Flying At a Low Altitude ; Air Transport Grew by 0.1% in Q2 2017


Friday, September 08, 2017 10:05AM / FBNQuest Research

Today we turn our attention to Nigeria’s aviation sector. The industry has struggled because its performance is strongly tied to consumers’ confidence, which remains relatively soft.

There has been a considerable surge in domestic airline fares, which appear as a luxury expense for most households that have restructured spending patterns to reflect the current economic realities. Business travel continues to stick out as the primary reason for travel across Nigeria as opposed to leisure.

Based on our channel checks, a few international airlines have experienced reduced patronage on their premium classes from Nigerian nationals. Increased traffic for economy tickets is the new trend.  

In March there were reports of conversations around Ethiopian Airlines acquiring Nigeria’s Arik Air. These reports have been denied by the Asset Management Corporation of Nigeria (AMCON).

The airline industry is heavily dependent on imports. Industry sources suggest an annual import bill of US$2bn for technical expertise, aircraft maintenance, spare parts and aviation fuel.  

The average external maintenance check is estimated to cost US$1m per aircraft. Due to these and other financial strains, we understand that for the eight larger local airlines, only 48 aircraft are operational out of a combined total fleet of 78. 

The airlines could reduce the import bill if the maintenance checks were carried out locally by newly trained technicians. As is often the case, the challenge would be to make the investment so as to enjoy the subsequent saving. The recent national accounts released by the NBS show that air transport grew by just 0.1% y/y in Q2 2017. 

Related News
3,457 Nigerians Repatriated from Abroad in 2016 – NBS
Jumia Travel launches a new feature to scale Facebook Messenger as a CS channel
A Dream of Schengen: Visa-Free Travel in Africa Remains Far Off
Emirates Announces 29th Consecutive Year of Profit Off $25.8bn Turnover, 105,000 Work Force
We Doubt The Shippers Council’s Capacity As A Regulator- WARTU
2,556 Road Traffic Crashes Recorded in Q1 2017 - NBS
Lagos Airport Accounted for 69.1% of International Passengers in 2016 - NBS
11,363 Road Traffic Crashes Recorded in 2016 - NBS
Air turbulence due to macro challenges


Related News