Nigerian airlines missing out on benefits of mergers, consolidation

Nigerian airlines, and indeed Africans, which had for a long time, refused to appreciate the trend of mergers and acquisitions are missing out on the benefits of such policy, aviation stakeholders have said.The stakeholders who listed the benefits of such voluntary decisions to include but not limited to growth and expansion; increase in market share; economies of scale and cost reduction; increases credit worthiness and bargaining power.

Other benefits are enhanced image and market perception; enhancing of the chance of the merger to take on bigger markets; helping to face competition; enhancing research and development capabilities, among others.

Aduke Atiba, executive director of Landover Company Limited, at a one-day Aviation Summit organised by Sabre Travel Networks, posited that the growth of Nigeria’s economy does not reflect in the number of airlines in the nation’s domestic market adding that as long as they ignore global trends in aviation, the problem in the sector may continue to skyrocket.

“In the past ten years, there has been an average of 10 domestic airlines in operation at any particular time, with average fleet capacity of about 10. Today, there are only about 7 licensed airlines operating in Nigeria, these aircraft owned by Nigerian airlines put together do not add up to the fleet of individual airlines in the US, Europe or Asia,” she said.

She explained that mergers in the US started since 1930 with Western Air Express and there have been more than 45 mergers in the US since then, adding however, that Africa is yet to appreciate this trend.

“Kenya Airways/Precision Air; Kenya Airways has 49 percent of Precision Air; Ethiopian (ET)/ASKY; ET has 40 percent stake in ASKY and Ethiopian/Air Malawi: ET has 49 percent stake in Air Malawi. Nigeria also has no record of mergers till date. Closest examples of cooperation is the interline agreements, an attempt among now defunct airlines.”

Atiba however noted that two major reasons why airlines on the continent have not been able to merge are the lack of trust for one another and fear of competition.

According to her, the airlines also have to meet some of the prerequisites for mergers adding that many of them currently cannot boast of such.

“There must be desire and ability to collaborate or share; inherent transparency and trust; there must sound business model and sound management and discipline.

“The airlines must have strong customer appreciation or be customer-centric as well as have strong governmental/regional support, mergers, consolidation, cooperation and synergies are yet to be realised. They may be ideal given global trends. However, myriad of pre-conditions must be met to ensure they work effectively,” she added.

Also speaking, Gabriel Olowo, president of Sabre Networks, convener of the event, in his speech at the aviation event with the theme, “A dozen world airliners by 2050,” said that despite the fact that mergers and consolidation have gained ground in the global aviation industry, airlines in the continent are still foot-dragging on the concept, which they said commenced in United States of America, USA, in 1930.

He emphasised that Nigerian and African airlines face serious trouble if they do not embrace mergers and consolidation.

He explained that the revenues of the three biggest airlines in the continent, Kenyan Airways, Ethiopian and South African Airways, which he put at over $3bn is just about 35 percent of the annual revenue of Emirates Airlines.

He added that all efforts to ensure mergers and consolidation among the continent’s carrier had failed in the past, but stated that mergers or consolidation could not be achieved by government coercion.

He also lamented the precarious situation of the Nigerian airlines, saying that there are only 57 aircraft in the fleet of the carriers in the country while an airline like South African Airways had over 67 aircraft in its fleet.

“Nigerian airlines are at the bottom level of success. The six airlines that we have in operations are in the lowest rung of the ladder in terms of revenue, service delivery and good business model.

“Business climate is shifting from the West to Africa. When that shift comes, the continent’s carrier may be caught napping.”

Article accredited to: Business day 

Nigeria committed to development of Aerotroplis, says Jonathan

Nigeria is deeply committed to the development of the Aviation sector through the use of Aerotropoli as the new centres of growth.

President Goodluck Jonathan at the Airport Cities (Aerotropoli) Conference 2013 held in Johannesburg, South Africa, who made the assertion, said that the Nigerian Aviation sector is ideally positioned as a catalyst of growth for key economic sectors, including travel, tourism, agriculture, rural development, trade, commerce, manufacturing and communications technology; with all of the attendant infrastructure development critical to sustainable growth of any economy.

Jonathan said through the Aerotropolis project, Nigeria specifically targets a diversification of the economy through increased economic activity, technology transfer, increased trade through global partnerships, value chain development and rural transformation; especially in exploiting the country’s agro-export opportunities, employment potential, new business development and private sector investment, both local and foreign. “The federal government of Nigeria remains fully committed, in partnership with the private sector to transform Nigeria into the foremost investment destination in Africa, well connected, economically efficient; offering sustainable, secure and attractive returns on investment.

“We are committed to supporting private sector-driven Aerotropoli to rapidly become the commercial nexus, anchoring aviation-enabled trade in goods and services; and driving business development from the Aerotropolis to neighbouring cities, towns and the entire West African region,” he declared.

Meanwhile, potential investors attending the Aerotropolis Conference have continued to flock to the Nigeria Aerotropolis Exhibition Pavillion making enquiries on the business opportunities which the project portends for both local and foreign investors.

They have generally showed huge interest in the projects and are receiving very useful information from the Ministry of Aviation officials who are readily on hand.

The Airport Cities Conference (Aerotropolis) Johannesburg, SA 2013 has provided a veritable platform for potential investors, aviation stakeholders and the general business community to brainstorm, exchange ideas and develop contacts for the enhancement of the new airport cities concept.

Nigeria’s delegation is led by Anne Ene-Ita, senior special assistant (SSA), to the President on Aviation Reform as well as George Uriesi, managing director of Federal Airports Authority of Nigeria, amongst others.

Article accredited to: Businessday

Dana to restart Calabar route as business improves

Business is looking up at Dana Airlines as the airline says that plans are underway to recommence flight operations to Margaret Ekpo International Airport, Calabar.

This is just as it resumed flight operations to Port Harcourt Airport on Monday, increasing the daily flights to 14.

Speaking to reporters on its recommenced flight operations, Tony Usidamen, the group corporate manager of the airline, said that the request of its loyal clients propelled it to recommence operations to the route.

He also said that the airline, which currently has five McDonalds 83 aircraft in its fleet hopes to increase the fleet with Boeing 737 aircraft in the coming months.

He however promised the airline’s clients to any of the routes in the country of world class flight experience.

He said, “We received lots of requests from our clients asking us to recommence the route. We are happy to offer them world class service we’ve been offering them in the past.

“We want to connect our passengers to as many locations as possible. We are looking to relaunch operations to Calabar and other cities in the coming months. This is going to be a boost on our consolidation drive.” Also speaking, Ebele Okoye, the general manager, South-South airports, Federal Airports Authority of Nigeria (FAAN) said that the resumption of flight operations to the airport by Dana would further afford passengers more choices on airline to fly with.

She explained that before now, the airline made applications to return to the airport, which was immediately granted them by the management due to its antecedents in giving air passengers prompt and comfortable air experience.

“I’m impressed that they are staging a comeback to the airport. Before now, the airline made applications for some assistance, which we are happy to oblige theicle m. We all know what happened to them and we are happy to welcome them back to the airport.”

Article accredited to: Businessday

$6.4 trillion of goods travel by air

There is no doubt that air transport is the backbone of any economy and upon which a continent or country must develop to actualise the gains therein.

The airline sector is the only one that promptly delivers goods to markets, connect people and foster opportunities for development through.

The sector, according to Tony Tyler, the director general of the International Air Transport Association (IATA), global airlines body would this year be responsible for over 35 percent of all world trade by value.

According to him, ‘$6.4 trillion of goods travel by air,’ adding that this year, the industry will safely and securely transport some 3 billion people and 48 million tonnes of cargo.

“This activity supports 3.5 percent of global Gross Domestic Product (GDP) equivalent to $2.2 trillion annually and transports around 35 percent of world trade by value, or around $6.4 trillion. We deliver goods to markets, connect people to business and reunite family and friends. And by bringing people of different cultures together, we foster opportunities for understanding and friendship.

But we are challenged in turning the great value that we create as an industry into consistent and sustainable earnings for ourselves and airline shareholders,” he said.

Tyler, who spoke at the Annual General Meeting, International Federation of Airline Pilots’ Associations (IFALPA), added that since 2003 airlines, generated about $5 trillion in revenues but had struggled to cover costs while the industry barely broke even with a net margin of only 0.1 percent.

“There’s no denying it—we work in a very challenging business. And everyone involved in the airline industry—and the value chain for that matter—must keep that in mind. Knowing that I am addressing you today, my members will want me to remind you that pilots are no exception,” he added.

He was however quick to say that so many changes have been brought into the system through hard work.

“But if you look back over the $5 trillion break-even decade, you will see change in every aspect of our business. That airlines are making even a small profit this year—with weak economies and jet fuel around $130 per barrel is evidence of the enormous improvements and efficiencies that have been achieved through hard work and sacrifice—including by pilots.

“We might all wish that we could sit back and enjoy a period of prosperity as a result. But with a 1.6% net profit margin that’s not the case. Airlines can and do go bust. We saw that with Malev, Spanair and others last year. The only way to ensure sustainable companies and employment is with constant improvements in productivity—and everybody needs to contribute—from those in the head office, to those who sell tickets, operate the check-in counters or fly and maintain the airplanes.”

Meanwhile, the Airline business confidence improved further in April according to the global airlines’ body quarterly of airline CFOs and heads of cargo.

The survey indicates that 73 percent of respondents expect an improvement in profitability over the next 12 months while the the improvement in outlook compared to January largely reflects the outcome of structural changes rather than an acceleration in global economic growth.

“The outlook for passenger and cargo demand was mostly unchanged in April compared to January, but respondents still anticipate an increase in traffic over the next 12 months.

“Yields are reported to have increased over the past 3 months compared to a year ago and the 12 month outlook is up on the January survey for both passenger and cargo.

Article accredited: Businessday

Ezeagu Tourist Complex

The untold story about Ezeagu tourist complex was revealed today. Ezeagu has a cluster of attractions and that is what makes it a tourist complex, a visit to the site will really tell you that tourism is the economy of the 21th century.

Travellers get seamless access to tickets as Medview opens booking offices in Yola, Jalingo

Domestic air travellers that had hitherto travelled kilometres to get to the airport in order to purchase flight tickets can now heave a sigh of relief as Medview Airline, a relatively new entrant into the domestic travel, has commenced sales of its flight tickets in Yola and Jalingo in Adamawa and Taraba states respectively.

The Management of the airline  said its decision was informed by the need to bring its services to the door steps of the people.

Until now, the only booking office serving Adamawa and Taraba States was at the Yola International airport.

“What we have done is to save our numerous passengers the rigours of going to the airport to pay for their reservation before their flight date,” Phineas Ndukodon, the airline station manager in Yola said.

Article accredited to Businessday

Cronos Airlines, Peacock collaborate to commence Port Harcourt-Malabo flights

Equatorial Guinea-based carrier, Cronos Airlines, has partnered with Nigeria’s Peacock Travels and Tours Limited to open the Malabo-Port Harcourt route soon.

This development followed an agreement inked recently by the two companies. With this, Peacock has now obtained the exclusive General Sales Agency (GSA) right to issue the airline’s tickets all over Nigeria. 

A statement by Segun Phillips, executive chairman, Peacock, quoted him as saying that Cronos also has an ambitious plan to commence flights from Malabo to Lagos and Abuja before the end of the year.

According to him, Malabo as a destination has historical link with Nigeria, especially the Efik speaking tribe who are found in Akwa Ibom and Cross River states.

The Malabo-PH service, he said, came at the right time for the sizeable number of Ibo traders plying the route.

“Previously, the traders go by ship which is slow, hazardous and unsafe. The new air link between Port Harcourt and Malabo, which lasts for just 45 minutes, becomes a comfortable, fast and reliable option than going by ship.”

Other segments of people plying the route are business executives and oil exploration workers. The route also comes handy for leisure travellers, who want to go to Equatorial Guinea to enjoy their vacation, according to the travel management company.

“It is an interesting tourist’s destination which boasts of upscale holiday and recreational facilities, including luxury hotels and one of the best golf courses in Africa,”  Phillips added.

He said with the popularity of golf game in Nigeria, the airline and Peacock would give priority to golf players for easy access.

The company said that it would offer total package, including entry visa and flight tickets for prospective passengers. To do this effectively, Peacock has three offices located at Aba, Port Harcourt city and Port Harcourt International Airport.

Peacock will assist prospective passengers to facilitate the issuance of visas while passengers can also connect Lome and Cotonou through Cronos.

He said the airline was already looking forward to signing interconnectivity with some foreign airlines in order to link Malabo to other oil producing cities in the world including Houston in United States and Dubai in United Arab Emirates.

Equatorial Guinea has the highest per capita income in Africa. This attests to the prosperity and business opportunities in the country, according to the statement.

Meanwhile, the Nigerian Aviation Handling Company (NAHCO) plc does ground and cargo handling for Cronos.

Article accredited to Businessday