Expert: Airline business in Nigeria prone to losses

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Chairman, HRG (Nigeria) and travel management consultant, Mr. Femi Adefope, has described aviation in Nigeria and, by extension, airline business in Nigeria and other places, as prone to losses, saying that Nigeria is a tough country to do such capital intensive business.

Adefope, who spoke to New Telegraph at the APG IET DAY in Lagos at the weekend, noted that the carriers were using largely imported products, even with uniforms, adding that if the uniforms were properly made, they are supposed to be fire retardant uniforms, which are not manufactured locally.


He reiterated that the sector was being subsidised, even with deregulation of the industry like the subsidy in the petroleum downstream sector. He expressed the concern that many airlines were operating in Nigeria today because of a lack of proper feasibility study and based on the perceived success of other airlines.

His words: “People are not doing proper feasibility studies before they venture into the airline business.


Again, when you go to borrow large sums of money, the interest rate is a lot. “I am not querying how people put funds together; there should be more cooperation between airlines. There should be a local clearinghouse, but because people don’t trust each  eraother, you can’t enforce anything, because you do not have a national identification card system here and that is one of the biggest drawbacks we have here.

“People do certain things for the wrong reasons with government not obliged to subsidise Jet fuel because these things are paid for in foreign currency and that is why foreign airlines are not complaining because that is part of their costs because that is how they pay anyway. If you look at our business set up, a lot of people are going into airline business without proper business plans,” he stated.

Many of the country’s airlines lack corporate governance coupled with lots of greed just as over-taxation has equally been attributed to many factors bedeviling airline operations in the country.

Adefope admitted that the travel industry had, to a large extent, recovered 70 per cent from the pre-COVID-19 era, stressing that business travel was the slowest to recover for obvious reasons.

“So far, to a large extent, the industry has recovered. We are about 70 per cent of where we were in 2019. Business travel was the slowest to recover for obvious reasons. Technically, we are still in the pandemic because the World Health Organisation (WHO) has not declared the pandemic ended because of the implications on employees but tourism has picked up.

“If you go to Dubai today, you will see so many Nigerians there. You will think that we have all relocated. People are itching to go on holiday because it helps everybody mentally. That has helped to jumpstart the travel business. We are hoping that business travel would start which would be slowed down during the elections. We hope that things will work out well,” he noted.

African airlines seem to be re turning to profitability. The last three years were excruciating for airlines and the travel industry. It was a crisis that ‘crumbled’ literally the entire global travel industry. But since the relaxation of COVID-19 rules, airlines and the travel trade operators have dusted themselves up by posting fantastic financial results.

Although the carriers are not yet back to their pre-COVID-19 state, they have, however, shown remarkable signs to bounce back. Nigerian carriers are not doing too badly despite a very poor economy. With the high airfare introduced in the wake of the astronomical cost of Jet A1 and the harsh economic situation, they have been able to remain afloat, although they are not out of the woods yet.

 

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