation business is not a tea party. Nigeria, they argue, needs to develop the capacity to make it to the club of globally respected hubs like Dubai, Singapore, JFK, and Johannesburg.
Nigeria has untapped regional opportunities to become the hub in West Africa. But there are some fundamental constraints. In a presentation recently, the Minister of Aviation, Chief Osita Chidoka listed the impediments to include under-financed domestic airlines, under-utilized BASA agreements, weak corporate governance in the industry and poor incentives for private sector participation.
According to him, these challenges have resulted in weak institutions, lack of economic opportunity, inability of the sector to significantly contribute to the GDP and low capacity to take advantage of the growing market potential.
To fast tract developments in the sector, the federal government said the private sector must invest at least $5 billion (N990 billion) in Nigeria’s aviation industry between now and 2018 in a short-term financing programme when traffic in Nigeria is projected to hit 12 million annually.
The midterm financing projection indicates that by 2018, about $7 billion investment would be needed as about 25 million passengers would be processed at the time.
Farouk Gumel of PriceWaterHouseCoppers, recently in a presentation tilted “Putting the Nigerian Aviation Market in Context” at an aviation business forum held in Lagos, noted that using its geographical advantage and financial resources, the Persian Gulf has transformed itself into the main hub for international air travel.
Gumel noted that for Nigeria to break into that exclusive club of aviation hubs, huge private sector involvement in airport infrastructure is critical. “The privatisation of airport infrastructure globally is on the rise as evidenced by an increase in refinancing activities and the diversification of revenue base. In recent times, airports are focusing on customer experience by being more creative with airport services and generation of non-aeronautic revenue,” he said.
He noted that majority of airport infrastructure in Nigeria are government-owned with most being significantly under-utilized. According to him, 75 per cent of passenger traffic are from three airports – Lagos, Port Harcourt and Abuja – in the past five years.
He noted that in 2011, over 90 per cent of the revenue earned was from two airports – Lagos and Abuja. This indicates that majority of the airports in Nigeria are significantly under-utilized, an unhealthy situation if Nigeria must be an aviation hub. Gumel seemed, however, glad in his disclosure that an Aviation masterplan has been developed to provide a strategic focus for the industry. He also noted that the government of countries that have succeeded in making aviation viable decided to make it a priority sector and made substantial investments to develop the sector.
Taking the discussion further, Mr Adekunle Abdulrazaq Oyinloye, Managing Director/Chief Executive Officer, Infrastructure Bank Plc believed the aviation sector is on a growth trajectory, as evident in economic indices that showed the sub-sector grew at a compound average rate of 14.3 per cent between 2010 and 2013 following reforms in the industry.
Mr Oyinloye, who spoke on “Financing Airport Assets and Infrastructure on a Sustainable Basis” said it is clear beyond doubt that there is immense headroom for growth in Nigeria’s aviation industry. Indeed, he stated, the federal government has conceptualized an aggressive growth and development plan for the industry.
“It is essential that development of the aviation sector is driven by a comprehensive programme that balances airport capacity requirements, with other key factors such as incorporation of operator/user-friendly and safe design features; interconnectivity with other modes of transportation; and provision of expansion/scalability of infrastructure and facilities within urban cities (which typically imposes development constraints), to mention a few, culminating in the development of an Aviation masterplan, which provides certainty of the development targets and the roadmap for the sector,” he noted.
According to him, a financial plan is required to ensure successful implementation of the masterplan. He expatiated: “Given government funding constraints, it is evident that a realistic financing plan for the aviation sector would incorporate a mix of funding from both government and private sector sources. While government funding sources include traditional on-budget funds, as well as internally generated revenues, private sources are relatively less conventional and could be in various forms, which would include private equity, infrastructure funds, capital markets and public private partnership arrangements such as private finance initiatives, concessions and other variants. The financing plan is particularly important because it highlights the portion of funds to be allocated to the private sector, which serves as the impetus for attracting private sector investment into the sector.”
According to him, a commercially-driven model is the desired structure for the aviation sector, whereby private investors take on financing, development and operating risks, while the government maintains regulatory oversight of the sector.
This trajectory appears to be the focus of the Managing Director of the Federal Airports Authority of Nigeria (FAAN), Engineer Sale Dunoma, who recently said that the Aviation masterplan is the paradigm shift in the formulation of aviation policies.
Eng Dunoma stated that “never before have aviation policies in the country made such immediate impact on the airport landscape and the economy than we are witnessing today”. He advised that part of the efforts must be channelled towards immediate certification of some of its international airport terminals, which experts agree must occur before Nigeria can be reckoned with in its quest to achieve a regional hub status.
Dunoma is hopeful Nigeria would meet the 2015 deadline as set by the International Civil Aviation Organisation (ICAO) to get, at least, two of the international airports certified. He reminded that the agency had in 2006 signed an undertaking with the Nigerian Civil Aviation Authority (NCAA) to certify the country’s international airports, especially the Murtala Muhammed International Airport, Lagos and Nnamdi Azikiwe International Airport, Abuja.
He explained that based on the agreement, the country was able to scale through the ICAO Universal Oversight Audit Programme (USOAP), stressing that recently, FAAN set up a certification team to appraise the requirements for certification.
He said, “Certification of aerodrome is a means of demonstrating that an organisation has implemented its quality management system appropriately; this includes a third-party audit. Quality management at airports ensures safety, security, efficiency and service, thereby stimulating air traffic and increase in financial profit.”
He explained further that the certification of airports brings about achievement and maintenance of a higher standard level of safety, promotes standardisation and consistency of procedures and operations.
Another requirement is airport facilitation, which requires the minimum time for passengers to complete all airport formalities for transit travels in line with global practices, a target which, he was sure, can be achieved.
According to aviation experts, before an airport could get an ICAO certification, it must have full fire cover with adequate fire fighting trucks and other equipment to handle emergencies. Such an airport is also expected to have a comprehensive airport security manual and programme tailored to fit into the standards and recommended practices of ICAO.
To ensure that there is tight security at the airports, the FAAN MD said the federal government has deployed advanced technology security systems in airports across the country, adding that it has also put in place a joint military security operation to further secure facilities at the various airports. Also deployed is a 24-hour surveillance patrol at the five international airports, viz, Murtala Muhammed International Airport (MMIA), Lagos; Nnamdi Azikwe International Airport (NAIA), Abuja; Port Harcourt International Airport (PHIA); Mallam Aminu Kano International Airport (MAKIA), Kano and Enugu International Airport (EIA).
The FAAN boss said: “Thus, to enhance airport security, various biometric devices and smart cards are options currently being considered or implemented across the world. We are working hard to tackle these challenges.”
Nigeria deserves a regional hub status, and whatever it takes, the authorities concerned must deliver on the mandate.