Nigeria: Events That Shaped Nigeria's Aviation Sector in 2022

16 January 2023

Due to certain challenges, some airlines were forced to limit their operations in the country

Last year, Nigeria's aviation sector grappled with a lot of challenges ranging from hikes in JetA fuel and airfare; regulatory, institutional and structural challenges; challenges of poor infrastructure; poor access to financial incentives; inability to repatriate funds; as well as underfunding of the industry.

Due to the challenges, some airlines (domestic and international) were forced to limit their operations in the country. In this report, PREMIUM TIMES highlights some of the key issues and policies that impacted the aviation sector last year.

1. Spike in prices of air tickets

In February, the prices of domestic airline tickets skyrocketed by over 100 per cent as major airlines pegged their minimum base fare at N50,000 and above.

A few years ago, the economy class fares were placed between N23,300 and N48,000, even though rates often increased to as much as N70,000 during the festive season. But in February last year, many months away from festive periods, the prices of air tickets of major airlines such as Air Peace, Ibom Air, Max Air, Aero Contractors, Dana, and Azman Air among others, rose to a minimum of N50,000.

Similarly, passengers could no longer receive discounts even when they booked tickets weeks ahead, sparking reactions from many airline users who lamented the development.

As aviation fuel prices and forex scarcity worsened further in August, domestic airlines pegged their minimum fare at N70, 000 and above. A review of air tickets prices across major domestic airline companies such as Air peace, Ibom Air, Max Air, and Azman among others then showed that the minimum prices for air tickets rose by at least 40 per cent from N50, 000 it was selling in February when the aviation fuel crisis surfaced.

2. Kaduna airport attack

In March last year, armed men invaded the runway of the Kaduna airport and killed at least a guard before security forces responded. The incident delayed the takeoff of a Lagos-bound flight by almost 44 minutes. Two days after the attack, Azman Airlines suspended its operation in Kaduna.

"We understand the security situation around the airport has been handled and normalcy has been restored accordingly, but it is imperative for the management to re-evaluate its operational procedures into the airport to ensure maximum safety of equipment, staff and passengers are fully guaranteed," Azman air management said at the time.

3. New airport terminal

Within the same period, as part of efforts to improve infrastructural facilities, President Muhammadu Buhari commissioned a newly built international terminal of the Murtala Muhammed Airport, Lagos. While touring the newly built facility, Mr Buhari said the terminal was built on a landmass of approximately 56,000 square metres, with 66 check-in counters and that it has the capacity to process 14 million passengers annually.

The new terminal is equipped with a censored conveyor belt, seven jet bridges, 10 ultra-modern cooling systems, heat extraction in the baggage hall, ample space for duty-free shops and banks, recreational areas for children, 22-room hotel for stop-overs among others.

4. Human remains' found on Lagos airport runway

The Federal Airports Authority of Nigeria (FAAN) in May last year discovered "unidentified human remains" on the runway of the Murtala Muhammed Airport in Lagos.

The incident led to the temporary closure of the said runway for several hours to allow for an immediate evacuation of the remains and subsequent investigations.

5. High cost of Jet A fuel and threats to shut down operations

Last May, as the high cost of jet fuel, worsened operational concerns, domestic airline operators threatened to shut down operations.

In a letter addressed to the Minister of Aviation, Hadi Sirika, and the Nigerian Civil Aviation Authority, airline operators complained about the operational challenges and how it has hindered progress in the aviation industry.

In reaction to the letter, the Minister of Aviation, Mr Sirika, pleaded with Nigerian airlines to suspend their planned shutdown of operations over the increase in the cost of aviation fuel from N190 to N700 per litre.

Following the move, four airlines separately pulled out of the plan and said they will continue their operations. The airlines were Ibom Air, Arik, Air Peace, Aero Contractors and Dana. Consequently, the aviation union (AON) later "acceded" to appeals from the government to withdraw plans to suspend operations after several meetings with key stakeholders.

Meanwhile, shortly after the airlines suspended their plan to shut down operations, Aero Contractors suspended passengers' flight operations indefinitely in July. The management of the airline at the time said they took the decision due to the high cost of maintenance, fuel, inflation and forex scarcity resulting in high foreign exchange rates.

Last year, the civil aviation regulator said airlines owed the government N19 billion and $7.6 million, and have refused to pay despite generating revenues from their operations. The Nigerian Civil Aviation Authority said airlines have instead launched a "campaign of calumny and falsehoods" against it.

"The airlines must enter an MoU on how they will pay their debts in the next 30 days from August 30th, 2022 or their licence will be suspended at the expiration of the deadline," NCAA Director General Musa Nuhu said during a meeting with representatives of the local carriers in August last year.

6. Dollar scarcity and trapped funds

Amidst lingering scarcity of foreign exchange in the country, last year, some foreign airlines threatened to halt operations to and from Nigeria.

In April, APG Interline E-Ticketing (APG IET), an airline servicing firm, announced that it would begin sales of air tickets in U.S. dollars due to the scarcity of foreign currency in Nigeria.

Likewise, Emirates airlines on several occasions threatened to suspend flights to Nigeria due to its failure to repatriate $85 million in revenue from the country. The International Air Transport Association (IATA) criticised Nigeria's failure to allow international airlines to repatriate their profits, warning it may cause the country more damage. The global aviation group hinted that the amount airlines have been unable to repatriate from the country rose to $464 million (N199.2 billion) in July last year.

As the issues generated reactions from industry stakeholders, the Central Bank of Nigeria (CBN) released $265 million to airlines operating in the country to settle outstanding-trapped funds from ticket sales. But this still did not clear the outstanding debt to airlines.

7. Nigeria gets licence for national air carrier

In June last year, Nigeria's Minister of Aviation, Hadi Sirika, announced that Nigeria Air Limited had received an Air Transport License (ATL) from the Nigerian Civil Aviation Authority (NCAA).

Nigeria Air is the nation's proposed national carrier which was unveiled at the Farnborough Air Show in England on July 18, 2018.

The project was suspended two months after it was announced after critics raised concerns over its relevance and sustainability. The proposed airline was expected to gulp $8.8 million in preliminary cost and $300 million as takeoff cost.

8. Bilateral agreement with Kuwait

In September last year, the Federal Executive Council (FEC) approved the signing of a Bilateral Air Services Agreement between Nigeria and Kuwait.

The agreement was expected to serve as a gateway for seamless airline services between both countries which is in line with the provisions of the International Civil Aviation Organization (ICAO), the aviation minister, Mr Sirika, said at the time.

9. Civil aviation act

Last year, President Muhammadu Buhari assented to the Civil Aviation Act, 2022. The Director General of the Nigerian Civil Aviation Authority (NCAA) noted at the time that the development will help strengthen the power of the NCAA as the primary regulatory agency in the Nigerian Aviation industry.

10. Ethiopian airlines emerged core investors in Nigeria Air

Another significant development in the Nigerian aviation industry in 2022 was the emergence of Ethiopian Airlines as a core investor in Nigeria Air with 49 per cent shareholding.

Similarly, in preparation for its operation, Nigeria Air Limited commenced the recruitment of qualified crew members for its operation.

"In line with the outcome of the panel session on Priority 4 (Improve Transportation and Other Infrastructure), the ministry of aviation is hereby directed to conclude and ensure the take-off of the National Carrier Project before the end of the year," Mr Buhari said at the closing ceremony of the 2022 Ministerial Performance Review Retreat in Abuja.

11. ICAO and Qatar partner Nigeria on aviation university

In October last year, the president of the International Civil Aviation Organization (ICAO) Council, Salvatore Siacchitano, announced the organisation's commitment to partnering with Nigeria on the establishment of the African Aviation and Aerospace University (AAAU) in Abuja. Similarly, the government of Qatar expressed its readiness to participate in the establishment and running of the African Aviation and Aerospace University located in Abuja.

Within the same period, ICAO classified Nigeria's implementation level of air safety and security standards among the "highest in the world."

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