Nigeria: Despite Lucrative Aviation Market, Nigerian Airports Among Highest Revenue Losers in Africa

Nigerian aviation expert and international consultant, Nick Fadugba has said Nigerian airports lose out from the highest revenue routes in Africa, disclosing that no Nigerian airport is rated among the top 10 highest revenue air route in Africa.

Fadugba who made this known at a conference in Dubai indicated that Nigerian airlines are not among the profitable carriers in Africa.

The top 10 routes in Africa according to Fadugba are Johannesburg-Dubai, Johannesburg-London, Cairo-Jeddah, Luanda-Lisbon, and Cape Town -Johannesburg.

Others are Cairo-Dubai, Cape Town – Dubai, Abidjan-Paris, Cape Town-London, and Mauritius-Dubai.

According to him, the leading airlines operating in Africa with the highest earnings are Emirates, South African Airways, British Airways, Saudi Arabian, TAAG-Angola Airlines, and Air France, adding that cities with the highest revenues in Africa are Johannesburg – Dubai ($315.6 million); Johannesburg – London ($295 million); Cairo-Jeddah ($242 million); Luanda -Lisbon ($231.6 million) and Cape Town-Johannesburg with $185 million.

Others are Cairo-Dubai ($181.3 million); Cape Town-Dubai ($176.7 million); Abidjan-Paris ($175 million); Cape Town – London ($174.6 million) and Mauritius-Dubai earn $164 million.

According to his presentation, out of the $2.1 billion revenue earned on the African routes, Emirates Airlines alone got $837.6 million within the period, while South African Airways came a distant second with $359.6 million.

Others are Saudi Arabian with $242 million, TAAG -Angola Airlines with $231.6 million, British Airways with $295 million and Air France with $174.6 million.

But while many foreign carriers do not operate many frequencies in a day to Nigerian destinations, Nigeria remains the most lucrative market per passenger in Africa, but Nigerian airlines and its airports do not benefit from these profitable operations, Fadugba said.

Two years ago the Minister of Aviation, Senator HadiSirika identified reasons why Nigerian airlines fail, which included poor business plan, high cost of maintenance, choice of operational equipment, high interest on loans and poor corporate governance as some factors responsible for the failure of Nigerian airlines.

The Minister said most Nigerian airlines had poor business plan and this include their administrative system, choice of aircraft, choice of routes, choice of manpower and financial management.

On the choice of aircraft, he said: “Since the average distance between two cities in Nigeria is about one hour, Nigerian airlines should acquire small body aircraft that are new and less costly to maintain. These types of airlines consume less fuel and also break-even at 50 per cent load factor.”

He said some poor critical decisions made by the management of the airlines led to their demise because airlines operate on a very low profit margin, but they generate high revenue. Owing to this, some owners misapply the funds and then fail to pay for aircraft maintenance, pay for fuel, pay for overheads and charges and then fail to pay the workers.

The airlines however blamed government for poor airport infrastructure, failure to have major aircraft maintenance facility and high insurance premium on aircraft due to country risk.

The Managing Director of Overland Airways, Captain Edward Boyo, had countered the Minister then and said that over 100 domestic airlines had died in the last 20 years due to unfavorable business environment and charges.

Boyo asked that most of the charges including corporate interest tax, educational tax, Federal Inland Revenue Service Tax, local government charges, PSC (passenger service charge), TSC/CSC (ticket sales charge/cargo sales charge), which he said were close to 35 in all, should be abolished as his airline has survived this far because of his business model, adding that if the unfavorable operational environment continues, he might not be sure that his airline would survive.

According eways aviation blog, top most profitable routes in Africa include the routes airlines make the highest profit per passenger with high airfares for long haul routes and this is where Nigeria falls in. Foreign airlines practically rip off Nigerian travellers, especially now the country is facing forex challenges, the blog said.

The blog noted that these routes may not be the most popular, but they are the most profitable due to high prices, geopolitics, or easy competitive environment.

According to the OAG, an air traffic analysis specialist firm, “The first observation that we can make from the results are that only one of the ten most profitable routes is within Africa’s two destinations. The rest are international routes from around the world. This is not unexpected as these routes would charge significantly more to passengers and cargo, but it highlights a lack of a strong African domestic market. The one route, from Johannesburg to Cape Town, is fourth on the list. There are easily destinations in Africa that could enter the top four with an even bigger population than these two cities.”

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