- Lists challenges that hinder Nigerian airlines from benefiting
AIRLINE Operators of Nigeria (AON) today asked the Federal Government of Nigeria to have a rethink on the immediate implementation of the open skies asking them to draw up a clear and deliberate policy on how the nation should approach.
The airline group which conceded that the open skies is a good idea however said that Nigeria is simply not ready to handle the level of unfair competition that the full implementation of the Single African Air Transport Market brings and that government should not to lose sight of the facts and dangers that the direct implementation will cause the Nigerian economy, Nigeria as a whole and the future of the youths.
The AON went on to list some of the concealed unfairness that Nigeria as signatory to the Yamoussoukro Declaration will face including requirement of over 34visas to travel within Africa, taxes the Nigerian airlines have o deal with, lack of forex access among others.
The statement signed by the Chairman AON, Captain Noggie Megisson read,”We are concerned that the timing is not right as there are several unresolved issues and challenges being faced by Nigerian aviation that will ultimately undermine the perceived gains of this Treaty that might be an illusion for our beloved country.”
He went on: “Some of the problems for Nigeria to take its position and compete favourably in the open skies process include the following:
· The basic issue of free movement of people and trade is an integral aspect of the declaration that will go a long way to determine the fairness of the SAATM project. Sadly, it is a well-known fact that Nigerians require over 34 visas to travel within Africa alone. This is an issue that first needs to be addressed. Before opening the skies, open the visas.
· Unclear and constantly changing policies that throw out Nigerian airlines’ feasibility studies into red. Government should come out with a clear policy that will position Nigerian airlines to take full advantage of the open skies.
· High Bank Interest rates of 28% compared to access to cheap funds provided and guaranteed by the government of most African carriers at a maximum of 2%.
· Nigerian airlines pay VAT while most African carriers don’t pay VAT both in their various countries as well as here in Nigeria. This is already a deficit of 5% on a small margin industry from the start for Nigerian Airlines.
· Airlines in Nigeria don’t have access to forex. We only get allocation per percentage of our bids which takes an average of 6 months. Most of the African carriers are subsidized and being funded by their government.
· Nigerian airlines are at a disadvantage to other African Airlines that are largely government-owned and heavily subsidized. For instance, South African Airways got on the average about $350m yearly in the past decade; Kenya Airways got about $600m in 2016, while RwandAir has never published its financial results for over a decade. Yet they will be competing against Nigerian airlines with private finance at 28%
· Nigerian airlines are subjected to multiple charges, taxes, levies and fees. On the average, we pay about 37 different charges that come under the guise of statutory levies and taxes to sustain a staff strength of about 18,000 staff of the various government agencies compared to most African carriers who pay a fraction in their countries to support a staff strength of less than 500.
· The charges around Africa are not uniform across board. Government should ensure all the taxes are uniform before the implementation of the Open skies. For instance, when we fly to some African countries they charge us heavy landing fees in excess of $5000 – $6000. The same countries subsidize their local operators who pay $200 for the same service. But when they fly into Nigeria they pay a mere $500, the same as our local carriers.
· Airlines in Nigeria pay high prices for JetA1 due to high taxes compared to some other countries where VAT and taxes in JetA1 have been abolished to their local carriers and some of them have local production of subsidized fuel.
· The threat of non-African investors abusing the open skies by setting up airlines since there is no way of ascertaining their shareholder structure and how to ascertain whether they are Africans, thereby diverting investment from Nigeria into neighbouring countries with the Nigerian market as the target.
The AON further surmised, “Countries like Ethiopia that is a strong pusher of the open skies idea makes 45% of its income from Nigeria, yet Ethiopian Airlines has not employed Nigerians as Air Crew or Ground Technical staff, and drains our beloved country of our scarce resources to contribute 32% of Ethiopia’s national GDP at the expense of the Nigerian economy and our ailing youths.”
“It should be put on record that monies made in Ethiopia can’t be taken out of the country. This is a sharp contrast with our case in Nigerian where everyone comes into the country to make free money and move them out of the country effortlessly leading to huge capital flight and putting stress on our foreign exchange reserve.”
“It is also noteworthy to state at this juncture that Ethiopia has a Visa on Arrival policy for over 40 countries. But sadly, and with disrespect, Nigeria that contributes immensely to their GDP, is not included among them and South Africa is the only African country included on the list.”
“57% of the 54 nations in Africa are yet to sign the open skies deal. Only 23 countries have committed themselves to open skies. The question therefore is why is Nigeria in a hurry to sign the Treaty when we are yet to put our domestic aviation industry in order first and empower our Nigerian carriers to compete effectively?”
“Also, Nigeria is the only country in Africa with eight (8) entry points while most of the other African countries have only one entry point.”
“It is sad that airlines were only invited to a Stakeholders forum for a briefing, barely 72hours to the signing of what has already been concluded without seeking the opinion of airlines and aviation entrepreneurs for advice and strategies on how to harness the open skies to the advantage of our beloved country Nigeria as a whole.”
“Nigeria is simply not ready to handle the level of unfair competition that the full implementation of SAATM will bring upon the country. A full implementation at this time will lead to massive capital flight, huge loss of jobs for our youth and a mortgaging of our beloved children’s future, as well as a further collapse of the already failing Nigerian aviation system.
So, while we believe open skies is a good idea, we hereby call on the government to have a rethink on the immediate implementation of the open skies and urge them to work with the local technical expertise in the aviation sector by going back to the drawing board and come out with a clear and deliberate policy on how we want to approach, position and take advantage of the open skies to the overall benefit of our beloved country Nigeria.