New airlines to launch amid survival, viability concerns

Barring a major shift in schedule, at least three new airlines will come up stream by mid-year, adding to the number of domestic carriers operating on both the local and regional routes.

The Guardian, at the weekend, learnt that the trio of United Nigeria Airline, Green Africa and Cally Air, had scaled various rungs of the certification ladder and already revving up engines for commercial operations.

Though a cheering development for the beleaguered industry, stakeholders have warmed up to the news with surprise and cautious optimism. The shock is not unconnected with investors’ courage to float airlines at a time of global downturn, traveller apathy and heavy reliance on government bailout to save existing airlines from collapse. However, some optimists foresee survival and win-win where the new and old carriers are open to good business plans, merger and better cooperation to evolve stronger airlines that can compete on the international front.

The new airlines are already making waves in the industry. United Nigeria Airline on Saturday operated a demo flight operation from the Murtala Muhammed Airport, Lagos, to Sam Mbakwe International Airport, Owerri.

The airline, which has its base at Akanu Ibiam International Airport, Enugu, already has its Air Operator Certificate (AOC),and is scheduled to commence domestic services this first quarter 2021. It plans to operate a fleet of four Embraer E145s initially, with services from Enugu to Port Harcourt, Abuja and Lagos.

Cally Air, owned by the Cross River State Government, is a proposed joint venture to be based at Calabar airport. It is also making progress towards public launch.
Green Africa has applied for an Air Operating Certificate (AOC) ahead of entry into the domestic market space. The Guardian learnt that the airline, owned by Babawande Afolabi, has submitted applications to the Nigerian Civil Aviation Authority (NCAA).

In December 2020, the airline sent its pilots on a type-rating training and recruited cabin crewmembers. A source at the NCAA said “the airline is serious; they mean business and could start soon, as they are close to acquiring the Air Operator’s Certificate (AOC)”.

Green Africa, being confident of all its scheduled plans has given out 24 free tickets during the December 2020 promotion fair. The airline earlier ordered fifty A220-300s aircraft from Airbus and also committed to leasing an additional three of the aircraft type from leasing company, GTLK Europe. In October 2020, Green Africa formed a strategic partnership with First City Monument Bank (FCMB), which yielded $31 million in a combination of standby letter of credit and rolling working capital.

For the aviation sector, these ventures are heart-warming given its huge opportunities for job creation, additional flight capacity and competition from the consumers’ perspective. But the general economic and industry outlook is bleak, and a source of worry for some stakeholders.

Generally, COVID-19 is a global storm predicated on insolvency. Clearinghouse for 280-plus airlines worldwide, the International Air Transport Association (IATA), recently estimated that the airline industry’s global debt rose to $550 billion by December, with half of existing airlines at the risk of collapse, even with government’s intervention.

In three months of lockdown, no fewer than 120 airplanes were parked in Nigeria, not yielding revenue, yet incurring maintenance cost. There is really no consensus on the losses incurred by the local airlines. But a huge fraction of about N360 billion estimated was on account of aircraft maintenance and overhead during the lockdown. Several of the nine operating airlines were in financial distress, to warrant the recent Federal Government’s N4 billion bailout.

President of the Aviation Safety Round Table Initiative (ASRTI), Dr. Gbenga Olowo, said the new prospects were looking serious, and they are going to be a plus for the industry except for COVID-19 that has shrunk the market adversely.

Olowo said without being paralyzed by fear, the intending operators could make the most of collaborations to give the country befitting strong airlines with better likelihood of survival.He added that Nigeria had never been in want of airlines, but of strong carriers that will last.

“Looking at the sector, our airlines are not too strong. We have said it enough that they should merge. I hope the sense in merger will come to play with the new ones; otherwise they will continue to parasite one another and at the end of the day, none of them may survive in another 10 years, given all the constraints on ground now, including COVID-19.

“I hope we just don’t have airlines on paper: we want real airlines. We have been talking that we don’t want airlines with two aircraft. We want airlines with 30 aircraft and it is doable. We have been talking about that again and again. ‘Me alone’ syndrome in Nigeria has been the challenge and this ‘me alone’, ‘die alone’ will not help the sector. We need machinery that will bring these airlines together. That would make the country proud of two, three strong airlines in the manner of speaking.

“Aviation industry is looking very bleak. Even when I heard about vaccines coming out, vaccines do not prevent infection. I just pray that COVID-19 does not become everybody’s portion. Looking at the outlook, it is not very favourable. It might take us another two, three years to get to 2019 level and if we are expanding, we better expand sensibly and economically, not just say I want to do airline for the sake of doing an airline,” Olowo said.

Aviation analyst, Olumide Ohunayo, said the industry is such that has free-entry and free-exit window; hence, a welcome development that new airlines are coming in.Ohunayo said the new carriers are coming at a time when aircraft are relatively cheaper in the global market.

“I have looked at the plans and they look good. United is coming in with smaller aircraft. They are starting small, smart and efficient. I hope they will look at what Ibom Air has done and replicate with schedule reliability and efficiency. Green Africa has made grandiose entry announcements with their order of aircraft and they will get good deals at this time. This is a good time for such.

“My problem for the A320 aircraft, is it a good time to start them in operations? Time will tell. But there is no doubt; the airline (Green Africa) has a quality team, quality management and enough funding to sustain that airline. That airline looks more like a future national carrier, if it is well planned and maintained,” Ohunayo said.

Chief operating officer of an operating airline on Sunday said the new entrants would bring new excitement to the industry, which underscores “unusual” growth at this lean time. He said investors could see the potential that abounds in the local industry, and are ready to come in.

“But we have perennial problems that have not been addressed. The operating environment is toxic and quite difficult for operators. Again, let’s not count our chickens before they are hatched. I can only hope that the new airlines are coming with a magic wand that we all can learn from. The more airlines that we have, the merrier,” he said.

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