From sky to junkyard: Sad journey of Nigeria’s 160 moribund domestic airlines
He stood in front of the reflective wall, adjusting his tie slowly for the umpteenth time. Having just concluded a ‘huge’ deal with his client at a popular hotel in Abuja, Nigeria’s capital, Okoye Andrew dashed for the lift in high spirits as he made his exit en route the airport.
He had to be in Lagos before his wife, Sandra, jetted out to Germany that night. Time was 6:00pm, rush hour in the capital city.
By the time a taxi finally dropped him off at the airport, all major airlines had left. His only option was the type nobody loved to patronise. He was in a fix.
“By the time I got to the airport, the only airline available is one that I had been warned by friends never to board,” Andrew said during an encounter with our correspondent. “Those who had patronised that airline in the past told me about the terrible state of their aircraft and that they were like accidents waiting to happen.
“But at that point, I didn’t have a choice, I had to join them if I had to be in Lagos that night,” he added.
Few minutes on board, Andrew’s worst fears were confirmed. Apart from being welcomed by a choking smell and the sight of water soaking the floor of the plane, the general atmosphere inside the aircraft fell far below expectations. It was a nightmare in broad daylight.
“It was a small plane and we were about 15 with only one middle-aged female flight attendant in it,” he recalled. “I sat close to the wing, trying to enjoy the view outside but the moment the plane began to rev up, I felt like running out. When it eventually took off, it continued to fly at low altitude while roaring like it would crash.
“To make matters worse, some minutes into the flight, after the hostess had served us cookies, there was turbulence and it seemed like we were going down, but the hostess kept telling us to relax. She told us to move to the front so the weight could be evenly distributed. I wondered what that meant.
“It was at that point that I said my last prayer. I thought it was over. But by the grace of God, we got to Lagos in one hour 40 minutes and at that moment I vowed never to board that airline again.”
Few weeks after Andrew’s nasty experience, the airline, unable to improve on its quality of services, folded up. And several years since that period, a number of other poorly-managed airlines have equally closed shop, turning the backyards of the country’s airports to graveyards for their ‘dead’ aircraft.
With undisguised annoyance, many air travellers and watchers of Nigeria’s aviation industry have lamented how domestic airlines in Nigeria seem to be folding up in their numbers, more so that they all find it difficult to operate for more than 10 years.
This concern was equally echoed by the Managing Director, Asset Management Corporation of Nigeria, Mr. Ahmed Kuru, in a recent interview with our correspondent, when he expressed deep worry that no Nigerian domestic airline has successfully operated for 10 years in the history of the country.
Once upon a vibrant sector
Interestingly, Nigeria once had a thriving aviation sector, such that many airlines sprung up and expanded in capacity with time.
It is worthy of note that at Nigeria’s independence in 1960, Nigeria Airways was the only domestic airline in the country and it was the national carrier, plying both domestic and international destinations, including countries in Europe, North America, and Asia. People who flew it at that time said its success earned it great respect and people were always happy to have a seat reserved on it.
Meanwhile, after the liberalisation of the aviation sector in the late 1980s, private airlines, including Okada Air, Kabo Air, Gas Air and Albarka Air, came on board in their numbers. And with the ready market – passengers – the airlines increased in capacity, while some chattered airlines also began coming in.
In fact, during ECOMOG’s intervention in Liberia’s civil war in the early 1990s, most of the private airlines had grown in capacity that the military government readily made use of them to airlift military personnel to Liberia. The Federal Government was paying the airlines handsomely and they were making money, expanding their operations.
The military airport commander at the Lagos airport during that period, Grp. Capt. John Ojikutu (retd.), told our correspondent that there were over 2,000 flights within that period and that government was paying the airlines $50,000 per trip for the BAC-111 aircraft and $120,000 for the Boeing 747 aircraft.
“So, the airlines made a lot of money and they were not paying landing or parking fees because it was an emergency operation, and government never owed them any amount,” he added.
But it would appear that the success recorded during that era was short-lived, as the airlines began to fold up one after the other, and today, almost all of them that operated during that era had become moribund.
A document obtained by our correspondent from a source at the Federal Airports Authority of Nigeria showed that about 160 airlines and private aircraft operators in Nigeria are now defunct, between the time the aviation sector was liberalised in the late 1980s and now.
The list is indeed a long one, but some of the popular names on the document include ADC Airline, Afrijet Airline, Air Meridian, Albarka Air, Barnax Airline, Bellview Airline, Chanchangi Airline, Dasab Airline, Hak Air, Harka Air, IRS Airline, Kabo Airline, Gas Air, Nigeria Airways, Okada Air, Oriental Air, Pan Africa Air, Savannah Airline, Slok Air, Sosoliso Airline and Triax Air. At the moment, they are all moribund and almost all of them no longer have offices or functional websites.
However, one could suffice it to say that the most popular of the defunct airlines is Nigeria Airways, which in its heyday, was, apart from being the national carrier, a contemporary of Lufthansa, British Airways, KLM, etc.
At some point, Nigeria Airways had about 30 aircraft in its fleet, with thousands of workers in its employ. And while deriving its share in the lucrative aviation business, Nigeria Airways was said to have about 300 prime properties, worth billions of naira, scattered across the world.
But gradually, due to what experts have narrowed down to poor management, corruption, overzealous employees who were fond of giving free tickets to senior government officials in a bid to curry their favour, and the refusal of the government to review and update the number of aircraft in the airline’s fleet, the airline began a downward slope to the bottom till it became a thing of the past.
Ojikutu, who buttressed the overzealousness factor with a personal experience, stressed that apart from poor management and corruption, sycophancy was one of the things that killed Nigeria Airways.
“There was a lot of sycophancy and they (the workers) gave a lot of concession to government officials to travel free, even when they had passengers that were ready to pay,” he said.
He recalled, “I was at the airport one day and Babangida’s wife (Maryam) was to go with some governors’ wives to Budapest in Europe. They (Nigeria Airways staff) shared economy tickets to all the women free.
One of the women happened to be the wife of my boss. The man wasn’t comfortable with his wife flying economy, so he gave me money to buy her first class ticket.
“On the day they were travelling, when my boss’ wife got to the aircraft, the same people with economy tickets were all seated in the first class and business class. That was an arrangement by Nigeria Airways and nobody from Aso Rock forced them to do it. When the same people now blame the government for the collapse of Nigeria Airways, I just laugh.”
In yet another revelation as to what led to the collapse of Nigeria Airways, the last Senior Legal Officer of the airline before its liquidation, Mr. Nwachukwu Okafor, had in an interview told Saturday PUNCH that it was not true that the airline folded up due to its indebtedness. He said oftentimes, the airline’s services were not paid for and that over the years, the government failed to boost the fleet of the airline, hence, its capacity began to derail.
He said, “The biggest debt which Nigeria Airways owed at a time was $31m, which resulted from non-payment of lease rentals of a DC-10 aircraft which Nigeria Airways leased from Equator Leasing Corporation. I can authoritatively report that the debt was paid by the General Abdulsalami Abubakar’s administration.
“The truth is that as of the time that Nigeria Airways was liquidated, the only debts being owed were trade debts which were current operational debts.”
Whether due to poor management, corruption or government’s failure to boost its fleet, the airline has gone down the drain, rendering thousands jobless, some of whom had died while trying to claim their entitlements.
From the about 30 aircraft in its fleet, only about four aircraft were remaining as of the time it was liquidated in 2003, because those that were lost due to crashes were not replaced, some were old and became unusable and some that were on lease had to be returned to the owners at the expiration of the lease.
Today, the ‘Flying Elephant’, as Nigeria Airways was known, can no longer fly. Our correspondent gathered that the scraps of the very few aircraft it had left have continued to gather dust at the premises of the Murtala Muhammed International Airport Lagos, as each day passes by, while its competitions have continued to expand their operations and capacity, whilst contributing effectively to the economy of their respective countries.
At the moment, one of its contemporaries then, Lufthansa, which commenced operations three years before Nigeria Airways, currently plies 220 destinations with the 277 aircraft it currently has, plus three on order, while KLM plies 145 destinations with the 120 aircraft it currently has, and it has placed orders for four. Also, British Airways plies 183 destinations with the 268 aircraft it currently has, plus four that had already been ordered.
Interactions with people revealed that the trajectory of Nigeria Airways is one that makes most Nigerians sad, more so that all the attempts to revive it have continued to hit the wall, in spite of the fact that Nigeria has the human capital and funds to run its own airline.
While the carrier of the giant of Africa, Nigeria Airways, has fizzled out of existence, Egypt Air that commenced operations in 1932, 26 years before Nigeria Airways, currently has 55 aircraft in its fleet and it plies 73 destinations.
Also, South African Airways that started operations in 1934 currently has 55 aircraft and it operates 39 destinations. In the same vein, Ethiopian Airlines that commenced operations in 1946, 12 years before Nigeria Airways started, currently has 90 aircraft and it plies 122 passenger destinations and 39 cargo destinations.
Equally, some African airlines that were either halfway to where Nigeria Airways was or were non-operational at that time have now become the darling of the aviation sector in Africa.
For example, Kenya Airways that commenced operations in 1977 now has 36 aircraft in its fleet, while RwandAir that commenced operations in 2003 plies 21 destinations with the 13 aircraft in its fleet. This implies that in spite of the civil war – Rwanda genocide, which almost brought the country to the ground, its aviation sector has picked up and currently, it has one of the fastest growing airlines in Africa.
But, sadly, what brought Nigeria Airways to its knees seems to have replicated itself repeatedly, with vigour, in other domestic airlines, given how their scraps have also taken space at the backyard of the various airports in the country.
Given the humongous number of domestic airlines and charter airlines operators that have become moribund in Nigeria less than 10 years into their operation, Ojikutu, who is a known expert in the industry, said the primary reason private airlines become moribund is poor corporate management, adding that lack of good business plans had also been a major issue.
He added that operators are wont to blame the government for the fate of their airlines, but that most of them entered the business without adequate knowledge of the industry and that when they started making money, they squandered it. He said at the point of inception, some of the airlines borrowed the business plan of other airlines, and that since the plan was defective, they ended up going under like the airline that used it before.
He said, “You asked what brought those airlines down? Certainly not the government policies, because these airlines were making money, but unfortunately, they had no knowledge of the industry, and as the money was coming in, they were diverting it and divesting it into other businesses.
“When it got to the level when they had to maintain their aircraft, they didn’t have the cash, thus, they had to park the aircraft. That was how they depleted their fleet gradually.”
He stressed that operators tended to focus on the influx of cash, thinking they had made money, but that unknown to them, the bulk of the money they had made would be needed for the C-check (maintenance), which would be done at certain intervals, depending on the age of the aircraft, and the number of hours it had flown, among other variables. The C-check costs between $600,000 (about N219m) to about $2m (about N730m).
“I remember one of them,” he explained, “when it gets to C-check, they would park the aircraft, because they would have spent what they realised over time. The airline had over 20 old aircraft. At the end of the day, all the aircraft went out of business because they kept parking them at the point of doing C-check on them.
“No doubt, aviation business is lucrative, but I always tell them (operators) that commercial aviation is not where you put in $1 and make a profit of $1. Rather, it’s an industry you put in $1 and your profit would come in Cents, and you might not realise it until one or two of your aircraft have gone for C-check.”
Ojikutu said that out of the about 22 airports in Nigeria, only about five of them have night landing facilities, such that once it’s 6 pm, they (airlines) can’t go to any other place, aside from Kano, Lagos, Abuja, Port Harcourt and Kaduna, of recent.
Thus, he pointed out that a good business plan would reflect the airports that have the facility to sustain their operations, the size of the aircraft they would need and the quantity so that their planes would spend more time in the air and not on the ground, where they would be accumulating parking charges, which would eat into their operational cost.
“Your business plan should reflect and ascertain that each of your aircraft should be in the air for a minimum of six hours in a day, because whichever way, you would spend money to maintain them, so it’s not about having 10 aircraft for the fun of it,” he added.
He also noted that due to the lack of adequate knowledge or prestige, some operators bought big planes, like Boeing, when what they needed was a small plane. “How can you buy a Boeing 737 and be flying Lagos to Abuja, which is about one-hour flight? That is an aircraft that is supposed to be in the air for a minimum of three hours, for profitability, because you spend more to maintain it,” he added.
Also speaking on the ugly trend, the Chief Executive Officer, Finum Aviation Services, Sheri Kyari, blamed the situation on a number of factors, but that chief among them is the inability of the operators to manage an airline.
He explained that some of the airlines that went under didn’t have focus and that regulation was not so firm, thus, the owners dipped their hands into the coffers of the airline and transferred money as they pleased. He noted that even though this factor had been minimised, it had not been totally eliminated.
Kyari identified other factors to include multiple taxes, cost of maintenance, cost of fuel, which he described as “very expensive”, load factor, looking at the number of air passengers, which he said was low, and airfare, which he described as low when compared to the cost of operation.
He noted that airlines are usually afraid to increase their fares so as not to lose patronage.
Also speaking on the factors militating against the survival of domestic airlines, the President of the African Development Bank, Dr. Akinwumi Adesina, said in Abuja at the just concluded International World Aviation Forum organised by the International Civil Aviation Organisation, that high taxes was one of the factors militating against the survival of airlines in the African continent.
He added that restrictive regulatory environment had also led to increased cost, limited profitability and limited growth of the market size.
Adesina stated that apart from leading to loss of jobs, these issues had made the continent to lose about 80 per cent of its market to foreign airlines.
He said, “The cost of air travel in Africa remains exorbitantly high and is 200 per cent more than the cost in the European Union and 250 per cent higher than in India for similar distances. A big part of this is the very high taxes, fees, and levies that are charged in Africa.”
An aviation analyst, Olumide Ohunayo, also told our correspondent that ownership influence was part of what had bedevilled domestic airlines in Nigeria, which he said had made it difficult for foreign airlines to partner with them.
He said apart from the fact that there had not been an adequate implementation of the guidelines in the sector, most of the airlines did not have corporate governance structure, like functional Board of Directors, such that owners or the managing directors did as they pleased. He pointed out that domestic airlines needed commercial linkage to be strong because the point-to-point operation would not see them through.
He added that it was ridiculous that the requirement to get an Air Operating Certificate was to have a minimum of two aircraft, saying two aircraft were too small and the policy should be reviewed.
Findings also showed that in the past, people got licences but never had any aircraft to fly.
Speaking on insurance, Ohunayo, who is the Director of Research at Zenith Travels, said “part of the things that took Arik to the ground was when the insurance cover on 10 of its aircraft expired at the same time and they could not pay.”
Asked if regulatory agencies like the Federal Airport Authority of Nigeria, Nigeria Civil Aviation Authority and the National Airspace Management Agency could be absolved of blame in the collapse of the airlines, Ohunayo argued that the agencies do not have full autonomy to carry out their functions due to political influence and interference.
He said, “Sometimes if NCAA wants to sanction an airline for an error, influential people would intervene and prevail on the NCAA to reverse the order. We need an autonomous NCAA and it should know that two aircraft are not enough to issue a licence.”
He also advised the airlines to come together and tell the government that the facilities available do not allow full utilisation of the airports, which would allow airlines to have more frequent flights. “Most airports close by 6 pm to 7 pm, which is not good for the business and the low-cost model,” he added.
The belief that Nigerian airlines don’t last more than 10 years almost found expression in Arik Air a few months ago until AMCON took over the management of the airline.
At the moment, there are about eight domestic airlines in the country, out of which two, including Aero, are under the management of AMCON, due to their humongous debt.
AMCON boss, Ahmed Kuru, told our correspondent recently that if AMCON had not
taken over Arik when it did, the airline would have collapsed two weeks after.
He said, “If anybody tells you anything contrary, I’m challenging that person. Arik had about 15 aircraft parked at the hanger, and if they had flown into Europe or some other places, there were signals to impound the aircraft. It was a good thing that we intervened.”
Kuru blamed the short lifespan of Nigerian domestic airlines on poor corporate governance, saying some owners did not separate themselves from the business, which ruined the business.
The oldest airline in the country at the moment, Aero, which would have broken the record, is also being managed by AMCON. Even though Aero has spent over 10 years, it was all along being run by the Nigerian owners in partnership with British investors. But the British investors left around 2010.
“Aero has the longest lifespan in Nigeria, after Nigeria Airways, and that was because it was being run by Britons. But I told people when the British people left Aero, about 2010, that the airline would not last 10 years when it would go the way other Nigerian private airlines went. Truly, it began going down until AMCON moved in,” Ojikutu said.
“That tells you that it is a structural problem,” said Kuru. “There is the issue of aviation infrastructure, there is the issue of aviation charges, sometimes very high, there is the issue of aviation fuel and there are poor corporate governance issues.
“Most of these businesses collapsed because of lack of corporate governance, which made the principal owners dip their hands into the purse. It is only now that technology is helping them. Those days, they could go there and carry money with bags, but now that people can book online, it has reduced.
“So, there are fundamental issues that need to be addressed at the government level, but I’m happy to say that the current Minister of Aviation (Hadi Sirika), who is also from the industry, is doing some silent reforms.”
While the collapse of the airlines has led to the loss of faith in the sector and massive job loss, just as reports say there are over 600 unemployed pilots in Nigeria at the moment, experts are of the view that domestic airlines can last longer if they do the right things.
Way out of the woods
In his view, Ojikutu said airlines could save money by not giving meals to passengers for one-hour flights. He said, “That meal they serve on the flight from Lagos to Abuja, for example, would cost not less N350 per passenger. Let’s say you carry about 100 passengers, that is N35,000 per flight. If an airline says it is making about 20 flights a day. If you multiply that, I have done it before, it’s about N250m for one airline in a year. So, if you remove meal, you have that money as surplus.
“They could also reduce cabin crew members. If you have about four people to serve the meal, reduce them to two. So, if you reduce cabin crew and you don’t have refreshment, you reduce cost.”
While dismissing agitations that some of the charges are too high, he said airlines should use airports where they could make quick turnarounds so as to reduce their parking charges, which eat into their revenue and increase operational cost.
He said, “Don’t listen to people who say the charges are too high. How come all the foreign airlines are paying the charges. I always say they (domestic airlines) behave like spoilt children. If those charges are not there, the agencies providing the services would run down.”
He also called on the NCAA and other regulatory agencies to be more effective, adding that NCAA should be asking the airlines for their balance sheets.
“Of course, there is money in aviation, but when you make money and you plough it back to the system, it helps, but you make money and divert it, that is what is killing all of them,” he added.
Also speaking on how domestic airlines could survive and outlive the 10 years most of them have not been able to beat, Kyari said one major way was for the government to reduce the multiple destinations given to foreign airlines, so that each foreign airline has only one entry point into the country.
“With that, one can be sure that domestic airlines would have very good load factor because they would be the ones to move passengers from that one entry point to other airports,” he added.
He also said since aviation business is carried out mainly in dollars, the government could intervene, adding that the airlines would also save some money if there is a maintenance facility in the country.
“Even though Aero has set up its own maintenance facility, the facility is small. I don’t know whether their facility would even support their operation, not to talk of doing for others. We need bigger maintenance facilities,” he said.
The General Manager, Public Relations, Nigerian Civil Aviation Authority, Sam Adurogboye, said if run according to the rules, airline business is profitable and the owner(s) would make good profit, but that lack of corporate governance had been the major bane of domestic airlines in Nigeria.
He added that the practice of using the money made by their airlines to run their other businesses was inimical to the survival of airlines noting that such owners tend to run into trouble when it’s time to pay for maintenance or pay for their insurance.
He added, “Other factors include high cost of operation, high cost of fuel, owner’s undue influence, high cost of forex, in which case they need to change their naira to foreign currencies when taking their aircraft abroad for maintenance.”
Speaking on the way out, he said the way to go was for airlines to adopt global best practice by merging or forming alliance. “Even the leading carriers all over the world are into one alliance or the other, but our operators want to go it alone, whereas they don’t have the financial muscle,” he added.
He pleaded with airline operators to get their acts together, saying there are about 27 requests for Air Operator Certificate (licence) before the NCAA, at various stages of processing.
He explained that even though the NCAA was not happy that some airlines folded up, it would not compromise safety standards. Punch