Adewale: Nigeria’s Aviation Industry Has Improved in Last Two Years
The Chief Executive Officer of Mainstream Cargo Limited, Seyi Adewale, in this interview with Chinedu Eze, raises hope that the aviation industry has significantly improved in all indices in the last two years. Excerpt:
With the acquisition of more aircraft by airlines and the certainty that more operators will join the market, do you envisage a saturation point where flight services will be counterproductive in terms of profitability?
No. I do not envisage that there will be a saturation point where flight services will be counterproductive in terms of profitability for various reasons. Firstly, the new aircraft are designated to local, regional, or international routes. Secondly, I believe the potential saturation point envisaged could principally be attributed to Lagos (Abuja route) airport but remember that Lagos has three airport terminals: international terminal, MMA2, and General Aviation Terminal (GAT).
Thirdly, all local airlines ought not to make Lagos their operational and administrative head office. A new airline chose Uyo as its hub and another airline, Enugu. This is the right way to go in my opinion. In fact, other airports are presumably cheaper to operate and manage than choosing Lagos as hub in terms of taxes, fees and levies whether directly or indirectly.
Fourthly, we are beginning to witness differentiated services because we now have what appears as low cost carriers that are suited for business travelers using ATRs (aircraft type), carriers with good cargo belly for traders using Boeing B737. This offers the passenger a choice based on the travel need including the airline’s on-time-performance (OTP).
In December terminal facilities were stretched to breaking point because of high passenger traffic. What should the airport management do in order to effectively manage the upsurge within a short time?
Ongoing airport terminal introduction and expansion should continue and quickly completed. Also, the airport concession plan should be sped up to allow new owners/ beneficiaries inject good (new) funds into infrastructure including technology, addition to existing runways and aircraft parking spaces at tarmac, and the possible introduction of slot system. The slot system will put more pressure on airlines to be more efficient because inefficiency will now be very costly.
In addition, there should be very good incentives for new airlines to operate from an airport other than Lagos and Abuja. The state governments, the Aviation Ministry and private airport owners including the Federal Airports Authority of Nigeria (FAAN) can lead this initiative.
Do you envisage a decline in passenger traffic if there is improvement in security and people can travel by road safely?
No, I do not envisage a decline in Passenger traffic owing to improved security for different reasons. The Economy remains the most important factor that will impact traveling decisions. How financially empowered families and businesses is important will determine their mode of transportation. The GDP forecast for 2022 is at least 2.8 per cent growth by the World Bank and up to $445 billion in monetary terms. This will most certainly impact the air travel sector positively
The youthful population in Nigeria appears to be more aggressive in improving their living standards or what could be termed a better life. Air travel appears to be one of their natural choice or tendencies with improved online ticket sales options. There is what we can term ‘the coffee taste or complement’. Once you start flying by air, it is in a way addictive because of the niceties it offers, its efficiency and speed. In fact, I believe it will grow even further with the imminent 2023 general elections, 2022 being the mobilizing year for it. Finally, with the growing understanding of COVID-19 and more vaccinated populace, air passengers will be motivated to travel more unlike previous years of intense restrictions and fear.
Do you agree that flight operations in Nigeria advanced in the last two years despite COVID-19 economic devastation?
Surely it advanced. We can glean from the number of new and newer aircraft in the fleet of airliners now, the improved airport infrastructure
generally, new airports commissioned, new recruitment and trainings by airlines, the growing air passenger awareness on rights, and their demands for quality service, refund, etc pushes both airports, airlines and the regulator to deliver more. Also, the growing competition (to endear passengers) within the sector is also an added advantage to improving quality services. I trust it will continue to be the case.
Can you give an assessment of the aviation industry in Nigeria in 2021?
Our aviation sector was largely positive in the just concluded year (2021). The positives include the lower impact of covid-19 as compared with Europe, UK, USA, Turkey, Brazil, India and many other countries. The Nigeria Centre for Disease Control (NCDC) figures reveal this and this has impacted positively on our travel industry. Many countries have eased their travel restrictions against Nigeria and flight schedules and frequencies were gradually getting back to the pre-pandemic figures. Similarly, cargo volumes are returning back to the pre-pandemic figures and our passenger travel figures were at least 50.7 percent higher than the 2020 (pandemic) figures.
Importantly, our local airlines improved their fleet with brand new aircrafts such as A320s and E-195s and some with newer ATRs aircraft that are more fuel efficient and we began to witness the entry of lowcost carriers into the sector. The passenger began to be the beneficiary of these good developments with increasing options, choice, destination, on-time-departures and reach. We did not record any commercial airline mishap and kudos to the Nigeria Civil Aviation Authority, (NCAA) that is the regulating body for airlines/ aviation. They appear to be more independent in their regulatory functions in 2021.
Furthermore, the federal government procured and invested in critical assets and infrastructure and new airports were built and commissioned by state governments. Also, the federal government came up with a 5-year development plan as it affects the industry that includes the inauguration of a national carrier and the planned concession of at least four international airports.
However, we witnessed a few negatives, which include our diplomatic row with
United Arab Emirates (UAE) and the implied Bilateral Air Services Agreement (BASA) issue that appears skewed to the detriment of the country. Also, the interference of the National Assembly into the tariff issue between airline operators and ground handling companies, which is within the scope of economic regulation of the NCAA, is a negative from our standpoint.
Nigeria was badly hit by COVID-19 in 2020. Recovery commenced in 2021 but Omicron slowed the recovery process again. Compared to other countries, do you think Nigeria’s recovery process was fast?
Yes, I believe our recovery (process) was fast. The reasons may include the very strict travel entry and departure protocol set by the Presidential Steering Committee (PSC) on Covid-19. The quick ‘red-Listing’ of highly infected countries like Turkey, Brazil and India during the ‘heat of the COVID-19 moment’ assisted us in limiting the COVID-19 spread. Also, many state governments especially Lagos State, the Covid-19 Epicentre stopped middlejunior workers from physical attendance in offices and many companies followed suit. Similarly, the high restrictions, penalties for violators of PTF regulations especially as it affects social and religious gatherings were effective. All these summed up, led to the relatively low transmissibility of COVID-19 within Nigeria and this aided our quick recovery process.
The aviation sector has a lot of projects it hopes to clinch in the year 2022, including national carrier, delivering the new terminals, airport concession, Maintenance Repair Overhaul (MRO) etc. Which of these projects are more urgent and why?
In my view, three of the highlighted projects stand out and my order of priority is first, airport concession. International airports are major gateways to any country and country perception via the gateway is impactful and it sticks. Our international airports are significantly below par when compared to airports in Egypt, South Africa, Kenya, Ethiopia, and even Ghana. The concession will gain us the opportunity to rebuild, develop, improve, upscale and upgrade all aspects of our international airport infrastructure. We should be the West African Aviation Hub and Gateway. Second is the national carrier. The positive and beneficial impact on our Bilateral Air Service Agreement (BASA) is huge. We will also reduce Forex outflows due to foreign airline fund repatriation. Others include job creation to reduce unemployment amongst the youth. Third is the MRO. This also will reduce capital FX flight from aircraft repairs, maintenance and overhaul.
Which of these projects do you think the government can deliver in 2022 and what will be the ripple effect on Nigeria’s aviation sector?
The federal government could close out on the first two priorities mentioned earlier (airport concession, and national carrier) early enough in 2022. The federal government proposed the national carrier to take off Q1 2022 and airport concession follows a similar timeline. The closeout and commencement of the two priorities will be a catalyst for growth and development of the sector, create new jobs, upgrade/ upscale our infrastructure including ICT, the implied knowledge transfer embedded, new or improved revenue lines (opportunities) for government, regional hub status, development of adjourning airport areas and potential innovation and new business modeling by entrepreneurs who take advantage of opportunities.
Do you see airfreight increasing in the year 2022?
Most definitely! I foresee an increase in airfreight, This will be driven by e-commerce, new manufacturing plants, creation of special economic zones including the proposed agroprocessing zones and federal government, Central Bank of Nigeria (CBN) and Nigerian National Petroleum Corporation (NNPC) supported agricultural produce or product exportation.
What do you think the government can do to encourage exports by air in Nigeria?
Already the African Development Bank (AfDB) is supporting the federal government by committing great funds ($520million for Phase 1) into the creation of Special Agro-Industrial Processing Zones in the six geo-political zones of Nigeria. This will bring agric producers, aggregators, and distributors to operate within the same vicinity and reduce transaction costs and share business development services for increased productivity and competitiveness. We will begin to export local produce/ products in a good, accepted, traceable and validated manner.
How is Mainstream Cargo Limited bridging the gap in facilitating cargo imports and exports in Nigeria?
For us at Mainstream Cargo Limited, we use our vantage or privilege position to educate our client-customers on the right and proper ways of doing importation and exportation of their cargoes in a cost effective, safe and secure manner. We are determined on this cause because it would be to their benefit (advantage) in the long run and they will therefrom appreciate or value us even more. Our client-customers save cost, improve efficiency, reduce customs clearing delays or detention, improve their procurement, logistics or transport divisions etc.
Furthermore, we are very fast and efficient because of our broad knowledge, technical prowess, global network, ability to handle, process, label and pack dangerous goods, sound advice on Form M or NXP processing, advice on right HSCode, paying correct customs duties and seamless delivery services remain our cutting edge. In addition, through our client-customer engagements, we expand the opportunities for them via Temporary Importation Permits (TIP), which they believe it’s difficult to get amongst other options we explore or introduce to them. In summary, it is our quality service, technical know-how, global reach, good communication (feedback) mechanism, excellent client compliant management and resolution strategies that stand us out. Many of our staff is A Grade with many including myself having distinction in IATA (Certificated) Courses.