Nigerian airlines are facing significant revenue losses of approximately N8 billion each year, due to their inability to fully utilize their aircraft fleets. This issue was brought to light through an investigation conducted by THISDAY.
In order for medium-sized aircraft such as the Boeing B737, Embraer E195-E2, Airbus A220, and Bombardier CRJ 900/1000 to generate enough revenue to justify their investment, they must operate for about 14-16 hours each day. However, due to various operational constraints, such as limited infrastructure and security threats, most airlines in Nigeria are only able to operate for 7-8 hours per day. This results in potential revenue loss for the airlines.
Not only does this impact revenue, but it also affects the overall airworthiness of the aircraft. The longer an aircraft is in operation, the better it performs. With the recent increase in airfares, which reflect the current inflation and exchange rates, the estimated potential losses have increased from N4. 3 billion three years ago to N8 billion per annum.
One of the main limiting factors for airlines is the lack of night landing facilities at most Nigerian airports. This means that the majority of airports are only able to operate during daylight hours, resulting in limited operational hours for airlines. Additionally, the cost of operating airports at night, including fuel for generators, overtime pay for technical personnel, and passenger concerns about insecurity, also contribute to limited utilization of aircraft.
Out of over 30 functional airports in Nigeria, only five have night landing facilities (Lagos, Abuja, Kano, Port Harcourt, and Enugu). Others may have the facilities but only operate at night by special arrangement. As a result, airlines in Nigeria predominantly operate during the day.
Akin Olateru, CEO of Omni-Blu Aviation Limited, stressed the impact of these factors on airline revenue. He stated that when airlines invest in brand-new aircraft, they may struggle to recover the costs associated with acquisition and repayment of loans. This is due to limited aircraft utilization, which affects their earnings.
Olateru also highlighted the importance of aircraft acquisition and utilization in the success of an airline business. He noted that the acquisition is relatively easy, but sustaining the business and making a profit is the more challenging aspect. He recommended that 80% of the industry’s efforts be focused on finding sustainable solutions for aircraft acquisition and utilization.
One way the government could support airlines in this area is by offering opportunities for them to acquire credit facilities with long-term, single-digit interest rates. This would help alleviate the financial burden on airlines and allow them to invest in more efficient aircraft. However, currently, the options available for airlines in Nigeria are limited. Many successful airlines around the world are backed by their government or listed on the stock exchange, neither of which is a viable option for Nigerian airlines.
In conclusion, it is crucial for the government and industry stakeholders to come together to find solutions for extending operating