NCAA Boss Attributes Airlines’ Revenue Drop To Libralisation, Privatisation
The Director-General, Nigeria Civil Aviation Authority (NCAA), Capt. Mukhtar Usman, has said that airlines’ revenue globally dropped substantially due to discontinued state funding, sustained de-regulation/liberalisation, privatisation and intense competition.
He said this while delivering a paper titled, “The Acts of Promoting Sustainable Air Transport Economy While Maintaining High Level of Aviation Safety Standards” at the just concluded Airport Business Summit and Expo in Abuja,
Usman said human and cargo traffic at many airports has also dwindled with declining purchasing power of passengers and shippers.
According to him, “On the other hand, the cost of providing standard air transport services has continued to rise with the continuous innovations in the facilities and increasing demand for customer satisfaction, as a result, most airlines presently are faced with high and rising cost of operation”.
The NCAA boss noted that in Nigeria, for instance, aviation fuel constitutes 40 —50 per cent of airlines’ direct operating costs, adding that high cost of funds and the steady devaluation of the local currency in which the airlines’ income is mostly denominated, against the foreign currencies on which their major expenses are based and many others, no doubt, aggravate the challenge.
He stated that a lot of small and average airlines around the world had either collapsed or gone bankrupt, while most, if not all the world’s major airlines have recorded losses or sharp falls in profit Within the period in reference,
The NCAA boss however stated that one of the few areas where significant performances have been recorded is the operation of low-cost airlines that have benefitted from a shift to cheaper travel.
This, he pointed out that it was because they use smaller and more fuel-efficient aircraft and extend their networks to small and remote aerodromes thereby taking their operations to the grassroots and aiding the distribution of goods and services to, as well as the development of the hinterlands.
Usman said that the big challenge at the moment for Nigeria and many other countries is creating a friendlier and more enabling environment for airlines and indeed other economic activities to flourish and hence ensure a sustainable air transport industry.
He listed the country’s challenge to include: the continuing attempt, mainly by the political leadership to “domesticate” the global minimal standards and recommended practices that sustain aviation worldwide in a way to align with Nigeria’s local politics and local economic minima.
This ,he said has led to reduced autonomy for the regulator and key organisations and their inability to a large extent, to determine and “control” their manpower programmes, for instance: number and quality of staff, placement, training etc, thereby negating professionalism.
Lack of internal leadership succession plan, as the managements are not groomed from within but based on political appointments and that this affects consistency and continuity of policy implementation and career progression in the industry.
Others are lack of political will to firmly and fairly apply the available policy and regulatory instruments in a consistent manner; and this tends to erode steady growth, integrity and professionalism in the industry and inconsistency in policies and policy enforcement has further eroded investors’ confidence in the industry and this inconsistency stems from the influence of different political interests that hold sway at different times; so industry development partnership with third parties are hindered.
On the way forward, the NCAA boss advocated that the national political leadership should ensure that square pegs were put in square holes, giving the regulatory body the necessary autonomy by resisting unnecessary interference in the latter’s statutory operations.
Government’s interference, he advised should be limited to ensuring an enabling political and economic environment to engender economic viability and sustainability of the aviation industry.