Hurdles for Local Carriers as Foreign Airlines Dominate Lagos

Foreign Airlines
  • Hurdles for Local Carriers as Foreign Airlines Dominate Lagos

Local carriers operating on the international route are faced with fresh hurdles as fellow African airlines now have dominance in the Lagos market.

The entry of the likes of RwandAir, Asky and Ethiopian airlines into the Lagos market, the heart of air travel in Nigeria, opens Arik Air, Air Peace and Med-View to competition right at their hub.

While fear has since gripped the local airlines over lack of competitive advantage, Nigerian passengers may witness great times enjoying more attractive offers, better onboard services and competitive fares from the foreign airlines.

Some experts have, however, faulted the development, describing it as indicative of government’s failure to protect its own flag carriers, airlines and the market.

The Guardian learnt at the weekend that the patronage of some local flights to Accra and South African routes has slightly dipped with the attendant drop in revenue in the last one week. The hint was given at a time International Air Transport Association (IATA) recorded a 7.1 per cent traffic growth among African carriers, compared to the traffic a year ago.

It was learnt that the national carrier of Rwanda, RwandAir, last month gained the approval of the Ministry of Aviation in Nigeria to ply Lagos-Accra route on a direct flight. The approval widens competition with Arik Air, Med-View, Air Peace and Ghana-based Africa World Airlines (AWA) on the route.

The fastest growing carrier in East Africa said the new addition was part of its consolidation on the African market.

RwandAir Country Manager, Nigeria, Ibiyemi Odusi, said the direct flight between the two West African cities was a result of the “fifth freedom right” the carrier secured from the Nigerian government.

The “fifth freedom of the air” is the right or privilege, in respect of scheduled international air services, granted by one state to another state to put down and to take on, in the territory of the first state, traffic coming from or going to a third state. The rights were packaged in the United States several decades ago.

RwandAir has been running the Lagos-Accra flights since March 23, 2017, creating more travel options for passengers on the route with the state-of-the-art Airbus 330 and Boeing 737.

Similarly, Asky Airlines has commenced its non-stop flight on the Lagos-Lome-Johannesburg route, giving already troubled Arik Air and South African Airways a challenge.

The Lome-based airlines in Togo have Ethiopian Airlines as its parent company and partner. Ethiopian Airlines, with at least 16, 787 dream liners, uses the Lome airport as transit hub for its Lagos-U.S. flights.

A keen observer of the industry, Group Captain John Ojikutu (rtd), was alarmed by the development, saying that the government should investigate officials that signed such agreements.

Ojikutu said: “RwandaAir flies direct Lagos to Accra! Who signed this patrimony of ours out again in the name of commercial agreements? How can the domestic airlines develop their capacities when the markets on the national exclusive routes are being mortgaged to foreign airlines?”

The Nigerian Civil Aviation Authority (NCAA) explained that it was a legitimate commercial agreement that would give government more revenue.

The spokesman of the apex regulatory body, Sam Adurogboye, said there was nothing untoward about the approval, claiming it was within the ambit of aviation regulations.

Adurogboye said the commercial agreement was signed with some conditions, which include certain royalty that the airlines must pay.

On its effect on the local airlines, he said that they were not running the routes as they should and needed to put their houses in order instead of complaining.

The ability of local airlines to withstand competitions with African leading carriers on the local route, however, worries more industry watchers.

The Chairman of Airlines Operators of Nigeria (AON), Capt. Nogie Meggison, said such agreements were possible where officials did not put Nigeria first.

He said: “Nobody does fifth freedom anymore. It is like giving your own away to develop others. Those countries are developing their economies at our own expense, just because our own people fail to put Nigeria first to grow our local airlines.

“Cape Town Convention was signed in South Africa, but South Africa is not a signatory to the agreement. You don’t operate an open sky when you are the one that has the advantage. The people struggling to sign open skies have just one airport, compare to yours that is 22. Seventy per cent of West Africans reside in Nigeria. So, why are you throwing yourself and your economy to others to prey on?”

Other experts have little sympathy for the local airlines. A source, who craved anonymity, said they got what they deserved in the matter, given their usual habit of blocking other airlines from plying the route they are not ready to take.

“Nigeria currently has many Bilateral Air Service Agreements (BASA) that are open to airlines to explore. Besides, Yamoussoukro open-sky agreement is there for African airlines to freely explore and Nigeria signed into it. Why are our airlines not exploring it?

“They don’t want anyone to call them weak, yet they are not ready to do anything. They are the same group of people that will be making noise that government is giving their market away. But the world has changed and far gone is the era of holding tightly to a market, that it is all yours. The passengers want options, authorities want streams of income and the market is ready for multiple players that are serious and ready,” the top official said.

The President of the ART, Gbenga Olowo, earlier raised concern that the domestic airlines had consistently rejected the option of merger and partnership to come out stronger and be in a position to compete with the foreign carriers dominating the African airspace.

About the Author

Samed Olukoya
Samed Olukoya is the CEO/Founder of investorsking.com, a digital business media, with over 10 years' experience as a foreign exchange research analyst and trader. A graduate of University of East London, U.K. and a vivid financial markets analyst.

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