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Hurdles for Local Carriers as Foreign Airlines Dominate Lagos

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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.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Crude Oil

Oil Prices Continue to Slide: Drops Over 1% Amid Surging U.S. Stockpiles

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Crude Oil

Amidst growing concerns over surging U.S. stockpiles and indications of static output policies from major oil-producing nations, oil prices declined for a second consecutive day by 1% on Wednesday.

Brent crude oil, against which the Nigerian oil price is measured, shed 97 cents or 1.12% to $85.28 per barrel.

Similarly, U.S. West Texas Intermediate (WTI) crude slumped by 93 cents or a 1.14% fall to close at $80.69.

The recent downtrend in oil prices comes after they reached their highest level since October last week.

However, ongoing concerns regarding burgeoning U.S. crude inventories and uncertainties surrounding potential inaction by the OPEC+ group in their forthcoming technical meeting have exacerbated the downward momentum.

Market analysts attribute the decline to expectations of minimal adjustments to oil output policies by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known collectively as OPEC+, until a full ministerial meeting scheduled for June.

In addition to concerns about excess supply, the market’s attention is also focused on the impending release of official government data on U.S. crude inventories, scheduled for Wednesday at 10:30 a.m. EDT (1430 GMT).

Analysts are keenly observing OPEC members for any signals of deviation from their production quotas, suggesting further volatility may lie ahead in the oil market.

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Energy

Nigeria Targets $5bn Investments in Oil and Gas Sector, Says Government

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Crude Oil - Investors King

Nigeria is setting its sights on attracting $5 billion worth of investments in its oil and gas sector, according to statements made by government officials during an oil and gas sector retreat in Abuja.

During the retreat organized by the Federal Ministry of Petroleum Resources, Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, explained the importance of ramping up crude oil production and creating an environment conducive to attracting investments.

He highlighted the need to work closely with agencies like the Nigerian National Petroleum Company Limited (NNPCL) to achieve these goals.

Lokpobiri acknowledged the challenges posed by issues such as insecurity and pipeline vandalism but expressed confidence in the government’s ability to tackle them effectively.

He stressed the necessity of a globally competitive regulatory framework to encourage investment in the sector.

The minister’s remarks were echoed by Mele Kyari, the Group Chief Executive Officer of NNPCL, who spoke at the 2024 Strategic Women in Energy, Oil, and Gas Leadership Summit.

Kyari stressed the critical role of energy in driving economic growth and development and explained that Nigeria still faces challenges in providing stable electricity to its citizens.

Kyari outlined NNPCL’s vision for the future, which includes increasing crude oil production, expanding refining capacity, and growing the company’s retail network.

He highlighted the importance of leveraging Nigeria’s vast gas resources and optimizing dividend payouts to shareholders.

Overall, the government’s commitment to attracting $5 billion in investments reflects its determination to revitalize the oil and gas sector and drive economic growth in Nigeria.

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Commodities

Palm Oil Rebounds on Upbeat Malaysian Exports Amid Indonesian Supply Concerns

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Palm Oil - Investors King

Palm oil prices rebounded from a two-day decline on reports that Malaysian exports will be robust this month despite concerns over potential supply disruptions from Indonesia, the world’s largest palm oil exporter.

The market saw a significant surge as Malaysian export figures for the current month painted a promising picture.

Senior trader David Ng from IcebergX Sdn. in Kuala Lumpur attributed the morning’s gains to Malaysia’s strong export performance, with shipments climbing by a notable 14% during March 1-25 compared to the previous month.

Increased demand from key regions like Africa, India, and the Middle East contributed to this impressive growth, as reported by Intertek Testing Services.

However, amidst this positivity, investors are closely monitoring developments in Indonesia. The Indonesian government’s contemplation of revising its domestic market obligation policy, potentially linking it to production rather than exports, has stirred market concerns.

Edy Priyono, a deputy at the presidential staff office in Jakarta, indicated that this proposed shift aims to mitigate vulnerability to fluctuations in export demand.

Yet, it could potentially constrain supply availability from Indonesia in the future to stabilize domestic prices.

This uncertainty surrounding Indonesian policies has added a layer of complexity to palm oil market dynamics, prompting investors to react cautiously despite Malaysia’s promising export performance.

The prospect of Indonesian supply disruptions underscores the delicacy of global palm oil supply chains and their susceptibility to geopolitical and regulatory factors.

As the market navigates these developments, stakeholders remain attentive to both export data from Malaysia and policy shifts in Indonesia, recognizing their significant impact on palm oil prices and market stability.

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