Over the past eight years, Nigeria’s aviation industry has seen a hundred percent increase in its aircraft fleet despite facing numerous charges and increasing operating expenses. The Nigerian Civil Aviation Authority (NCAA) increased from 175 registered aircraft in 2015 to 358 registered aircraft this year. The numbers were presented by Captain Musa Nuhu, NCAA Director-General, at the recent National Aviation Conference (FNAC) hosted by the Federal Airports Authority of Nigeria (FAAN) in Abuja, Nigeria, on the topic of “Sustainability of the Aviation Industry in Nigeria: The Regulator’s Perspectives.”
Additionally, the nation has 40 airports this year, up from 27 in 2015. Nuhu also mentioned that the number of airstrips in the country climbed from 77 to 92, while the number of heliports rose from 221 in 2015 reached 370 in 2023. He reminded the conference attendees that there are currently 73 air transport licences, up from 34 in 2015. Furthermore, he stated that there were 320 commercial air transport certificates as opposed to the 196 that existed in 2015. The number of issued Air Operator Certificates (AOCs) to airlines, he added, increased by a factor of 100% during that time, from 16 to their current total of 32.
Significant progress has been achieved in the sector.
Before COVID-19, the aviation industry was the nation’s second fastest-expanding industry, and the head of the NCAA gave his assurance that it would nonetheless continue to play an important part in the country’s socioeconomic development. However, he expressed his empathy that the industry was confronted with many obstacles that affected the sector’s potential to be sustainable and profitable. He emphasized that the Nigeria Civil Aviation Authority (NCAA) was not responsible for the majority of these obstacles.
Nevertheless, he assured that NCAA would pave the way for the success of aeroplanes as well as other operators through its regulatory structure. He cited the high cost of financing, the debt cost, the exorbitant cost of Jet A1, and the shortage of FOREX as impediments. According to Nuhu, the air transport company has a low return on investment and a high cost of entry. Considering the country’s current macroeconomic situation, with double-digit interest rates, depreciation of the currency, rising inflation, and more, this is a risky business to undertake.
Foreign exchange, maintenance costs and others impede the sector.
Several domestic operators are struggling to survive as a result of the heavy load of their high levels of debt. These obligations are to be paid to the organisations that provide support services, which can be public or private. These obligations also apply to the NCAA; they are not exempt. Foreign exchange constitutes a sizeable portion of the overall cost of transactions in the aviation industry. The purchasing of equipment, replacement components, upkeep, employee training, insurance, and other related expenses.
Moreover, service providers are forced to turn to secondary markets at outrageous costs since they do not have adequate access to foreign currency at official rates. Due to the high cost of Jet A1, around forty percent of the total cost of running an airline in Nigeria is accounted for by that expense. In the past year, the price of Jet A1 has tripled, which has had a negative impact on the already slim profit margins of airlines.
The sector contributes $128 million to the country’s GDP
Lastly, Rabiu Yadudu, managing director of the FAAN, maintained that this action was crucial to the sector’s continued growth. According to him, just in the past week, FAAN launched a new aerotropolis project at Akure Airport, which was once the country’s largest aerodrome before Abuja Airport expanded to 11,000 acres. He added that the aviation industry in Nigeria now contributes $128 million to the country’s GDP after the country adopted the Single African Air Transport Market (SAATM). He also said that 17,400 new jobs had been made possible due to SAATM. The SAATM is a priority initiative of the African Union’s 2063 agenda.