Ac­cess Bank on avi­a­tion re­silience

Op­por­tu­ni­ties in lack of avi­a­tion hub in West Africa Grow­ing pop­u­la­tion = Growth in fly­ing num­bers In­vestors take ad­van­tage in grow­ing pop­u­la­tion Lever­age on AfCFTA

Business a.m. - - FRONT PAGE - Charles Abuede

THE CORO­N­AVIRUS PAN­DEMIC, which crip­pled has eco­nomic ac­tiv­i­ties across sec­tors of Nige­ria’s econ­omy, re­mains a ma­jor source of con­cern for dif­fer­ent stake­hold­ers across the econ­omy. Avi­a­tion com­pa­nies around...

THE CORO­N­AVIRUS PAN­DEMIC, which crip­pled has eco­nomic ac­tiv­i­ties across sec­tors of Nige­ria’s econ­omy, re­mains a ma­jor source of con­cern for dif­fer­ent stake­hold­ers across the econ­omy. Avi­a­tion com­pa­nies around the world are par­tic­u­larly feel­ing the brunt brought about by the pan­demic. The ef­fects of the pan­demic on the sec­tor in­clude the halt­ing of do­mes­tic and in­ter­na­tional flights across the world, with the Nige­rian avi­a­tion in­dus­try by no means left out. Tak­ing a deep look into an in­dus­try which is oligopolis­tic in its struc­ture, re­cent data from the Na­tional Bureau of Sta­tis­tics (NBS) re­vealed that the avi­a­tion in­dus­try in Nige­ria con­trib­utes about 0.11 per cent of Nige­ria’s to­tal gross do­mes­tic prod­ucts (GDP), while the in­dus­try is es­ti­mated to have a nom­i­nal GDP of N51.3 bil­lion, and broadly char­ac­ter­ized by re­silience after the in­dus­try ex­pe­ri­enced two con­sec­u­tive quar­terly growths. How­ever, fig­ures from the In­ter­na­tional Air Trans­port As­so­ci­a­tion (IATA) showed that the global avi­a­tion in­dus­try will lose $252 bil­lion in the year 2020 as a re­sult of the pan­demic, with sev­eral air­line ruptcy and slash­ing up to ca­pac­ity. To this ef­fect, the Nige­rian reg­u­lated air­line mar­ket is no ex­cep­tion to the losses, re­trench­ments, as well as flight ca­pac­ity re­duc­tion as the in­dus­try is wit­ness­ing sev­eral lay-offs as well as pay-cuts. The re­cent re­open­ing of airports across the coun­try and the re­turn of flights has come as a big respite for many, but the can­cela big eco­nomic im­pact on the in­dus­try which is said to have lost $800 bil­lion to the Nige­rian econ­omy while the pan­demic has gulped almost $1 bil­lion from the air­line in­dus­try, this is ac­cord­ing to Musa Nuhu, di­rec­tor-gen­eral of the Nige­rian Civil Avi­a­tion Au­thor­ity (NCAA). note ti­tled “the Nige­rian Avi­a­tion In­dus­try Re­port 2020” to clients and cus­tomers, an­a­lysts at Ac­cess Bank high­lights ma­jor rea­sons why the in­dus­try thrives de­spite the cur­rent ac­tiv­i­ties. Ac­cord­ing to the an­a­lysts, the Nige­rian avi­a­tion in­dus­try has thrived de­spite a stew­ing busi­ness en­vi­ron­ment as a re­sult of Nige­ria’s large pop­u­la­tion which pro­vides a mar­ket base; all thanks to the cen­tral lo­ca­tion of the West African na­tion to al­low for easy ac­ces­si­bil­ity of flight ser­vices to other parts of the world. Fur­ther to the en­listed strengths of the in­dus­try, as aptly de­lin­eated by the an­a­lysts, the high-in­come lev­els for air­line op­er­a­tors given the lux­ury that comes with fly­ing is another point for con­sid­er­a­tion as well as the grow­ing glob­al­iza­tion which prompts peo­ple to fly for ei­ther busi­ness or leisure. The in­dus­try, on the other hand, ex­hibits some form of weak­nesses which, ac­cord­ing to Ac­cess bank an­a­lysts, are the age­ing fleet and un­der­uti­liza­tion of air­craft, high prices of avi­a­tion fuel and high cost of main­te­nance, lim­ited ac­cess to for­eign cur­rency and high tax­a­tion in the in­dus­try as well as in­ad­e­quate in­fra­struc­ture which in­ca­pac­i­tates the smooth op­er­a­tion of the avi­a­tion mar­ket. The threats ex­pe­ri­enced by the in­dus­try can­not be over em­pha­sized as the pan­demic as well as ter­ror­ist at­tacks in some parts of the coun­try cou­pled with other force ma­jeure is pos­ing threats in the mar­ket. Not so fast to for­get is the volatile na­ture of the Nige­rian macroe­co­nomic en­vi­ron­ment highly negates the in­dus­try’s growth de­spite wit­ness­ing pos­i­tive growth in two con­sec­u­tive quar­ters. Although, the in­dus­try thrives as the large pop­u­la­tion size of the coun­try ac­counts for the large mar­ket base, the height­ened avio­pho­bia dur­ing this COVID-19 era has slowed down the growth pace of the in­dus­try as well as the level of cor­rup­tion which has to a large ex­tent con­tin­ues to de­ter in­vest­ments into the in­dus­try. Con­clu­sively, pos­i­tiv­ity lies within the fu­ture of an in­dus­try which is highly opened to more en­trants into the in­dus­try as well as in­vestors who will take ad­van­tage of the na­tion’s ever-grow­ing pop­u­la­tion which trans­lates to growth in the fly­ing pop­u­la­tion. The huge po­ten­tials of the in­dus­try to at­tract for­eign in­vestors can be cap­i­tal­ized on as the in­dus­try cur­rently lack avi­a­tion hubs in West Africa while lever­ag­ing on the AfCFTA pact could mean real and more se­ri­ous busi­ness for the in­dus­try.

Newspapers in English

Newspapers from Nigeria

© PressReader. All rights reserved.