Africa's largest domestic airline market is close to total collapse, with just 10 aircraft left operating to serve Nigeria's 90 million population.
The explosion of private operators, which filled the vacuum left by Nigeria Airways as it struggled to define its role in a confused political environment during the 1990s, has shrunk dramatically. The combination of domestic recession and a poor image among overseas lessors has left the carriers starved of equipment and finance while they continue to wage a fierce price war to attract the remaining traffic.
Nigeria's Ministry of Transport has been faced with urgent calls from private operators to halt the deterioration by guaranteeing external loans and lease payments to re-equip the carriers.
Nigeria's domestic fleet has halved over the past four years with the mix of BAC 1-11s and 727-100/200s suffering a poor maintenance and safety record. By October the remaining eight carriers had only 10 operational aircraft between them. ADC Airlines and Kabo Air, two of the stronger players, have just one and two B727s, respectively, while Bellview Airlines has one DC-9 left.
Kayode Odukoya, managing director of Bellview, has led the calls for government guarantees to support a restructuring of the industry. The government has so far resisted the calls, though the ambivalence of the international financial community towards investing in Nigeria would limit the impact of this move.
The shaky finances of the remaining players have declined following a state-imposed doubling of domestic fares in March. However, fares have been driven down with carriers charging US$50-60 for a one-hour sector compared with an $80 standard fare. The government has been advised to ensure a more stable private sector by imposing financial fitness criteria, with a minimum capitalisation of $2.5 million. So far the government's response has been to repeat its commitment to end Nigeria Airways' international monopoly. In theory, the move would allow carriers to improve yields and increase hard currency earnings.
The Ministry of Transport says it will handle applications for international routes directly rather than routing them through Nigeria Airways. The flag carrier, which uses only a handful of its 65 route authorities, has been accused of shielding private carriers from unused routes through excessive royalty demands and bureaucratic delays. Bellview, for example, was granted rights to Nairobi, Bombay and Rio de Janeiro at the end of last year but has been unable to exercise them.
Source: Airline Business
