The Federal Airport Authority of Nigeria (FAAN) has sought to exploit opportunities for investments as it embarks on Public-Private Partnership (PPP).
This comes on the heels of FAAN’s latest report that Nigeria lost $2.5 billion in Maintenance, Repair and Overhaul (MRO) on Nigerian aircraft and other facilities in 2021.
Investors King gathered that the Federal Government has been seeking measures to carefully and painstakingly address important industry concerns and pave the road for a National Air Transport Industry that is profitable, as well as a significant accelerator for national economic growth and development.
This new development was revealed by the Minister of Aviation, Senator Hadi Sirika, on Thursday in Abuja, explaining that it also aims to reduce the federal government’s financial burden.
According to him, FAAN`s key partnership initiative will focus on safety and security, infrastructural development, growing domestic airlines through new route development and designation of airports for improved performance and revenue creation.
Reaffirming what was revealed on Tuesday, he said “recently, the Federal Capital Territory offered 12,000 hectares of land for aviation development for Abuja airport. This will give good opportunity for investment. There are opportunities in other airports like the Lagos airport.”
“Apart from FAAN, other agencies, NCAT, NIMET, AIB NCAA under the ministry also provide excellent opportunity for the investment in the airports.The aviation sector summons opportunity for investment,” he added.
Furthermore, Sirika stated that the government’s goal was to encourage investors by making regulation easier to invest in all areas of the roadmap.
He claimed that the federal government’s efforts to find a solution to the COVID-19 pandemic’s issues had offered excellent opportunities across the whole aviation ecosystem.
FAAN Director of Commercial and Business Development, Mr. Sadiku Rafindadi, also spoke stating that the participation of the general people, government officials, and aviation stakeholders was critical to the forum’s success.
Due to its proximity to Europe, the Middle East, and the rest of Africa, Rafindadi said the Nigerian aviation sector was ideally positioned to take advantage of the predicted expansion in the African market.
IATA Kicks as FG Excludes Foreign Airlines from Priority Forex List
The International Air Transport Association (IATA) on Sunday kicked against the Federal Government of Nigeria’s decision to exclude foreign airlines from its priority list when approving forex requests.
The association made this known at the 78th Annual General Meeting and World Air Transport Summit held in Doha, Qatar on Sunday.
Speaking at the event, Kamil Al-Alawadhi the Regional Vice President for Africa & Middle East, IATA, said the decision to not prioritize the aviation sector, especially foreign airlines in forex requests was unacceptable, adding that the move could hurt the nation’s aviation industry.
According to him, blocked foreign airline funds in Nigeria stood at an estimated $208 million in the third quarter of 2021 and by the first quarter of 2022, this has risen to $283 million.
This Alawadhi said the Federal Government must start working on reducing as the aviation sector is a crucial sector of the economy responsible for thousands of job creation and it will be wrong to deny foreign airlines the opportunity to repatriate their revenue.
He, however, said officials of the association would visit Nigeria soon to discuss the matter, Investors King understands.
The IATA VP said, “Nigeria needs to start reducing the backlog. The Central Bank of Nigeria was not forthcoming on the blocked funds. It is sad that Nigeria owes the bulk of the entire blocked funds. This is very unacceptable”.
“We heard that there is a shortage of dollars. It has been a hectic ride. We met with the Vice-President. We will keep checking. This is going to damage the image of the country. We are hoping that it will go down well. The figure is huge”.
However, the issue was a result of a chronic forex shortage that have seen foreign exchange demand risen to a record-high and pushed the Naira to Dollar exchange rate to N610/$ at the black market despite the Central Bank of Nigeria’s efforts at converging rates.
How Nigeria Lost $2.5bn to Foreign Countries Due to Lack of MRO
The Federal Airports Authority of Nigeria (FAAN) at the National Aviation Conference on Tuesday disclosed that Nigeria lost $2.5bn in Maintenance, Repair and Overhaul (MRO) services on Nigerian aircraft and other facilities in 2021.
FAAN explains that the absence of an MRO facility in Nigeria was costing the country billions of dollars annually.
FAAN Managing Director Rabiu Yadudu, said “I am looking forward to a time when, instead of sending our human resources and flying machines abroad for training and checks, thereby expending huge foreign exchange in the process, we not only domesticate such activities but also earn foreign exchange from it when other countries send their machines here for checks and their manpower for trainings in Nigeria.
“Nigeria lost about $2.5bn in MRO investment in foreign countries in 2021. Having such investment here would have improved the sector tremendously.”
According to Isaac Balami, a former Aero Contractors’ Maintenance Engineer, airframe maintenance alone costs Nigeria $1 billion per year, or $1 million per aircraft.
“Airlines expend about $1 million on the maintenance of airframe alone and not to talk about the maintenance of landing gear and engine, which have different maintenance programme. These amounts are spent by Nigerian airlines, the Nigerian Navy, the Nigeria Air Force, the Nigeria Police, the Presidential Fleet and others that operate fixed wing aircraft. Maintenance cost is in terms of hardware and software.”
Balami further noted that it was carefully and thoughtfully chosen to provide solutions to major industry challenges as well as chart the course for a National Air Transport Industry that is effective, efficient, and profitable, as well as a major catalyst for national economic growth and development.
The Federal Government has been working to develop an MRO facility in Nigeria as part of its aviation plan. The Federal Ministry of Aviation has acquired 12,000 hectares of land in Abuja for the facility’s development and other aviation projects.
Airfares, Road Transport Fares Rise Over 40% in A Year – NBS Reveals
The Nigerian Bureau of Statistics (NBS) has revealed a surge in the Airfares and bus commuters in various parts of the country in the last one year.
Investors King obtained an NBS report titled, ‘Transport Fare Watch for April 2022′ which covers the bus journey within the city per drop constant route; bus journey intercity, state route, charge per person; airfare charge for specified routes single journey; journey by motorcycle (Okada) per drop; and waterway passenger transport.
The reports reveal that on a month-to-month basis, the average fare paid by air passengers for specific routes on a single voyage grew by 18.57 percent from N46,810.62 in March 2022 to N55,501.49 in April 2022. This means that the fare increased 52.44 percent year over year from N36,409.46 in April 2021.
The average intercity bus fare paid by commuters increased by 8.75 percent from N3,270.94 in March 2022 to N3,557.15 in April 2022. On a year-over-year basis, however, it increased by 45.38 percent from N2,446.86 in April 2021. Similarly, the average bus ticket paid by commuters within the city each drop grew by 6.39 percent month over month, from N536.35 in March 2022 to N570.64 in April 2022. On a year-on-year basis, this rose by 47.80% from N386.10 in April 2021.
A different section of the report states that the average fare paid by commuters for motorbike trips grew by 8.03 percent month over month, from N395.12 in March 2022 to N426.84 in April 2022. The ticket increased by 54.48 percent year over year from N276.30 in April 2021. Furthermore, from N900.84 in March 2022 to N951.93 in April 2022, the average fare paid for water transportation (waterway passenger transportation) grew by 5.67 percent month over month. This increased by 16.06 percent year over year from N820.23 in April 2021.
On state profile analysis, Taraba recorded the highest air transport charges (for specified routes single journey) in April 2022 with N65,000.00, followed by Kogi with N64,258.91, while Kano recorded the least with N50,000.00.
Analysis by zone also showed that the North-Central recorded the highest airfare in April, 2022 with N57,552.54, followed by the North-East with N56,800.16, while the South-East had the least with N53,402.58.
Investors King suggests the increase in prices is linked to recent issues faced by local airlines, ranging from energy price spikes to a lack of access to foreign money.
About four months ago, Investors King gathered that the airline tickets will rise as a result of the increase in aviation fuel which was N400 per litre, and other operational costs which include airport charges.
Dr. Obiora Okonkwo, the Chief Executive Officer of United Airlines explained that domestic airlines were operating in a difficult environment.
He said “the first foreign exchange transaction we did when we started was N340. But now, when it is available, it is N450 but when it is not available, the alternative black market cost is N570. It might surprise you to know that despite such increase, today, because of the market situation, you still can buy your ticket at N20,000 or N21,000.
“What this means is that since all the airlines are buying from the same market, any ticket at this rate is being subsidised by the airlines. Aviation fuel, depending on how it is applied in the aircraft, can easily become 30 to 40 per cent of the cost component of your operations.”
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