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Local Airlines Lose N39.2 Billion Yearly to Expatriates



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  • Local Airlines Lose N39.2 Billion Yearly to Expatriates

Local airlines are weighed down by a yearly wage bill of N39.2 billion for expatriate pilots and engineers. Some of these domestic carriers which are already in distress parade no fewer than 682 foreign pilots with cumulative wage bill in excess of N3.27billion a month. Foreign maintenance engineers are also in the excess of 300 across the board.

Figures from the Nigerian Civil Aviation Authority (NCAA) show a total of 2,269 active licensed pilots of who 1,646 are Nigerians. Non-Nigerian pilots are 623, while there are at least another 59 pilots with certificates of validation, though not licensed by Nigeria as at March 27, 2017.

The situation encourages capital flight. The expatriate wage bill of N3.27billion is enough to pay a total of 1,646 active licensed Nigerian pilots. Put to different use, the expatriate wage bill of N39.2billion per year can offset the airlines’ outstanding liabilities to regulatory agencies in the last six years and still keep them afloat.

Comparatively, a foreign captain earns at least $12,000 (N4.8million) a month. The best paid Nigerian captains are those in managerial positions, who earn about N2.5million a month, while most of them earn about N1million.

Arik Air, which started with a foreign managing director, has 28 aircraft fleet-size and parades the largest retinue of expatriates, including pilots, engineers and crew. German Airline, Lufthansa, is saddled with maintenance, while Indians do the reservations.

Dana Air started operations with planes that required foreign pilots with over 500-hours of experience on MD 82/83 aircraft type. Till date, foreigners still man its cockpits. Two foreign pilots were in the cockpit of the aircraft that crashed in 2012 in Lagos.

The Secretary General, Aviation Round Table (ART), Group Captain John Ojikutu, noted that the penchant for foreign pilots is not about them being “better than the Nigerian pilots; it is more about capital flight than any other consideration.”

About three years ago when the oil market was booming, and with about 200 private jets in the airspace, the ratio of expatriate to local pilot was three to four, with at least 1,000 foreign pilots in Nigeria.

The Chairman, Nigerian Aviation Safety Initiative (NASI), Capt. Dung Rwang Pam, said the wage bill would not have been much about two years ago when the exchange rate was less than N200 to $1 and more expatriates were around. But with dollar to naira rate hitting the roof, some of the airlines are beginning to buckle under their overhead.

Investigation shows that some operators are quite unsettled with the bloated overhead and are considering ways to reduce it.

The aviation sector is high-capital intensive and dollar-denominated but with very low profit margin. On a good day, a well-run airline earns six per cent profit margin.

Leading rotary wing helicopter services operator, Bristow Helicopters Nigeria, recently sacked 118 expatriates including pilots and engineers, citing downturn in the oil and gas sector.

Similarly, Caverton Helicopters dismissed 150 staffers, among them foreigners.Arik Air was in February taken before a UK High Court of Justice (Chancery) by 20 of its foreign pilots. The expatriates sought to “wind up” the company over the non-payment of their salaries by the airline amounting to $600,000 (N240million).

Since the Asset Management Corporation of Nigeria (AMCON) took over the management of Arik, The Guardian learnt that efforts are on to tackle the challenge of “too expensive pilots and engineers” where there are cheaper equivalents in the Nigerian workforce.

But the challenge is that “a layoff will require compensation that is even more crazy than their wages. So the management wanted the current contracts to run, without a plan to renew any once they expire. The burden is too much to bear at this time,” a source said on a condition of anonymity.

One of the airlines was apparently more innovative with the expatriate release strategy. It was learnt that the airline started paying the foreigners in naira, instead of dollars, to absolve it from the attendant excess cost on account of dollar fluctuations. Displeased with the mode of payment, the foreigners began to leave on their own, and are seeking better prospects in other airlines.

Meanwhile, there has been an upsurge in the global demand for good pilots lately, where some of the expatriates have been finding new opportunities.Domestic carriers have not been spared of the poaching, with about 12 Arik pilots, and six from Air Peace, moving to RwandAir, Emirates, Etihad and others.

With the foreign pilots and some Nigerians finding better offers abroad, fresh opportunities are opening up for about 400 young Nigerian pilots that are unemployed. President, ART, Gabriel Olowo, said poaching was a plus, especially in the light of the downturn being experienced by some airlines

He said: “What will a pilot do if there is no aeroplane to fly? If I am in Arik and aeroplanes go from 30 to nine, and the pilots are sitting down, they can’t fly, what do I do? I’ll roster them but there are no aeroplanes and they ask me to pay allowances. That was why they (unions) picketed Landover, because pilots were scheduled and there were no service for them. Let them poach them and go and gather the experience; the day we need them, we will look for them.”

The challenge, however, is the little or no experience at the disposal of unemployed pilots. More so, domestic airlines are reluctant to fund the cost of type-conversion course in excess of $30,000 (N12million) per pilot.

“It’s cheaper and easier to employ an already rated pilot. With less than 300 flying hours (instead of 500 to 700 required to fly certain categories of aircraft), and no jet experience, very few airlines are attracted to freshly licensed pilots,” a chief operating officer said.

Doyen of the aviation sector, Capt. Dele Ore, called for an urgent review of the operating expatriate quota that has over the years been responsible for “widening the imbalance between expatriate and indigenous aviators in the sector.”

According to Ore, “for security reasons, we need to make it a policy that all registered aircraft in Nigeria must have a Nigerian onboard the cockpit. This means that either the commander is a Nigerian or the co-pilot is a Nigerian.

“Let’s face it. Haven’t you heard of situations where one pilot goes to the toilet and the other locks himself up? That is the security aspect of it. Second is that you are providing jobs for those Nigerians that are roaming the streets. That way, you are also helping government policy that wants to stop capital flight because what is spent on one expatriate is enough to train and nurture five to six Nigerians,” Ore said.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and, with over a decade experience in the global financial markets.


COVID-19: Demand for Second Passport by High Net Worth Individuals Surges 50 Percent



african union passport

The number of high net worth individuals looking for a second international passport in order to improve their global access rose by 50 percent year-on-year, according to the latest statement from the deVere Group.

The group said national lockdowns, borders and travel restrictions have helped boost enquiries for second passports, citizenships and overseas residencies this year.

deVere Group, an independent financial advisory firm, that manages over 100,000 clients globally said demand for its residency and citizen service skyrocketed in this highly unusual year.

Most of the enquiries were from high net worth individuals from the U.S., India, South Africa, Russia, the Middle East and East Asia “who are seeking alternative options in Europe and the Commonwealth.”

According to Nigel Green, the Founder and CEO of deVere Group, “Previously, a second passport, citizenship or residency were regarded by many as the ultimate luxury item; a status symbol like yachts, supercars and original artwork.

“While this still remains the case, there’s also been a shift due to the pandemic.

“Now, second citizenship or overseas residency are increasingly becoming not just a ‘nice to have accessory’ but a ‘must have.’

“Whether it be for personal reasons, such as to remain with loved ones overseas or be able to visit them, or for business reasons, a growing number of people are seeking ways to secure their freedom of movement as they have faced travel restrictions which are, typically, based on citizenship.”

He continues: “The pandemic has served as a major catalyst for demand which skyrocketed this year. It has focused minds to secure that second passport or elite residency.

“However, the appeal for is broader than just the global Covid-19 crisis.

“Increasingly people prefer the concept of being a global citizen, rather than being solely tied to the country of their birth.

“They too value the many associated benefits including visa-free travel, world-class education, optimal healthcare, political and economic stability, reduced tax liabilities and wider business and career opportunities.”

However, nations have different criteria for granting citizenship, including time spent in the country, the ability to prove the legal source of funds and zero criminal records.

For instance, Portugal’s residency program requires just two weeks every two years of residency to gain the benefits, including the right to live, work, study and open a business there, as well as travel across the 26 countries of Europe’s Schengen area.

“More and more nations are running citizenship-by-investment programs, in which applicants invest an amount of money in a sponsoring country typically in high-end, new-build real estate developments in exchange for permanent residency, citizenship, or both,” affirms James Minns, deVere’s Head of Residency & Citizenship.

“These programmes, which high-net-worth individuals regard as invaluable insurance, are typically based on property investments that start from 250,000 EUR.”

Nigel Green concludes: “These highly unusual times have fuelled the surge in demand for second passports.

“The pandemic has brought into sharp focus what really matters to people: family, freedom and security.”

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Online Shopping Skyrockets Amidst COVID-19 Pandemic




Lagos, Tuesday 30 November 2020 – As we experience the first-ever Black Friday promotional phenomenon under lockdown, the dominance of online shopping platforms has become crystal clear.

To keep track of this development Nielsen Global Connect has conducted extensive research that includes an overarching view of the massive increase in online FMCG  shopping and just how rapidly it evolved over the first six months of lockdown.

Nielsen Connect, Global Intelligence Unit, Executive Director Ailsa Wingfield comments; “Amidst the COVID-19 pandemic, online FMCG shopping usage has advanced by up to five years in just six short months. As a result, there has been a rapid increase in online shopping and usage with new users, frequency and preference having skyrocketed.

Preference of online as the most-used channel has also more than doubled.

Evidence of this results from the Nielsen New Shopper Normal Study which was conducted in May 2020 allowing for powerful insight into the effect of the COVID-19 lockdown on consumers, during an unprecedented time in our history.

The Nielsen study found that in terms of new Nigerian FMCG online shoppers, 29% had never shopped online. Sixty-seven per cent recently shopped online during the past week and 12% shopped most often online during the past week versus only 7% pre COVID-19. In terms of Frequency, 23% said they shopped online multiple times a week and 44% shopped once a week.

The best of both worlds

 Nielsen’s consumer and retail measurement evidence therefore clearly shows a massive and ongoing move to online, but it must be pointed out that this is not in isolation when considering the overall shopping journey. In Nigeria, two-thirds of consumers (67%) say they are now using both online and offline channels with fewer exclusive brick & mortar shoppers at 33%.

Wingfield elaborates; “Overall, consumers are shopping and buying in a mixed reality. In many instances, online shopping options are a new addition to their existing store repertoire but most consumers indicate that they will maintain a combination of online and offline – which will lead to the rise of more omnichannel shopping journeys and experiences.”

Interestingly, this adoption is even more pronounced for ‘Constrained Consumers’ – those who have been impacted by job/income loss. These consumers are less likely to be exclusive Brick & Mortar shoppers as Omni shopping is even more important to help them make better and more frugal choices.

Wingfield adds; “The challenge for retailers is that consumers want equivalent experiences regardless of the environment in which they shop. These are categorised by a seamless experience where the retailer’s online, and bricks and mortar offerings, are connected and offer a similar and familiar shopping experience.”

 Still more work to be done

In terms of the remaining obstacles for retailers to overcome and where online needs to work harder, the biggest concern for Nigerian shoppers is delivery which has emerged as the most important factor to get right. 42% of Nigerian consumers stated they wanted same/next-day delivery while 21% said they don’t want to wait when there are no slots available.

When it comes to Price & Promo perceptions, 57% of respondents said online prices had increased, while 22% perceived less online promotion and 17% said online was more expensive. That said, online price perceptions are currently more favourable than offline (brick and mortar) perceptions. They may also improve even further, following the heavy push by retailers of online-only Black Friday and year end seasonal promotions.

 Looking to the future

 Looking at how consumers’ newfound relationship with online shopping will evolve, Wingfield comments; “We saw that ‘necessity catalysts’ such as safety and precaution considerations and the availability of products initially drew consumers online, but there are still several obstacles to overcome. To sustain online FMCG traction, retailers and brands will need to focus on how they can solve consumers’ changing needs by differentiating their offerings in the Omni shopping journey.”

She goes on to suggest; “They will need to solve for overall satisfaction and experiences in the areas of time, convenience, availability and value based on consumers’ altered circumstances to truly differentiate themselves.”

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Rising Operating Costs, Exchange Rates, Service Charge Increased Airfares by 100%



air peace

Price of air tickets rose by 100 percent across several routes as rising operating costs, high foreign exchange and surged in service charge forced airline operators to raise airfares.

Airlines attributed the increase to a series of price adjustments and the introduction of new fees by the Federal Airport Authority of Nigeria (FAAN). According to them, airline firms were given special concessions, which will continue to push price up and could hit an average of N100,000 for even the Lagos/Abuja route.

Speaking on the situation, Captain Ado Sanusi, the Managing Director of Aero Contractors, said airline companies could not access forex at the official rate while the FAAN had upped its fees.

He said “We were buying dollars at N360 and it went to N380 but you can’t get it for less than N480.

“We are paying VAT at 7.5 per cent. We are paying 15 per cent duty on our spare parts. The boarding passes, we pay 15 per cent duty on it.

“The passenger service charge has increased by FAAN. So, don’t look at one component but look at the total reason for the increase.

“Yes, there is an increase in demand but it is caused by the lack of aircraft and this lack of aircraft is caused by unavailability of spare parts which is also caused by dollar scarcity.”

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