Continent-wide agreement to support growing Nigerian aviation industry

 

With investment in new airport infrastructure ongoing, the government is undertaking a series of policy and regulatory reforms aimed at improving aviation operations and following international best practice. Chief among these is a recent move to join the Single African Air Transport Market (SAATM), an agreement among 23 African nations to liberalise their aviation markets in support of increased inter-African air movements.

SAATM membership dovetails ongoing regulatory reforms that have brought Abuja’s Nnamdi Azikiwe International Airport (NAIA) in line with best international practice, as well as ease of doing business reforms that are expected to improve air passenger experiences. Combined with infrastructure upgrades, these reforms will support strong future aviation growth, with stakeholders now calling on the government to re-establish a national carrier.

SAATM Membership

In January 2018, 23 African nations officially signed on to the SAATM initiative to create a form of open sky agreement where eligible airlines from committed countries are permitted to conduct business in corresponding SAATM markets and benefit from improved air traffic rights.

Stakeholders anticipate the SAATM initiative will see inter-African flight ticket prices significantly reduced, with direct services between African countries also forecast to increase, eliminating the need for stopovers in the Middle East and Europe.

This could be a boon to Nigeria: in June 2018 George Etomi & Partners, a Lagos-based law firm, reported that rising ticket purchases have driven aviation industry growth in Nigeria, writing that the sector’s growth has been supported by the naira’s stabilisation and improved economic stability, which has in turn bolstered investor confidence in aviation.

Stakeholders also anticipate that the SAATM will drive job creation in Africa’s aviation industry, with the International Air Transport Association reporting in 2014 that the liberalising of routes for 12 key African countries would create 150,000 new jobs and add $1.3bn to the continent’s annual GDP.

Policy Reforms

Joining SAATM was the latest move in a year of positive policy developments that have bolstered growth outlook. As highlighted by George Etomi & Partners, January 2017 also saw the country reach a number of aviation milestones, including improving NAIA’s global aviation safety rating in the Level 3 State Safety Programme Implementation Process, bringing it on par with airports in the US and the UK.

Additionally, NAIA and Lagos’ Murtala Muhammed International Airport both attained International Civil Aviation Organisation certification from the Nigerian Civil Aviation Authority, bringing their safety certifications further in line with global best practise.

In May 2017 then-Acting President Oluyemi Oluleke Osinbajo signed three executive orders that dealt with the ease of doing business, expected to improve safety, security and passenger facilitation in airport areas by prohibiting touting and requiring on-duty staff to work in uniform and hold official airport staff identity cards.

National Carrier

With policy reforms and infrastructure investment ongoing, some stakeholders are revisiting the idea of creating a new national carrier. Nigeria’s first national airline, Nigeria Air, launched in 1958, eventually grew its fleet to 30 aircraft, although its debt rose to $60m when it was liquidated in 2003.

In May 2017 the Federal Executive Council allocated N1.52bn ($4.9m) of funding to begin preparations to reintroduce a national airline, including the establishment of an aviation leasing company, new airport concessions, construction of an aviation maintenance, repair and overhaul facility, and construction of an aerotropolis and agriculture air cargo terminals. Germany’s Lufthansa was appointed transaction advisor, with the government reporting it was in talks with Boeing and Airbus to form a consortium to support the airline’s creation. The government later rejected Lufthansa’s offer, appointing Airline Management Group in its place.

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The Report: Nigeria 2019

Transport chapter from The Report: Nigeria 2019

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