Why Nigerian Airlines Fail
An industry expert and former Managing Director of Virgin Nigeria, Captain Dapo Olumide, has said the inability to save money for aircraft checks, poor infrastructure and lack of comprehensive maintenance facility are some of the major factors responsible for the failure of airlines in Nigeria.
Olumide, who revived the former Nigeria Airways after it became moribund said aircraft are highly maintenance intensive in terms of cost, especially when it is conducted overseas, noting that the huge resources spent on maintenance by Nigerian airlines make them uncompetitive with other carriers in Africa and others that fly into the country.
Olumide, who is currently the CEO of Ropeways, Cable Car Company explained: “We don’t have the maintenance facilities in Nigeria. You can’t do the entire spectrum of maintenance required on a typical commercial aircraft in Nigeria.
“But we may have facilities for helicopters and small aircraft, such as the four-seater equipment that you have in a flying school; you can do all of the maintenance here.
“But when you talk about commercial aircraft from a regional jet and above, we don’t have the capabilities.
“Yes, we can do A check or B check. For an A check, they are simple things that can be done here. But when it comes to a C check, there are very few facilities here to do it. Aero has facility that can do C-check now.
“I give credit to them. But in the contrary, in Nigeria we don’t have the ability for operators to maintain their aircraft here. So they pay the huge cost of having to fly the aircraft abroad for maintenance. That is a huge expense, so you are no longer competitive,” Olumide said.
He said most international carriers come from countries where they have easy access to maintenance facility and aircraft spares; that they spend less money on both aircraft maintenance and for spares.
“You are complaining about the foreign airlines coming in here, they have an advantage because they do the maintenance of their aircraft right where they depart from and they don’t have to worry about visas, crew change and buying tickets for the crew, which cost a lot of money.
“They live about five miles away from the airport and the training facility is five miles from the airport. The aircraft is maintained right at the airport so their cost is much, much lower than yours. So those are the two big issues that I find holding back the industry. But there are other issues as to why operators in Nigeria are failing and have consistently failed,” Olumide said.
The former Managing Director of Virgin Nigeria said any airline that wished to succeed in Nigeria must have a financing model, stressing that indigenous airlines get it wrong when it comes to aircraft maintenance.
“Reserves mean you are putting money aside. Because those checks and expenses are due maybe in a year from now, maybe five years from now but every hour you fly the aircraft you should set aside a reserve.
“Let me simplify it by saying a savings account. You have to have a savings account somewhere where you put that money and don’t touch it. This should be separate from your ticket sales, don’t touch it, so that when that maintenance comes you have the money for it.
“But they don’t do that and so they suddenly find themselves saying they don’t have the money for maintenance,” Olumide noted.
He said that Nigerian airlines also operate old aircraft, which needs frequent maintenance, noting that problem with old aircraft is high cost of maintenance. In addition, he decried the high cost of operating in the Nigerian environment.
“You also have issues with high operating cost in our environment, the operating cost are very high. Because the charges you receive from the authorities are very high, much higher than other countries.
“But even if they weren’t, the fact of the matter is that because fuel is so expensive here, you hear operators say our fuel is 40 per cent of our operating cost, yes. I would tell you why it is 40 per cent because you are operating old aircraft.
“In developed countries the cost of fuel for their operation is 25 per cent. Why is it 25 per cent and our is 40 per cent? It is not because of their price of fuel; it is because in that environment it is all about efficiencies,” he said.