Nigerian Aviation Industry Report 2018

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NIGERIAN AVIATION INDUSTRY REPORT 2018

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NIGERIAN AVIATION INDUSTRY REPORT 2018

DISCLAIMER

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Designed by

David Ibemere

UJU IKEDIONU BusinessDay research and intelligence Unit Research Analyst

Designed by

BusinessDay research and intelligence Unit

BusinessDay research and intelligence Unit

BusinessDay Research and Intelligence Unit

David Ibemere

4

NIGERIAN AVIATION INDUSTRY REPORT 2018

TABLE OF CONTENTS Acronyms .............................................................................................................................................................. 6 Executive Summary.............................................................................................................................................. 7 Objective................................................................................................................................................................. 9 Key Takeaways......................................................................................................................................................10 The Global Aviation Industry............................................................................................................................ 13 Africa: Passenger Traffic Trend Analysis.......................................................................................................... 15 The Nigerian Aviation Sector............................................................................................................................. 17 Evaluation of Nigeria’s Passenger Traffic:..................................................................................................... 18 Nigeria Total Aircraft Traffic:........................................................................................................................ 19 Nigeria Total Cargo Movement:.................................................................................................................... 20 Mail Movement:.............................................................................................................................................. 21 Volume of Passengers traffic of airlines:................................................................................................. 22-23 Nigerian Airports Sufficiency:........................................................................................................................... 26 Commercial Activities at Nigerian Airports....................................................................................................... 36 Cargo Charges................................................................................................................................................. 36 Airports Tariffs................................................................................................................................................ 37 Corporate Affairs............................................................................................................................................ 43 Other Airport Tariffs...................................................................................................................................... 44 Training Centre Charges................................................................................................................................ 46 Process Flow for Retail Offering Facility Management.............................................................................. 47 Investment Opportunities in Nigerian Airports............................................................................................. 49 Role of the Aviation Sector in the Nigerian Economy.................................................................................... 53 Challenges in the Nigerian Aviation Sector..................................................................................................... 57 Strategic Priorities for the Nigerian Aviation Sector...................................................................................... 60 Sectorial Agenda.................................................................................................................................................. 60 Projects under Development and Procurement.............................................................................................. 61 Aviation Implementing Departments and Agencies...................................................................................... 61 Proposed 2018 Budget on Aviation Projects.................................................................................................... 64 Activities and Recent Achievements:................................................................................................................ 69 Nigerian Aviation Industry Stakeholders......................................................................................................... 70 The Way Forward................................................................................................................................................ 71 Airport Construction Cost................................................................................................................................ 73 Conclusion........................................................................................................................................................... 74

BusinessDay Research and Intelligence Unit

NIGERIAN AVIATION INDUSTRY REPORT 2018

ACRONYMS GDP

Gross Domestic Product

NIMET

Nigerian Metrological Agency

NAIA

Nnamdi Azikiwe International Airport

NCAT

Nigerian College of Aviation Technology

AIB

Accident Investigation Bureau

CAA

Civil Aviation Authorities

ICAO

International Civil Aviation Organization

IATA

International Air Transport Association

ANA

All Nippon Airways

SARP

Standards And Recommended Practices

NCAA

Nigerian Civil Aviation Authority

ATC

Air Traffic Controllers

FAA

Federal Aviation Administration

IASA

International Aviation Safety Assessment

USA

United States of America

QoQ

Quarter on Quarter

YoY

Year on Year

SRC

Safety Regulation Commission

MD

Managing Director

VAT

Value Added Tax

DCBD

Director of Commercial & Business Development

FAAN

Federal Airports Authority of Nigeria

ICT

Information and Communication Technology

IT

Information Technology

MMIA

Murtala Muhammed International Airport

CAT

Category

MRO

Maintenance Repair and Overhaul

AIU

Airline Update

CUT

Common User Terminal

NAMA

Nigerian Airspace Management Agency

LED

Light Emitting Diode

BASA

Bilateral Air Services Agreement

ICRC

Infrastructure Concession Regulatory Commission

CPDLC

Completion of the Controller Pilot Data Link Communication

UNDP

United Nation Development Programme

CTIA

Cape Town International Airport

Q1…Q4

First quarter to fourth quarter

TCM

Total Cargo Movement

BusinessDay Research and Intelligence Unit

NIGERIAN AVIATION INDUSTRY REPORT 2018

Executive Summary A well-functioning air transport sector presents substantial economic growth and development benefits via its significant contribution to GDP, job creation, trade generation and tourism promotion. national, regional, and international scale.

It also fosters global economic integration and provides

Presently, various commercial activities are carried out by

dynamic connectivity on a national, regional, and inter-

different individuals and business concerns at all the Ni-

national scale ll-functioning air transport sector presents

gerian airports. In 2017, close to N3 billion was generated

substantial economic growth and development benefits

from cargo charges (port import, port export, and tran-

via its significant contribution to GDP, job creation, trade

shipment) alone.

generation and tourism promotion.

Furthermore, investment opportunities exist in areas of Hangar/aircraft maintenance, Ground handling support,

It also fosters global economic integration and provides

ICT Security Support, Specialised Cargo Temperature

dynamic connectivity on a The Nigeria Aviation sector

Control/Refrigeration, Outdoor/Indoor Advertising, Fa-

has experienced gross infrastructure deficiency over the

cility Maintenance, Landscaping and Horticultural De-

years, with many airports built in states where they nei-

sign, Perimeter Fencing/Physical Barrier and Specialised

ther promote economic development nor take advantage

Cargo Haulage Services in different airports across the

of market potentials. Decaying infrastructure, obsolete

country.

equipment and inability to fully utilize the commercial and trading activities, have been the main cause of ineffi-

Nigerian aviation sector in 2017 contributed 105.9 billion

ciency of the aviation sector.

naira, a 10.8 per cent increase from the previous and have the potential contribute more in the subsequent years with

This report x-rays the performance of the global and Nige-

sectorial goals of re-introducing a national carrier.

rian aviation sectors in terms of revenue generation, pas-

However, in the cause of carrying out our research, we

senger and aircraft traffic, and cargo and mail movements.

observed that due to lack of MRO facility in Nigeria, the

Global passenger traffic and cargo movement was 4.1 bil-

airlines spend up to N22.3 billion on C-checks alone in

lion and 60 million in 2017 respectively and forecasted to

every 18 month.

increase to 4.3 billion passengers and 62 million metric tonnes by the end of 2018, with global revenue genera-

Finally, we concluded that for the Nigerian aviation sector

tion capacity estimated at US$ 640 billion. Nigeria on the

to drive growth and optimize its market potentials, it re-

contrary recorded 8 per cent and 17.1 per cent decline in

quires transparent concessioning process, routine mainte-

passenger traffic and cargo movement in 2017 from the

nance of facility and upgrading of infrastructure. In order

preceding year .

to reduce the cost of flying out the aircrafts to other countries for maintenances as well as the cost of buying forex,

Analysis on Nigerian airports level of sufficiency shows

Setting up MRO is very important.

that the airports are adequate for the existing passengers.

The construction of a standard airport in Nigeria can be

Before an airport is set up in a particular region, it is nec-

estimated at a range of US$ 3 - 7 billion. It will cost up to

essary to ensure that the region has the economic capacity

N175 billion to rehabilitate the runway of about airport

to drive and optimize the airport.

25 airports in Nigeria while the cost of setting up MRO in Nigeria is estimated at about US$32 million.

NIGERIAN AVIATION INDUSTRY REPORT 2018

Objective The Nigerian Aviation Sector has been facing the challenge of infrastructure deficit, which has led to the massive economic losses. This report aims at identifying the challenges in the aviation sector, suggesting ways of tackling these challenges, and providing insights to the commercial and investment opportunities in the Sector.

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NIGERIAN AVIATION INDUSTRY REPORT 2018

KEY TAKEAWAYS 1 GLOBAL PASSENGER TRAFFIC

Global passenger traffic and cargo movement was forecasted to increase to 4.3 billion passengers and 62 million metric tonnes by the end of 2018, with global revenue generation

US$ 640

Global revenue generation

capacity

capacity estimated at US$ 640 billion.

2 PASSENGER & CARGO MOVEMENT

Nigeria recorded 8 per cent and 17.1 per cent decline in passenger traffic and cargo movement in 2017 from the preceding year.

TRAFFIC BY AIRPORT 3 PASSENGER Murtala Muhammed International Airport Lagos is the most functional airport in Nigeria with 60% of the total passengers’ traffic

4 CARGO REVENUE GENERATION

Nigeria generated close to N3 billion from cargo charges (port import, port export, and transhipment) alone in 2017.

AIPORTS 5 20ACTIVE Nigerian airports are active while 6 are moribund with most of the active airports operating skeletal flights.

8% & 17%

The level of decline in passenger traffic and cargo movement

60%

Total Passengers’ Traffic In Murtala Mohammed Airport

N3bn

Cargo Revenue Generation In 2017

20 & 6

Active and Moribund Airport

NIGERIAN AVIATION INDUSTRY REPORT 2018

BusinessDay Research and Intelligence Unit

GLOBAL AVIATION INDUSTRY

NIGERIAN AVIATION INDUSTRY REPORT 2018

GLOBAL AIR REVENUE Cargo Traffic Passenger Traffic in billions

62M

Metric tonnes

41.1 2.4

49.3

48.8

2.9

3.0

2011

2012

49.1 2.7

2009 2010

49.5

51.5

3.2

3.3

2013 2014

52.8

54.9

3.6

3.8

2015

2016

59.9

62.5

4.3BN

Airline Passengers 4.3

4.1

2017 2018F

Source: IATA, BRIU

T

he aviation industry comprises the airports, the technical personnel, and the equipment.

The Nigerian Civil Aviation Authority (CAAs), which is periodically evaluated by the International Civil Aviation Organization (ICAO) and other international bodies, certifies the airports in Nigeria.

Between 2016 and 2017 for instance, commercial airlines’ passenger traffic increased from about 3.8 to 4.1 billion passengers. Airline passenger traffic is forecasted to increase to 4.3 billion passengers by the end of 2018, with global revenue generation capacity estimated at US$ 502 billion, US$ 532 billion and US$ 581 billion in 2016, 2017 and 2018.

The aviation industry, one of the most regulated industries across the world, has played crucial role in the transportation systems and economies of many countries. Being the fastest means of transportation, the air transport is facilitating the increasing linkage of various global economies.

Moreover, about 55 million and 60 million metric tonnes of cargo were carried by air in 2016 and 2017, generating combined global revenue of close to 100 billion U.S. dollars within the two years. Cargo traffic is estimated to rise to above 62 million metric tonnes in 2018, with revenue of about 59 billion U.S. dollars2.

2 http://www.iata.org/pressroom/facts_figures/fact_sheets/Documents/

Distribution of Global Air Passenger and Cargo Activities by continent

27%

Europe

24%

North American

33%

Asia/pacific

9%

Middle East

5%

Latin and Carribean

$561 Aviation industry contribution to GDP was also estimated at 561 billion dollars in 2014 while the global passenger traffic is estimated to reach 7.3 billion by 2034.

2%

African Airline

13

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NIGERIAN AVIATION INDUSTRY REPORT 2018

According to the International Air Transport Association (IATA), the global aviation sector has become highly competitive as airports compete on price and service quality in order to attract and retain needed traffic. This is because passengers are becoming more sensitive to airlines charges, as the search for cheap fares and booking have been made easier by the internet.

Global airlines transport over 10 million passengers and about US$ 18 billion worth of goods on more than 100,000 flights daily. Asia/Pacific, with 33 per cent of global air passenger and cargo traffic, is the leading region in aviation activity. It is followed by Europe and North America, with 27 per cent and 24 per cent, respectively, of global air passenger and cargo traffic. Middle East region comprised 9 per cent of world traffic; Latin America and the Caribbean Regions accounted for 5 per cent, while African airlines accounted for the remaining 2 per cent 3.

Moreover, the liberalisation and corporatisation of the airline sector, as well as the privatisation of airport companies have redefined the nature and extent of competition in the air transport sector.

The air transport industry in developing countries generated an estimated total of 38 million jobs in 2014 (28 million Tourism catalytic jobs, 2.3 million induced jobs, 4.1 million indirect jobs and 3.8 million direct jobs). Aviation industry contribution to GDP was also estimated at 561 billion dollars in 20144 . The global passenger traffic is estimated to reach 7.3 billion by 2034.

According to Euromonitor, the leading airlines in terms of market share are Delta Airlines lnc, United Airlines, Southwest Airlines, American, British Airways, and Air China. The others are Lufthansa, China Southern Airlines, Saudi Arabian Airlines, and China Eastern Airlines .

Using some customer-based survey and defined methodology, Skytrax7 listed Qatar Airways, Singapore Airlines, ANA (All Nippon Airways), Emirates, Cathay Pacific, EVA Air, Lufthans, Etihad Airways, Hainan Airlines, and Garuda Indonesia as the 10 leading airlines in the global aviation industry in 20178.

The increase in aviation activities since 1960 has been due to increasing demand for passenger and freight services, technological progress, associated investment and steady decrease in the real cost of air travel5.

3 ICAO Economic Developmen 4 IATA 5 https://blog.euromonitor.com/2017/11/top-20-global-airline-brands-market-share.html

7 Skytrax is an independent air travel review website 8 http://www.worldairlineawards.com/awards/world_airline_rating.html

International Passengers Traffic Trend

Thousands

25,000 20,000 15,000

10,000 5,000 0

2007

2008

ETHIOPIA

BusinessDay Research and Intelligence Unit

2009

2010 KENYA

2011

2012

NIGERIA

2013

2014

2015

2016

SOUTH AFRICA

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NIGERIAN AVIATION INDUSTRY REPORT 2018

Africa: Passenger Traffic Trend Analysis

Internation Passenger traffic in ‘Millions’

T

COUNTRY

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

ETHOPIA

2.9

KENYA

2.86 2.88 2.95 4.04 4.51 4.65 4.52

NIGERIA

1.36 1.46 1.37

S/AFRICA

12.87 13.14 12.5 15.78 16.41 17.57 16.31 17.03 18.51 19.5

2.72 2.91 3.55 4.44 4.2

5

5.67

4.79 4.72 4.21

6.27 7.07 8.24 4.45

4.4 4.53

4.46 4.61 4.49

Source: World Bank, NBS, BRIU

he major and the fastest growing aviation industries in Africa are in Ethiopia, Kenya, and South Africa. The aviation sector in these countries has high passenger traffic, quality airline services, and good airport infrastructure.

In 2007, Ethiopia’s international passengers’ traffic was 2,290,179. It soared steadily from then to 2016. While Kenya made 2,857,464 traffic in 2007.

It increased gradually in 2008 through 2009 and boomed in 2010 through 2012. It then decreased in 2013 through 2015 but then rose back in 2016.

Nigeria’s international passengers’ traffic (arrival and departure) has experienced a chequered growth path. The country’s international passenger traffic grew from 2007 to 2008; it dropped in 2009 but increased from 2010 through 2011. It further dropped in 2012 and 2013, increased slightly in 2014, and dropped in 2015 and 2016.

While South Africa’s international passenger traffic increased gradually from 2007 to 2008, it declined in 2009 but rose again in 2010 through 2012. It decreased in 2013, but grew steadily from 2014 to 2016.

AFRICANS IN THE SKIES 2016 Aided by rising consumers spending and a growing middle-class African air is on the rise.

4.49 million

Nigeria

Ethopia

Africa most populated country has experience unsteady air traffic since 2007 picking up strongly in 2016

Kenya

8.24 million

Traffic growing since 2007

4.53 million

Passengers Traffic has fluctuate since 2007

19.5 million South Africa

Unargubly with the highest passenger traffic and still rising

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NIGERIAN AVIATION INDUSTRY REPORT 2018

NIGERIAN AVIATION INDUSTRY

BusinessDay Research and Intelligence Unit

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NIGERIAN AVIATION INDUSTRY REPORT 2018

THE NIGERIAN AVIATION INDUSTRY Nigeria has more than 25 airports, 30 airlines, 590 pilots, 19 flight engineers, 258 Air Traffic Controllers (ATC), 677 aircraft maintenance engineers, 1,103 cabin crew and four aircraft dispatchers9.

T

he functional principles, procedures and standards applied in civil aviation are based on the Standards And Recommended Practices (SARP) of ICAO and specified National laws and regulations.

The Nigerian Civil Aviation Authority (NCAA) is the zenith supervisory body in Nigeria, supervising the activities of all airlines and their pilots, engineers and cabin staff, airports, airstrips and heliports, and navigation aids. The NCAA also supervises all service providers including the airport authority, air traffic service providers, and aviation training institutions.

As Africa’s most populous country, Nigeria is an important destination for over 22 foreign carriers.

The country currently has Bilateral Air Services Agreements (BASA) with over 78 countries.

Travellers can fly directly to many of the world’s business centres such as London, Paris, Frankfurt, New York, and Johannesburg.

With the attainment of America’s Federal Aviation Administration (FAA) International Aviation Safety Assessment (IASA) Category One Certification, Nigerian registered carriers can now fly directly into the United States of America (USA).

Nigeria is an important des n a onor over 22 foreign carriers.

Murtala Muhammed International Airport Lagos is the most functional airport in Nigeria

17

The aviation sector in Nigeria experiences gross infrastructure deficiency; it has airports in various states that can neither support economic development nor take advantage of existing and emerging opportunities.

Decaying infrastructure and obsolete equipment (terminal buildings, control towers, navigational aids, central air conditioning systems, conveyor belt, lights etc) are the main cause of inefficiency in the sector.

This is worsened by insufficient airport facilities (which leads to long wait times for check-in, extended security screening procedures, and delayed baggage pick up time) as well as inadequate safety, security and surveillance equipment systems.

AIRPORTS PASSENGERS TRAFFIC Azikiwe 25%Nnamdi Interna onal Airport Abuja

60%

NIGERIA Decaying infrastructure and obsolete equipment (terminal buildings, control towers, naviga onal aids, central air condi oning systems, conveyor belt, lights etc) are the main cause of inefficiency in the sector.

Murtala Muhammed International Airport Lagos is the most functional airport in Nigeria, accounting for 60 per cent of the passenger traffic. Nnamdi Azikiwe International Airport Abuja accounts for 25 per cent passenger traffic; Mallam Aminu Kano International Airport, Port-Harcourt International Airport, and Akanu Ibiam International Airport Enugu have 20 per cent of the passenger traffic, the remaining 17 other airports have the 5 per cent traffic11

20%

MallamAminu AminuKano, Kano, Mallam Mallam Aminuand Kano, Port-Harcourt and Port-Harcourt Port-Harcourt and AkanuIbiam IbiamEnugu Enugu Akanu Akanu Ibiam Airports Enugu International Airports the remaining 17International International Airports accountsfor for20% 20% other airports allallaccounts all accounts for 20% accounts for 5%

5%

78

Nigeria as Bilateral Air Services Agreements countries

9 http://www.ncaa.gov.ng/about-ncaa/about-us/ 11 Businessday Aviation Desk

BusinessDay Research and Intelligence Unit

NIGERIAN AVIATION INDUSTRY REPORT 2018

Evaluation of Nigeria’s Passenger Traffic

In 2017, Nigeria’s total passenger traffic grew steadily from Q1 to Q3. From 2,880,494 in Q1, the passenger traffic rose 10.2 per cent to 3,173,825 in Q2, and rose 16 per cent to 3,680,627 in Q3. It then slided 0.6 per cent to 3,659,999 in Q4.

Year on year (YoY) however, total passengers’ traffic in Nigeria grew by negative 21.5% (2,880,494) in first quarter 2017 against 3,671,094 in 2016. There was also a decline from 3,173,825 in second quarter 2017 against 3,724,622 in 2016 with growth rate of (-14.8%).

But third quarter 2017 experienced a slight growth to 3,680,627 against 3,679,687 (0.03%) in 2016 and similarly last quarter 2017 total passengers’ traffic stood at 3,659,999 against 3,489,317 (4.9%) in same quarter in the previous year.

BusinessDay Research and Intelligence Unit

Total passenger passenger traffic traffic Total Totalpassengers' passengers'traffic traffic Total 16,000,000 16,000,000 15,500,000 15,500,000

15,335,745 15,335,745

15,000,000 15,000,000

14,564,720 14,564,720

14,500,000 14,500,000 14,000,000 14,000,000

14,330,857 14,330,857

14,126,767 14,126,767

13,500,000 13,500,000 13,000,000 13,000,000

13,394,945 13,394,945 2013 2013

2014 2014

2015 2015

2016 2016

2017 2017

Quarterly passenger passengertraffic traffic Quarterly Thousands Thousands

T

he country’s total passenger traffic (international and domestic, arrival and departure) grew 8.6 per cent from 14,126,767 in 2013 to 15,335,745 in 2014, sliding 7 per cent to 14,330,857 in 2015, before it rose 2 per cent to 14,564,720 in 2016. In 2017, the total passenger traffic stood at 13,394,945, a decline of 8 per cent as shown in the graph below.

4,000 4,000

3,500 3,500

3,000 3,000

2,500 2,500

Q1 Q1

Q2 Q2 2017traffic traffic 2017

Q3 Q3 2016traffic traffic 2016

Q4 Q4

Source: NBS, BRIU

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NIGERIAN AVIATION INDUSTRY REPORT 2018

Nigeria Total Aircraft Traffic

I

n 2013, the total aircraft traffic (international TOTAL AIRCRAFT TRAFFIC and domestic, arrival and departure) in Nigeria 300,000 was 227,644, it increased in 2014 to 257,734 (13%). However in 2015, it fell to 242,831 (-6%) 250,000 and fell further to 213,059 (-12.3%) in 2016. In 2017 however, the total aircraft traffic stood at 214,358 200,000 (0.6%) as shown in the graph below.

150,000

In first quarter257,734 2017, total aircraft traffic in Nigeria 242,831 227,644 213,059 50,240. This increased by 4.5 per cent to 52,504 in the second quarter, 3.1 per cent to 54,130 in the 50,000 third quarter, and by 6.2 per cent to 57,486 in the last quarter as shown in the graph below.

was 100,000

0 2013

2014

2015

2016

Year on year however, there was a rise in total aircraft traffic to 50,240 in first quarter 2017 compared to 45,886 (9.5%) recorded in same quarter the previous year. Second quarter 2017 recorded 52,504 against 58,505 (-11.4%) in the second quarter 2016.

Total aircraft traffic increased to 54,130 and 57,484 in third and last quarter 2017 compared to 53,525 and 54,860 recorded in same quarters the previous year 214,358 with growth rate of (1.2%) and (4.6%) respectively.

2017

Total aircraft traffic

Quarterly Aircraft Traffic (Thousand)

TOTAL AIRCRAFT TRAFFIC 300,000

60,000

250,000

50,000

200,000

40,000

150,000

30,000

100,000

10,000

50,000

-

257,734

227,644

20,000

Q1

Q2 2016 traffic

Q3

Q4

0 2013

242,831

2014

2015

213,059

214,358

2016

2017

Total aircraft traffic

2017 traffic

Quarterly Aircraft Traffic (Thousand) 60,000 50,000 40,000

30,000 20,000 10,000

19

-

BusinessDay Research and Intelligence Unit Q1

Q2 2016 traffic

Q3 2017 traffic

Q4

NIGERIAN AVIATION INDUSTRY REPORT 2018

Nigeria Total Cargo Movement

Quarterly cargo movement (kg)

Quarterly cargo movement (kg) Thousands

T

he total cargo movement (international and domestic, arrival and departure) fell 7 per cent from 204,104,618 kg in 2013 to 189,754,412 kg in 2014, dropping further by 3 per cent to 189,172,871.9 kg in 2015 before rising 3.1 per cent to 195,106,868 kg in 2016. It plunged 17.1 per cent in 2017 to 161,800,520 kg.

The decrease in both cargo and passengers traffic in 2017 could be attributed to two factors: the 2016 Nigeria recession caused by crash in the global oil prices and the exchange rate volatility which led to the devaluation of naira.

The 2016 recession slowed down Nigeria’s economy and reduced investors’ confidence to invest. This caused credit impairment and bankruptcy in the real sector and fall in real wages. Its effect on the aviation sector was significant as the number of people who travelled for tourism and business declined, reducing the air traffic.

Furthermore, the exchange rate volatility that was accompanied by devaluation of the naira made it more expensive for airlines to operate - the cost of aviation fuel increased while the spare parts and aircrafts maintenance became highly expensive.

60,000 50,000

42,033

41,458

40,000

44,884 33,426

30,000 20,000 10,000

There was a steady increase in total cargo movement through the first three quarters of 2017. From 41,457,573 kg in the first quarter, total cargo movement inched 1.4 per cent to 42,033,390 kg in the second quarter, rose 6.8 per cent to 44,883,814 kg in the third quarter, but dropped by 25.5 per cent to 33,425,744 kg in the last quarter.

-

Q1

Q2 2016 movement

Q3

Q4

2017 movement

Total cargo movement (kg)

300,000

250,000 Thousands

Year-on-year however, there was a steady decline in total cargo movement. From 42,311,777 kg in Q1 2016, total cargo movement (TCM) declined 2.02 per cent to 41,457,573 kg in similar period in 2017. It dropped 9 per cent from 46,316,298 kg in Q2 2016 to 42,033,390 kg Q2 2017, and from 49,095,386 kg in Q3 2016, TCM shed 9 per cent to reach 44,883,814 kg in Q3 2017. TCM dipped 42 per cent from 57,383,407 kg in Q4 2016 to 33,425,744 kg in Q4 2017.

70,000

200,000 150,000 100,000

50,000 -

2013

2014

2015

2016

2017

Total cargo movement (kg)

Q3

Witness the Highest Cargo movement 2017

44.88 million kg

The reduction in air traffic due to recession and high cost operation due to exchange rate volatility, led to some airlines winding up and others scaling down or suspending operations.

BusinessDay Research and Intelligence Unit

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NIGERIAN AVIATION INDUSTRY REPORT 2018

Mail Movement

Quarterly mail mo

Thousands

Total mail movement (kg)

I

8,000 4,000

Total mail movement 2017

40,000

-

Q1

39,446

35,000 30,000 25,000 20,000 15,000 10,000

6,453

5,000 -

2013

6,081

2014

6,439

2015

6,570

2016

2017

Total mail movement (kg)

Thousands

Quarterly mail movement 14,000 12,000 10,000 8,000 6,000 4,000 2,000 -

Q1

Q2

2016 movement

21

10,000

2,000

45,000

In Q1 2017, total mail movement in Nigeria was 6,466,211 kg and increased by 28.57 per cent to 8,313,347 kg in Q2. It rose 39.1 per cent to 11,561,661 kg in Q3 and grew further by 13.3 per cent to 13,104,503 kg in Q4.

Year-on-year however, there was a steady increase in total mail movement through the four quarters.

This ranges from 605,572 kg in Q1 2016 to 6,466,211 in Q1 2017 (967.8 per cent increase), from 709,986 kg in Q2 2016 to 8,313,347 kg in Q2 2017 (1070.9 per cent increase), from 1,515,331 kg in Q3 2016 to 11,561,661 kg in same quarter 2017 (663 per cent increase), and from 3,975,670 kg in Q4 2016 to 13,104,503 kg in Q4 2017 (229.6 per cent increase).

12,000

6,000 Total mail movement (kg)

Thousands

n 2013, the total mail movement (international and domestic, arrival and departure) in Nigeria was 6,452,629 kg, but decreased by 5.8 per cent in 2014 to 6,080,668 kg. In 2015 however, it rose 6 per cent to 6,439,495kg, growing by 2 per cent to 6,570,335 kg in 2016. 2017 recorded a significant increase in mail movement as this jumped 5004 per cent to 39,445,722 kg.

14,000

Q3

Q4

2017 movement

BusinessDay Research and Intelligence Unit

Q2 2016 movement

NIGERIAN AVIATION INDUSTRY REPORT 2018

Volume of Passengers traffic of airlines Domestic Carriers

A

ir Peace, with 2,604,963 passengers, had the highest volume of passengers among the eight local carriers in 2017, followed by Arik Air that had 1,430,170 passengers. Dana Air carried 1,194,004 passengers while Med-View Airline transported 985,483 passengers and Azman Air airlifted 689,233 passengers within the period. Aero Contractors had 409,018 passengers.

First Nation Airways with just one operating aircraft since late 2016 transported 189,155 passengers; Overland Airways had 144,049 passengers.

Nigerian airlines are beginning to make impact in the global aviation industry as many of them have begun to expand their fleet capacity, venture into several routes, and adhere to strict safety rules.

Nigeria also signed the open skies (Yamoussoukro) agreement, giving domestic airlines better opportunities to compete with foreign airlines.

For instance, Arik airline, Med-view Airline, and Air Peace are expanding their routes to include Accra, Dubai, Conakry and Abidjan and others.

These airlines have been able to compete with other foreign airlines by identifying and improving on key success factors such as attracting customers, managing its fleet, managing its people, and managing its finances.

TOP AIRLINE TRAFFIC DOMESTIC VOLUME

Passenger

22

Air Peace,

2,604,963

Arik Air

1,430,170

Dana Air

1,194,004

Med-View

985,483

Azman Air

689,233

BusinessDay Research and Intelligence Unit

NIGERIAN AVIATION INDUSTRY REPORT 2018

International Carriers

E

thiopian Airlines ferried 416,229 passengers

Asky Airways 119,154, African World Airlines

in 2017, becoming the biggest carrier for in

112,542, Rwandair 108,256 and Kenya Airways

2017. British Airways emerged the second

airlifted 93,307 passengers.

biggest carrier with 275,233 passengers.

Delta Airlines conveyed 93,244 passengers during

Air France ferried 254,290 passengers, Lufthansa had

the year, while Royal Air Maroc airlifted 88,015.

245,151, Emirates transported 242,033 passengers,

Etihad Airways carried 84,984 passengers; Med-

and Turkish Airlines flew 219,551.

View transported 72,175 passengers; Arik Air had 67,270 passengers; Air Cote D’Ivoire conveyed

Virgin Atlantic Airways flew 185,994 passengers,

59,059 passengers to various destinations as Saudi

KLM Airlines 185,999, Qatar Airways 170,159,

Air served 56,115 passengers.

Egypt Air 151,018, South African Airways 140,273, Air Peace lifted 31,551 passengers. Middle East Air and Max Air had 27,295 and 18,830 passengers in the year. Sudan Air conveyed 14,053 passengers while Meridian Air welcomed 13,839 passengers on board.

Mid Air Africa grossed 5,050 passengers; Cronos Air TOP AIRLINE TRAFFIC INTERNATIONAL VOLUME

Airline

Passenger

Ethiopian Airlines

416,229

British Airways

275,233

Air France

254,290

Lufthansa

245,151

Emirates

242,033

Turkish Airlines

219,551

BusinessDay Research and Intelligence Unit

attended to 4,858 passengers, Azman

Air

airlifted

2,003

passengers. The Cameroonian Airline and Camair-Co did not lift any passenger.

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NIGERIAN AVIATION INDUSTRY REPORT 2018

Volume of Passengers traffic of airlines 2017

Volume of Passengers traffic of airlines 2017

International carrier

Ethiopian Airlines British Airways Air France Lufthansa Emirates Turkish Airlines Virgin Atlantic Airways KLM Airlines Qatar Airways Egypt Air South African Airways Asky Airways African World Airlines Rwandair Kenya Airways Delta Airlines Royal Air Maroc Etihad Airways Med-View Arik Air Air Cote D’Ivoire Saudi Air Air Peace Middle East Air Max Air Sudan Air Meridian Air Mid Air Africa Cronos Air Azman Air Cameroonian Airline Camair-Co

24

Passengers traffic 416,229 275,233 254,290 245,151 242,033 219,551 185,994 185,999 170,159 151,018 140,273 119,154 112,542 108,256 93,307 93,244 88,015 84,984 72,175 67,270 59,059 56,115 31,551 27,295 18,830 14,053 13,839 5,050 4,858 2,003 0 0

Domestic carriers

Air Peace Arik Air Dana Air Med-View Airline Azman Air Aero Contractors First Nation Airways Overland Airways

Passengers traffic

2,604,963 1,430,170 1,194,004 985,483 689,233 409,018 189,155 144,049

BusinessDay Research and Intelligence Unit

NIGERIAN AVIATION INDUSTRY REPORT 2018

NIGERIAN AIRPORTS SUFFICIENCY

BusinessDay Research and Intelligence Unit

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NIGERIAN AVIATION INDUSTRY REPORT 2018

NIGERIAN AIRPORTS SUFFICIENCY13

Murtala Muhammed International Airport, Lagos

A

irports in Nigeria are sufficient for existing

When cost-benefit analysis of airports is conducted, we

passengers. Even though one might be

discover that there must be a driver and city pair for any

tempted to compare the number of airports

airport to be viable.

in Nigeria to the United Kingdom, USA and some other

For instance, the oil companies in Warri and the traders

developed countries, such comparison may be misplaced

in Onitsha combine to drive traffic to the Asaba airport.

as aviation is a commercially viable entity and as such, the

Cargo movement is also an important consideration in

number of airports in a country is not a function of the

deciding whether and where to establish an airport.

country’s population but GDP, disposable income, and other metrics.

Airports are not social services venture as are hospitals and schools. Hence, they should not be built just anywhere.

Nigeria has a huge population but low disposable income.

If there is a need for fast and easy movement, investing

Before an airport is set up in a particular region, it is

in airstrips could be a better option than spending huge

necessary to ensure that the region has the economic

amount of money in building airports that would not be

capacity to drive and optimize the airport.

optimally utilized.

13 Information and relevant data provided by Aglow Aviation

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NIGERIAN AVIATION INDUSTRY REPORT 2018

The secondary airports or airstrips can be used as cheaper

This is what Japan has done: building a fast rail that links

form of operations for airlines and means of commuting

it to Europe.

for the people.

The most important part of owning an airport is having the necessary infrastructure and maintaining it for the

Ghana, for example, has just about 9 airports only

safety of airlines and passengers.

compared to Nigeria that has over 20 airports both domestic and international.

However, most airports in Nigeria are not efficient and

Nassarawa and Osun states, for example, are building air-

self-sustaining due to several factors that include low

ports. But Nassarawa is not far from Abuja, and Osogbo is

passenger and cargo traffic and lack proper maintenance,

not far from Ibadan.

causing them to become moribund; even some of the ac-

Ekiti state is also proposing to build an airport when Ondo

tive ones operate skeletal flights.

state is just 30 minutes away. The key approach for Nigeria should be effective multi-modal means of transportation that will include road, rail, air and water.

Nnamdi Azikiwe International Airport, Abuja

BusinessDay Research and Intelligence Unit

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NIGERIAN AVIATION INDUSTRY REPORT 2018

Active Airports in Nigeria

“Most of these active airports operate skeletal flights”

Features

Active

Ibadan Airport

Run Way Geographic Location Terminal Layout Seating Areas

Run Way

Jalingo Airport, Taraba

Security Lines Good Infrastructure Good Terminal Layout

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NIGERIAN AVIATION INDUSTRY REPORT 2018

Active

Features

Geographical Location Port Harcourt International Airport

Seating Areas

Akanu Ibiam International Airport Enugu

Passenger Traffic

Availability Of Internet Connectivity

Good Baggage Handling System Good Security System

Run Way Magaret Ekpo International Airport Calabar

BusinessDay Research and Intelligence Unit

Geographical Location Airport Lounge Passenger Traffic

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NIGERIAN AVIATION INDUSTRY REPORT 2018

Features

Active Runway

Gombe Lawanti International Airport

Airport Lounge Good Terminal Layout

Runway Airport Lounges Availability To Internet

Akure Airport

Connectivity

Run Way Good Terminal Layout

Benin Airport, Edo

30

Good Infrastructure

BusinessDay Research and Intelligence Unit

NIGERIAN AVIATION INDUSTRY REPORT 2018

Features

Active Run Way

Warri Airport, Delta

Atm Locations Seating Areas Good Baggage Handling

Run Way Terminal Layout

Ilorin Airport, Kwara

Geographic Location

Run Way

Akwa Ibom Airport Uyo

BusinessDay Research and Intelligence Unit

Parking Availability Security Lines Baggage Handling

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NIGERIAN AVIATION INDUSTRY REPORT 2018

Features

Active

Passenger Traffic

Muritala Muhammed Airport

Run Way Airport Lounge Good Terminal Layout Baggage Claim Locations Baggage Handling Variety Of Restaurants

Passenger Traffic

Nnamdi Azikwe International Airport Abuja

Run Way Good Terminal Layout Security Lines Baggage Claim Locations

Two run-ways

Mallam Aminu International Airport Kano

32

Airport Lounge Availability of internet connectivity Good baggage handling

BusinessDay Research and Intelligence Unit

NIGERIAN AVIATION INDUSTRY REPORT 2018

Active

Kaduna Airport

Maiduguri International Airport

Yakubu Gowon

Features

Runway

Arrival Halls Run Ways Good Security

Airport Lounges Overall Cleanliness Parking Availability

BusinessDay Research and Intelligence Unit

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NIGERIAN AVIATION INDUSTRY REPORT 2018

Features

Active

Runway Asaba International Airport (Asaba, Delta)

Yola Airport (Yola, Adamawa)

Availability Of Internet Connectivity Good Baggage Handling

Run Way Passenger Traffic

Run Way Sam Mbakwe Airport Owerri, Imo

34

Good Geographical Location

BusinessDay Research and Intelligence Unit

NIGERIAN AVIATION INDUSTRY REPORT 2018

Moribund airports in Nigeria Moribund

Features Few passenger movement

Sultan Sadiq Abubakar Airport

Poor airport perimeter fencing Poor baggage handling system Sir AbubakarTafawa Balewa Airport Bauchi

Few passenger movements

No security lines

Kebbi International Airport (BirninKebbi, Kebbi)

Few passenger movement

Few passenger movement

Poor airport lounge Poor internet connectivity Few passenger movement

Minna Airport

Poor baggage handling system Poor airport lounge Few passenger movement

Makurdi Airport (NAF Base), Benue

Poor geographical location Poor internet connectivity

Kastina airport

BusinessDay Research and Intelligence Unit

Few passenger movement

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NIGERIAN AVIATION INDUSTRY REPORT 2018

Commercial Activities at Nigerian Airports17 Presently, various commercial activities are carried out

to have been generated in 2017 from cargo charges (port

by different individuals and business concerns at all the

import, port export, and transhipment) alone.

Nigerian airports.

This excludes income generated through punitive charges

The most prominent of these are listed in the tables below.

and other airport tariffs.

Analysis of the information provided on FAAN website shows that on the average, close to N3 billion was shown

Cargo charges Name Of Service Airline Cargo Fee

Guidelines / Preconditions (Including

Fees Payable

Timelines If Applicable All Airlines that carry cargo

N 5.0 Per Kg (Charged on the total cargo

pay this fee

through-put on board the flight as contained in the manifest)

Port Charge

The owner/agent of the cargo can only make

Import

payments to FAAN after he/she must have

N 7.0 Per Kg (Normal Cargo)

cleared with the Nigerian Custom Service

N 20.0 Per Kg (Express/Courier)

and Ground Handling Companies.

Airlines that want to use FAAN’s Trans-shipment

airport as a hub for goods to other countries, i.e. the goods have been

Export

N 7.00 Per Kg

discharged and handled on the apron.

Punitive Charge

Cargo elements that are processed through the passenger terminals as

N 2, 000.00 Per Bag/Piece

excess baggage instead of passing through the designated cargo terminals.

17All Data contained in the tables in this section was sourced from FAAN at http://www.faan.gov.ng

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Airports tariffs category I

CATEGORY I Premium International Airports (Mma/Naia/Portharcourt) PREMIUM INTERNATIONAL AIRPORTS (MMA/NAIA/PORTHARCOURT)

PROJECTS

INTERNATIONAL GROUND

PROCESSING

PREMIUM

RENT

FEE

(N/ m2/annum)

(N/m2/annum)

OLD

NEW

OLD

NEW

RATE

RATE

RATE RATE

Petrol Station

2,000

3000

1,500

2000

500,000

Banking Hall

2,000

3500

1,500

2500

750,000

Shopping Mall

2,000

3500

1,500

2500

500,000

Warehouse (Dry/Cold)

2,000

3000

1,500

2000

600,000

Exhibition Centre

2,000

3500

1,500

2000

500,000

Office Complex

2,000

3500

1,500

2000

500,000

In-Flight catering

2,000

2500

1,500

1750

500,000

Hotel/Motel

2,000

3500/3000

1,500

2000

750,000

Cell site installation

2,000

3000

1,500

2000

750,000

Interline Offices

2,000

3000

1,500

2000

500,000

Conference Centres

2,000

3000

1,500

2000

500,000

Holiday Inn/Resort Centre

2,000

3000

1,500

2000

500,000

Housing Estate/ Amusement

2,000

3000

1,500

2000

750,000

Aviation Fuel/Tank Farm

2,000

2500

1,500

1750

600,000

Hangar(Maintenance)

2,000

2500

1,500

1750

600,000

Horticultural/Flower garden

2,000

2500

1,500

1750

300,000

Public Gallery

2,000

2500

1,500

2000

500,000

Car Wash

2,000

2500

1,500

1750

150,000

Parks

BusinessDay Research and Intelligence Unit

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NIGERIAN AVIATION INDUSTRY REPORT 2018

Airports tariffs category II

II Premium InternationalCATEGORY Airports Enugu/Kano OTHER INTERNATIONAL AIRPORTS (KANO/ENUGU) PROJECTS

INTERNATIONAL PREMIUM

GROUND RENT

PROCESSING

(N/ m2/annum)

(N/ m2/annum)

FEE

OLD

NEW RATE

RATE

OLD

NEW

RATE

RATE

Warehouse (Dry/Cold)

1,000

2,000

500

1000

600,000

Exhibition Centre

1,000

2,000

500

1000

500,000

Office Complex

1,000

2,000

500

1000

500,000

Aviation Fuel/Tank Farm

1,000

2,000

500

1000

600,000

Hangar(Maintenance)

1,000

1,500

500

1000

600,000

In-Flight catering

1,000

1,500

500

1000

500,000

Hotel/Motel

1,000

2,500/2000

500

1500

750,000

Cell site installation

1,000

2,500

500

1500

750,000

Interline Offices

1,000

2000

500

1000

500,000

Conference Centres

1,000

2500

500

1500

500,000

Public Gallery

1,000

2000

500

1000

500,000

Holiday Inn/Resort Centre

1,000

2000

500

1500

500,000

Housing Estate/ Amusement

1,000

2000

500

1500

750,000

Horticultural/Flower garden

1,000

1500

500

1000

300,000

Petrol Station

1,000

2000

500

1000

500,000

Banking Hall

1,000

2000

500

1000

750,000

Shopping Mall

1,000

2000

500

1000

500,000

Car Wash

1,000

1500

1,500

1000

150,000

Parks

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NIGERIAN AVIATION INDUSTRY REPORT 2018

Airports tariffs category III

CATEGORY III

Premium International Airports(Oweri, Kaduna, Calaber, Benin)

PREMIUM SECONDARY AIRPORTS(OWERRI, KADUNA, CALABAR, BENIN) PROJECTS

DOMESTIC PREMIUM (N/ m2/annum)

GROUND RENT

(N/

PROCESSING FEE

m2/annum) OLD

NEW

OLD

NEW

RATE

RATE

RATE

RATE

Warehouse (Dry/Cold)

500

1,000

250

500

400,000

Exhibition Centre

500

1,000

250

500

300,000

Office Complex

500

1,000

250

500

400,000

Aviation Fuel/Tank Farm

500

1,000

250

500

500,000

Hangar(Maintenance)

500

1,000

250

500

500,000

In-Flight catering

500

1,000

250

500

500,000

Hotel/Motel

500

1,000

250

500

500,000

Cell site installation

500

1,500/1000

250

500

500,000

Interline Offices

500

1,000

250

500

400,000

Conference Centres

500

1,000

250

500

400,000

Public Gallery

500

1,000

250

500

300,000

Holiday Inn/Resort Centre

500

1,000

250

500

400,000

Housing Estate/ Amusement

500

1500

250

500

500,000

Horticultural/Flower garden

500

1000

250

500

150,000

Petrol Station

500

1000

250

500

450,000

Banking Hall

500

1000

250

500

500,000

Shopping Mall

500

1000

250

500

300,000

Car Wash

500

1000

250

500

150,000

Parks

BusinessDay Research and Intelligence Unit

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NIGERIAN AVIATION INDUSTRY REPORT 2018

Airports tariffs category IV

CATEGORY IV

ALL OTHER DOMESTIC AIRPORTS (ILORIN, JOS, MAIDUGURI, IBADAN, SOKOTO, AKURE,

ALL OTHER DOMESTIC AIRPORTS (ILORIN, JOS, MAIDUGURI, IBADAN, KATSINA, MINNA, MAKURDI, ZARIA, YOLA) SOKOTO, AKURE, KATSINA, MINNA, MAKURDI, ZARIA, YOLA) PROJECTS

DOMESTIC PREMIUM (N/ m2/annum)

GROUND RENT

(N/

PROCESSING FEE

m2/annum) OLD

NEW

OLD

NEW

RATE

RATE

RATE RATE

Petrol Station

250

1,000

250

500

400,000

Banking Hall

250

1,000

250

500

300,000

Shopping Mall

250

1,000

250

500

400,000

Warehouse (Dry/Cold)

250

1,000

250

500

500,000

Exhibition Centre

250

1,000

250

500

500,000

Office Complex

250

1,000

250

500

500,000

Aviation Fuel/Tank Farm

250

1,000

250

500

500,000

Hangar(Maintenance)

250

1,500/1000

250

500

500,000

In-Flight catering

250

1,000

250

500

400,000

Hotel/Motel

250

1,000

250

500

400,000

Cell site installation

250

1,000

250

500

300,000

Interline Offices

250

1,000

250

500

400,000

Conference Centres

250

1500

250

500

500,000

Public Gallery

250

1000

250

500

150,000

Holiday Inn/Resort Centre

250

1000

250

500

450,000

Housing Estate/ Amusement

250

1000

250

500

500,000

Horticultural/Flower garden

250

1000

250

500

300,000

Car Wash

250

1000

250

500

150,000

Parks

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SLOT TARIFF ATM TARIFF SOURCE

INTERNATIONAL

DOMESTIC AIRPORTS

AIRPORTS Concession fee

N 3,000,000.00

N 2,000,000.00

Rent

N30,000/m2

N30,000/m2

Service Recovery Charge

20% of Rent

20% of Rent

N500,000.00 (Non-

N500,000.00 (Non-

refundable)

refundable)

Utility

As per consumption

As per consumption

Tenure

Annually but renewable

Annually but renewable

(SRC) Processing fee

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NIGERIAN AVIATION INDUSTRY REPORT 2018

Airports tariffs (telecommunication base station tariff) Telecommunication Base Stations Tariff

Telecommunication Base Stations Tariff

GAT, Domestic Wing of Lagos Airport Concession fee:

N1,562,000.00

Premium:

N250,000.00

Rent:

SRC:

Utility:

30,000.00/m2 20% of Rent As per consumption

Murtala Muhammed International Airport Concession fee:

N3,125,000.00

Premium: SRC:

Rent: Utility:

N625,000.00 N50,000.00/m2 20% of Rent As per consumption

Port- Harcourt International Airport Concession fee:

N3,125,000.00

Premium: SRC:

Rent: Utility:

N625,000.00 N50,000.00/m2 20% of Rent As per consumption

Nnamdi Azikwe International Airport Concession fee: Premium: SRC:

N3,125,000.00 Rent: Utility:

N625,000.00 N50,000.00/m2 20% of Rent As per consumption

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Corporate Affairs

Corporate tariffs EXCURSION/GUIDED TOURS 1 - 50 Pupils / Per day

N 40,000

1 - 50 Students (Tertiary) / Per day

N 50,000

HOME VIDEOS/FILMING 0 - 3hrs

N 500,000

A day

N 1Million

FILMING (COMMERCIALS) / Per day Per Day

N 500,000

ADHOC PROMOTIONS Per Day

N 250,000

Photography on the Landside / Airside 0-3 hrs.

N 500,000

A Day

N 1 Million

CONFERENCE HALL / PROTOCOL LOUNGE PROMOTIONAL LEAFLETS/TABLE

N 500,000 / N 200,000 - Per Day N 200,000

STANDS AIRPORT RECEPTION

BusinessDay Research and Intelligence Unit

N 500,000

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NIGERIAN AVIATION INDUSTRY REPORT 2018

Other Airport Tariffs Other Airport Tariffs

Landing International landing Day landing $0.00909/kg or equivalent in Naira Night landing $0.01364/kg or equivalent in Naira Parking fees $0.00114/kg after 3 hours free parking

Domestic landing Day landing 25k/Kg Night landing 37.5k/Kg Parking fees 03.15k/Kg after 3 hours free parking

Avio Bridge Aircrafts weighing over 195,044 kg $50 per use or equivalent in Naira Aircrafts weighing between 0-195,044 kg -

$40 per use or

equivalent in Naira.

PSC International $50 per pax or equivalent in Naira Domestic N 1000 per departing passenger

Fuel Charge N 2.50 per litre Port Charge Courier / Tarmac/Pre –Release/

N7/Kg

Discriminatory charge N20/Kg N5/Kg Air Cargo N5/Kg Trans- Shipment N50/kg International Terminal charge N20/kg Courier /Express Charge N2,000.00/Bag Punitive Charge for cargo

Common user Terminal Equipment Cute for International Operations is (CUTE) calculated as: Total chargeable passenger x 1.4 Dollars

Check – in Counter Charge:

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Check – in Counter Charge: Scheduled Flights 7 Dollars x No of counters used x hours Casual Flights used 100 Dollars x No counters used X hours used

Concession fees Minimum of 5% on Turnover Service Recovery Charge (SRC) 20% on rent for Concessionaires within Terminal Building with full facilities/services provided by the Authority.

10% on rent for Concessionaires

BusinessDay Research and Intelligence Unit

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NIGERIAN AVIATION INDUSTRY REPORT 2018

Training Centre Charges

Classroom Rental:

N 90,000

(Premium) Executive Conference Room, P.A.S., Prospective customer is required to formally apply to GM Projector, Internal Restaurant, Central A.C., with Training & HRD at least 2 weeks ahead of use. Application external restrooms and parking lot. must indicate the purpose of use. This is important to

also ascertain the availability of space

N 70,000 (Gold) Medium size classroom, P.A.S., Projector, Internal Restaurant, Central A.C., with external restrooms and parking lot.

Prospective customer is required to formally apply to GM Training & HRD at least 2 weeks ahead of use.

Application must indicate the purpose of use. This is important to also ascertain the availability of space

N 65,000 (Classic) Medium size classroom, P.A.S., Projector, Prospective customer is required to formally apply to Internal Restaurant, Central A.C., with external restrooms and parking lot.

GM Training & HRD at least 2 weeks ahead of use.

Application must indicate the purpose of use. This is important to also ascertain the availability of space

N 70,000 Per Person Airside Operations Safety Compliance Training

46

Being a mandatory programme for all persons operating motorized equipment in the airside, prospective organizations is required to formally apply to GM Training & HRD at least 2 weeks ahead of the training

BusinessDay Research and Intelligence Unit

NIGERIAN AVIATION INDUSTRY REPORT 2018

Process Flow for Retail Offering Facility Management Process Flow for Retail Offering Facility Management

Application

Forwarding of Offer & Acceptance to Retail Department

Appraisal of application

Issuance of Award Letter by Board Secretary’s office

Liaison with Management for Space Availability

Submission of Approval & Application to Board Secretary’s office

Submission of Letters of Documentation & Financial

BusinessDay Research and Intelligence Unit

Letter Approval from Managing Director

Forwarding of Award & Acceptance to Commercial Inspectorate

payment and submission of receipt by applicant

Sending out of offer letter

sending out of agreement copy for vetting

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NIGERIAN AVIATION INDUSTRY REPORT 2018

1. Applicant submits application to be granted a space 2. On receipt of an application, the Airport Management (management) forwards acknowledgement to the applicant.

3. Management appraises the application to determine whether the applicant has the basic requirements for consideration for an offer / award.

4. Upon satisfying the condition (3) above, applicant Liaises with the management where the facility is domiciled for comments on availability of space / facility being requested for.

5. If a space is available management sends two (offer) letters to the applicant, who is required to convey acceptance within two weeks of receipt of the letters.

6. Approval is sought from the Managing Director (MD) as soon as the applicant submits a letter of acceptance of the financials for the space.

7. Once the approval is given by the MD, the approval (with a copy of the application) is sent to the Board Secretary’s office for issuance of award letter.

8.

The Board Secretary’s office then issues the award letter, which the applicant picks up from there. He is then expected to submit an acceptance letter within two weeks to the same office.

9. The Board Secretary forwards copy of the offer and acceptance to the retail department.

10. The retail department forwards copies of the award and acceptance to either the Commercial Inspectorate or the Commercial Department of the concerned airport for issuance of invoice.

11. The applicant makes payment and submits a copy of the receipt to the Retail Department.

12. The applicant’s offer letter, acceptance letter, and receipt of payment are sent to: a.

The airport to allow mobilization to the allocated space

b.

The Legal Directorate for draft agreement.

13. A draft copy of the agreement is sent by the Legal Directorate to DCBD for vetting by the Retail Department before a final Tenancy Agreement is prepared by the Legal Department for execution by the applicant and the Authority (FAAN).

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INVESTMENT OPPORTUNITIES IN NIGERIAN AIRPORTS18 Nigeria’s airports provide good business opportunities for profitable investments to all categories of investors. These opportunities include: Hangar/aircraft maintenance services: Hangar services for safe storage of aircraft not in use and for maintenance services are still in short supply across the country. Again, there is still significant deficiency in aircraft maintenance capacity in the country.

FAAN is ready to partner with competent private investors with the requisite expertise and financing capacity to develop such facilities in the various airports in the country. It is anticipated that this will assist Nigeria realise its vision of becoming West Africa’s aviation hub, through the provision of capacity for aircraft repair and maintenance.

Ground handling support services: There is a shortfall in the supply for standard ground handling services such as landing gantry equipment/ services, lounge to tarmac bussing, and aircraft parking ICT Security Support Services

gear in some of our (especially domestic) airports.

IT companies with expertise in access control, remote monitoring/surveillance, etc. can provide such services for the various airports in the country. There is also substantial demand for design and installation of computer networking and Wi-Fi systems at the various airport terminals.

Specialised Cargo Temperature Control/Refrigeration Services FAAN is currently focusing on air cargo development, with several cargo freight facilities being completed at airport terminals round the country. As such there is high demand for refrigeration/temperature control equipment and services for perishable agricultural produce, which presents investment opportunities for private investors with technical expertise and financing capacity.

18 Information obtained from FAAN through www.faan.gov.ng

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Outdoor/Indoor Advertising Services Opportunities also are available for both local and international brand names to take advantage of prime advertising locations offered by the airport environments. Both global brands and their advertising agencies can benefit from these prime outdoor and in-terminal advertising locations.

Facility Maintenance Services: There are also opportunities for world class facilities management companies to take care of our airport terminals and environs.

Landscaping and Horticultural Design Services: Landscape artists and horticultural design consultants can avail themselves of demand for such services at various airports round the country. The demand for such services will increase with the expected completion of five new international airport terminals later this year as well as completion of rehabilitation work on over 16 others.

Perimeter Fencing/Physical Barrier Services: There is an opportunity for contractor-financing to provide and build perimeter fencing at some of our airports across the country.

Specialised Cargo Haulage Services: Road transport companies can acquire specialized trucks for transport of perishable agricultural produce from farms and warehouses to the airport.

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Airport Investment Opportunities: what investors stand to gain

Services

Estimated Value (NGN)

Average number of Clients per day

Average annual revenue generation (NGN)

3

Average revenue generation per day (NGN) 900,000

Hangar/aircraft maintenance services

300,000

Ground handling support services

100,000

5

500,000

182,500,000

-

N/A*

N/A

N/A

100,000

5

500,000

182,500,000

Outdoor/Indoor Advertising Services

-

N/A

N/A

N/A

Facility Maintenance services

-

N/A

N/A

N/A

Landscaping and Horticultural Design Services

-

N/A

N/A

N/A

Perimeter Fencing/ Physical Barrier Services

-

N/A

N/A

N/A

Specialised Cargo Haulage Services

200,000

6

1,200,000

438,000,000

ICT security support services Specialised Cargo Temperature Control/Refrigeration Services

328,500,000

* Not Applicable. The services that fall under this category are mostly awarded on contract basis by the government and are usually projects that will take a lot of time. It is therefore likely that a company will undertake such project for months. Hence the average number of clients per day cannot be measured.

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AVIATION SECTOR AND NIGERIAN ECONOMY

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ROLE OF THE AVIATION SECTOR IN THE NIGERIAN ECONOMY19

Contribution to GDP

T

he Nigerian aviation sector has contributed

billion naira in 2012, 2013, 2014 and 2015 respectively.

directly and indirectly to the countryw’s GDP.

Air transport contributed 94.5 billion naira to Nigeria’s

As at 2008, the aviation sector contribution to

GDP (at current basic prices) in 2016, having declined

GDP was only 25.8 billion naira and grew marginally to

1.29 per cent from the previous year. By 2017, aviation

32.7 billion naira in 2010, from 29.2 billion recorded in the

sector’s contribution to GDP surged by 10.8 per cent to

preceding year.

an all-time high of 105.9 billion naira, as shown in the

In 2011, the sector’s contribution jumped by 42.1 per

graph below.

cent to 56.5 billion and trended upward thereafter to 65.6 billion naira, 76.9 billion naira, 84 billion naira and 95.7

Aviation Sector’s Contribution To GDP In Nominal Terms (N’ Bn) 120 100 80 60 40

20 0

2008

2009

2010

2011

GDP (=N=BILLION)

2012

2013

2014

2015

2016

2017

Linear (GDP (=N=BILLION))

Source: NBS, BRIU

19

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Insights culled from Oxford Economics

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In the first quarter of 2017, air transport grew 14.90 per cent quarter-on-quarter to contribute 25.4 billion naira to GDP; it declined to 21.9 billion naira in the second quarter but rose 9.13 per cent to 28.1 billion naira in the third quarter as represented in the graph below.

When adjusted for price fluctuations, the contribution of

By 2016, air transport contribution to GDP declined by

the aviation sector amounted to 28.2 billion naira in 2008.

-4.86 per cent to 60.1 billion naira.

With the emergence of the economy from recession, the

It moved slightly upward to 30.4 billion naira in 2009 and

sector added 61.2 billion to GDP in 2017 as shown in the

32.7 billion in 2010. In 2011, air transportation added 51.9

graph below.

billion naira and grew that figure to 63.1 billion naira in 2015, prior to the 2016 recession.

AVIATION SECTOR'S CONTRIBUTION TO GDP IN REAL TERMS (N'BN) 80 70 60 50 40 30 20 10 0

2008

2009

2010

2011

GDP (=N=BILLION)

BusinessDay Research and Intelligence Unit

2012

2013

2014

2015

2016

2017

Linear (GDP (=N=BILLION))

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NIGERIAN AVIATION INDUSTRY REPORT 2018

In the first quarter of 2017, total air transport contribution to GDP stood at 14.9 billion with growth rate of 1.53 per cent. It reduced to 12.6 billion naira with growth rate of 0.15 per cent in the second quarter and increased to 16.2 billion naira with growth rate of 0.48 per cent in the third quarter as represented in the graph below.

MDA PROJECT / DESCRIPTION SECTOR Federal Ministry of Aviation Concession of 4 International Airports Transportation (Abuja, Lagos, Kano and Port Harcourt): The Federal Government of Nigeria (FGN) will concession the Abuja, Lagos, Port Harcourt and Kano international airports in the first phase of its concession programme.

The government was committed to upgrading the existing facilities at the airports as well as developing new strategy to reposition the sector, just like every other place in the world, FGN will concession the airports and are beginning with the big four.

STATUS PHASE The Ministry is in the Development process of procuring Transaction Advisers (TAs) to prepare an Outline Business Case (OBC) to determine the projects viability and bankability.

Federal Ministry of Aviation The Ministry is in the Development i. Establishment of a Maintenance, Repair and Transportation process of procuring Overhaul (MRO) Centre ii. Development of Job creation Transaction Advisers Aerotropolis (Airport City).

(TAs) to prepare an iii. provides Development Cargo/Agro-Allied The Nigerian aviation sector jobsofin various forms to Nigerians and non-Nigerians as outlined below.

Outline Business Case Airport Terminals iv. Establishment of a (OBC) to determine the National Carrier operators v. Setting up of Aviation • Direct employment to airport (retail, car rental, government agencies projects viabilitysuch and as customs and immigraLeasing Company. tion, freight forwarders and some catering), airlines (flight and cabinbankability. crews, executives, ground services, check-in,

training, maintenance staff), civil aerospace (engineers and designers of civil aircraft, engines and components), and air navigation service providers (air traffic controllers and executives).

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•

Indirect employment to suppliers to the air transport industry such as aviation fuel suppliers, construction companies that build airport facilities, suppliers of sub-components used in aircraft, manufacturers of goods sold in airport retail outlets and a wide variety of activities in the business services sector (call centres, information technology and accountancy).

•

Induced employment through spending from those directly or indirectly employed in the air transport sector, which supports jobs in industries such as retail, manufacturing and service (banks and restaurants).

•

Catalytic employment to other sectors such as the tourism industry.

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Tax revenue generation High revenue is generated in the aviation sector through tax. These include: a) Income tax receipts from employees, social security contributions and corporation tax levied on profits. b) VAT on domestic and international flights originating in Nigeria. c)

Taxation of aviation sector’s supply chain.

d) Taxation of the activities supported by the spending of employees of both the aviation sector and its supply chain.

Fostering economic Integration According to industry analysts, Nigeria has about 50 routes connecting Nigeria to urban agglomerations around the world.

This helps in facilitating Nigeria’s economic integration into the global economy by providing greater access to foreign markets and resources, enhancing links within and between international businesses, and providing better access to international capital markets.

The Nigerian Aviation sector and air transportation could also foster trade generation and tourism promotion if properly managed.

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Challenges in the Nigerian Aviation Sector The population and the geographical location of Nigeria present strategic advantage for the aviation sector, but this advantage has not crystallised due to a number of challenges. We outline a few of the challenges in the following paragraphs.

i.

Poor Infrastructure: The main challenge in the aviation sector is deficit infrastructure at the airports. When the airports were built, Nigeria’s population was relatively small. In the construction of MMIA2 for example, it was forecasted that just about Two Hundred Thousand people will to go through the airport annually. However, Mr. Tayo Ojurin, an aviation expert and CEO of Aglow Aviation, estimates that about 7 million people go through the international airports while about 8 million people go through the domestic airports each year, thereby making infrastructure such as car packs, aprons, terminal building insufficient.

ii.

Absence Of Routine Maintenance Culture: The average life span of a runway is between 30 to 40 years. Nigerian runways lack much needed routine maintenance. Also, it is imperative that an airport runway has accompanying airfield and approach lighting. But industry experts say that for many years, some of the airport runways have been without airfield lighting.20

iii.

Absence Of De-Rubberisation: In addition, the runways are not often de-rubberized1. 14 airports out of 22 airports in Nigeria just upgraded to CAT II navigational aid in 2018 while the rest still remain in CAT I, making it difficult for pilots to land even with 800m of visibility during harmattan periods. This often leads to cancellations and delays of flights as the harmattan haze increases, getting passengers stranded at the airports, even though the rest of the world have been operating CAT III and aircrafts could land in zero or no visibility since 1968. Operators are affected as a result since they cannot charge passengers for the delay. Sometimes, the operators spend extra money to lodge the passengers in hotels, whereas they are expected to generate revenue to pay the taxes and levies by the agencies and parastatals as contributions to the country’s GDP.

iv.

Lack Of Mro Facility: Lack of Maintenance Repair and Overhaul (MRO) facility in Nigeria causes capital flight as aircrafts fly out of the country to get those services in other countries, making them very expensive. According to Airline Update (AIU), Ethiopia has one MRO; Egypt has three; South Africa has 15; Kenya has 7.

20 Airfield lighting guides the pilot to land on the runways and also taxi to the apron in the night

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In addition, all local airlines with commercial operations fly to France, Germany, Lithuania, South Africa, Kenya and Ethiopia, among others, to do C-checks. Arik Air, for instance, presently patronizes an MRO facility in Lithuania, a country of only 2.8 million people. Currently, eight airlines operate in the local airspace in Nigeria with at least 73 aircrafts. Air Peace has 13 aircraft, Arik Air has the largest fleet size of 28 (12 now serviceable), Aero Contractors has 10, with two currently in use, First Nation has two, with one in operation while Azman Air and Med-View have four apiece. Dana Air has five and Overland Airways has seven airplanes. In total, the airlines spend up to N22.3 billion on C-checks alone in every 18 month.

Nigerian airlines and their aircrafts NIGERIAN AIRLINES

TOTAL AIRCRAFT*

Air Peace Arik Air

28**

Aero Contractors

10***

First Nation

2****

Azman Air

4

Med-View

4

Dana Air * The information on total aircraft was as at March 2017 Overland Airways ** 12 out of the 28 aircrafts are serviceable *** 2 out of the 10 aircrafts is currently in use **** 1 out of the 2 aircrafts is in operation

v.

13

5 7

Overcrowded Terminal Buildings: Terminal buildings are not LED-compliant and lack proper directions making the building much overcrowded especially at the peak time (4.00pm to about 8.39pm). Inappropriate cooling systems both at the terminals and at the aerobridges, lack of automated security check-in system and CUT equipment (Common User Terminal), poor power supply, inefficient Baggage Handling System, poor customer services, Food and beverage outlets with a sense of place and lack of hotels and lounges for passengers’ relaxation.

NAMA last year put in some equipment in the Nigerian international airports which they said is only beneficial to the Nigerian international airports and not the domestic airports because the corresponding equipment are not available in the local airports

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OTHER ISSUES21 • Financial leakages in Agencies.

• Absence of effective revenue recognition and collection.

• High Debt of profile of airlines operators.

• High cost of funds and shrinking capital market.

• Inadequate human capital development/capacity building of aviation experts.

• High price and scarcity of Jet A1-Aviation fuel.

• Contentious and often inconsistent concession agreements.

• Bilateral Air Services Agreement (BASA).

21Airfield lighting guides the pilot to land on the runways and also taxi to the apron in the night

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Strategic Priorities for the Nigerian Aviation Sector

Nigerian aviation sector should prioritise: •

Maintenance and rehabilitation of existing airports in Nigeria.

•

Construction of new airport terminal buildings and rehabilitation of existing ones.

•

Provision and improvement of airport and airline safety and security systems.

•

Upgrade and expansion international airports infrastructures to accommodate the increasing traffic.

•

Provision and improvement of air safety measures to meet ICAO standards.

•

Working towards establishing Nigeria to be an aviation hub in West Africa.

Source: Aglow aviation

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Sectorial Agenda During its various electoral campaigns, the party that formed the present Nigerian government listed concessioning of airports, setting up of MRO facility, establishment of aviation university, re-introduction of national airline and development of aerotropolis and agro cargo terminals as some of the priority areas for the Nigerian aviation sector.

In order to meet up with the proposed agenda, the government set up a committee of advisors to help set up national airlines and provide the necessary infrastructure needed to achieve the above goals.

According to Senator Sirika Hadi, a former pilot, introducing a national airline in Nigeria will enable the country adopt the African Union’s single African Air Transport Market Initiative (launched in January 2018) to liberalise civil aviation in Africa. It is also expected to create jobs for Nigerians, drive growth in tourism, and increase the yield on foreign exchange.

In order to attain this goal however, aviation analysts and experts opine that the Nigerian Government should partner with credible (foreign and indigenous) technical investors for the national airlines to function properly, with the public sector taking minority stake in the operation and management of the airlines. The partnership with private investors will help mitigate potential risks of funds embezzlement and ensure quality services provision.

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Asaba Airport

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Projects under Development and Procurement The under-listed projects were under aviation pre-contract negotiations according to Infrastructure Concession Regulatory

MDA PROJECT / DESCRIPTION SECTOR Federal Ministry of Aviation Concession of 4 International Airports Transportation (Abuja, Lagos, Kano and Port Harcourt): The Federal Government of Nigeria (FGN) will concession the Abuja, Lagos, Port Harcourt and Kano international airports in the first phase of its concession programme.

The government was committed to upgrading the existing facilities at the airports as well as developing new strategy to reposition the sector, just like every other place in the world, FGN will concession the airports and are beginning with the big four.

STATUS PHASE The Ministry is in the Development process of procuring Transaction Advisers (TAs) to prepare an Outline Business Case (OBC) to determine the projects viability and bankability.

Federal Ministry of Aviation i. Establishment of a Maintenance, Repair and Transportation Overhaul (MRO) Centre ii. Development of Aerotropolis (Airport City). iii. Development of Cargo/Agro-Allied Airport Terminals iv. Establishment of a National Carrier v. Setting up of Aviation Leasing Company.

The Ministry is in the Development process of procuring Transaction Advisers (TAs) to prepare an Outline Business Case (OBC) to determine the projects viability and bankability.

Commission (ICRC) as at 31st November 2017.

Source: ICRC

Table 16: List of projects under development and procurement

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AVIATION IMPLEMENTING DEPARTMENTS AND AGENCIES22 In order to formulate and implement the National Aviation policies; install, maintain and upgrade equipment and infrastructure, and implement safety and security measures in the sector, the following listed agencies were set up by the government to carry these duties.

Federal Ministry of Aviation The ministry is responsible for formulation and management of the government’s aviation policies in Nigeria.

Federal Airports Authority of Nigeria (FAAN) FAAN was set up by the Nigerian Government’s Decree 45 of 1976, to oversee the operations and maintenance of all federal airports. The aviation agency was re-named the Federal Airports Authority of Nigeria (FAAN) in August 1995, following a major restructuring and reforms of the Nigerian Aviation sector by the Federal Government.

FAAN is responsible for ensuring that business policies are in conformity with the policies of the Federal Government as regards contracts and business agreements. It also observes appropriate due process practices in line with government policies and which are also in conformity with global best practices in the international aviation industry.

Nigerian Civil Aviation Authority (NCAA) Nigerian Civil Aviation Authority is the regulatory body for aviation in Nigeria. It became autonomous with the passing into law of the Civil Aviation Act 2006 by the National Assembly and assent of the President of the Federal Republic of Nigeria.

The Act not only empowers the Authority to regulate Aviation Safety without political interference, but also to carry out oversight functions of Airports, Airspace, Meteorological Services, etc. as well as economic regulations of the industry.

Nigerian Airspace Management Authority (NAMA) The Nigerian Airspace Management Agency (NAMA) was established in 1999 and charged with the responsibility of providing air traffic services in Nigeria and aerodromes at all the major Nigerian airports with the navigation services. Its duty also includes minimizing or preventing interference and generally securing the safety, efficiency and regularity of air navigation.

Nigerian Metrological Agency (NIMET) The Nigerian Meteorological Agency (NIMET) was established by the NIMET (Establishment) ACT of 2003. NIMET is a Federal Government agency charged with the responsibility of advising the Federal Government on all aspects of meteorology, projecting, preparing and interpreting government policies in the field of meteorology, and issuing weather (and climate) forecasts for the safe operations of aircrafts, ocean going vessels and oil rigs. The Act also mandates the Agency to observe, collate, collect process and disseminate all meteorological data and information. It also empowers it to co-ordinate research activities among staff, and publishes scientific papers in the various branches of meteorology in support of sustainable socio-economic activities in Nigeria.

22 Information obtained from ‘nigeriagovernance.org’ and websites of the agencies.

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Nigerian College of Aviation Technology (NCAT) The Nigerian College of Aviation Technology (formerly known as Nigerian Civil Aviation Training Centre), Zaria, was set up by Act. No 31 of 1964 (as amended), to conduct Civil Aviation courses for use in flight training or airport operations & management.

Accident Investigation Bureau (AIB) The Nigerian Accident Investigation Bureau (AIB) was established under the Civil Aviation Act 2006 under the Ministry of Transportation and is charged with investigating any civil aircraft accident and serious incident arising from air navigation in or over Nigeria, or occurring to any Nigerian aircraft elsewhere.

The fundamental objective of AIB is to improve aviation safety by determining the circumstances and causes of air accidents and serious incidents, and providing safety recommendations intended to prevent recurrence of similar accidents.

Proposed 2018 Budget on Aviation Projects23 The sum of USD 115 million was allocated to the Nigerian aviation sector. Analysts say that this figure is inadequate, considering that South Africa that ranks behind Nigeria in terms of economy size allocated USD 540 million that the South African government allocated for the upgrade of just two of their main airports - Cape Town International (CTIA) and OR Tambo International Airport.

The main upgrades for CTIA are realigned runway, new domestic arrivals terminal, new international departure lounge and boarding gates while OR Tambo is being upgraded to accommodate larger aircraft, remote apron stands for Airbus, space for passengers awaiting bus and refurbishment of terminal1.

Some of the aviation projects proposed by the Federal ministry of transportation are shown in the next page

24 From the 2018 Proposed Nigerian Budget.

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25

Engineering News

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FEDERAL MINISTRY OF TRANSPORTATION – HQTRS PROJECT NAME

TYPE

AMOUNT

Airfield Lightening (AFL) at Calabar Airport

ONGOING

200,000,000

CONSTRUCTION OF 10KM OPERATIONAL FENCE AT IBADAN ON-GOING

200,000,000

AIRPORT Construction of General Aviation Terminal at Port Harcourt ONGOING

191937643

Airport, and Its Outstanding Liability Construction of general aviation terminal at Owerri Airport

ONGOING

111,915,540

Construction of GAT Cargo building and offices at Lagos

ONGOING

55,000,000

Construction of Security patrol operational road (Asphalt) at ONGOING

33,764,124

Ibadan Airport Completion of Construction of Bi-Metal Welded Security ONGOING

24174455

Operational Fence at Kano Airport. (Balance Payment) Provision of Transit Lounge at MMIA

ONGOING

29,757,467

Construction of Control Tower and Technical Building at Enugu ONGOING

42,825,294

Airport.

Construction of Terminal Building at Enugu Airport

ONGOING

Fabrication and Installation of Conveyor Belts at Enugu and Port ONGOING

2,030,800,391 202,199,709

Harcourt Airports Production and Installation of Information desk at Abuja, Lagos, ONGOING

92,005,348

Kano, Port-Harcourt and Enugu Airport Construction of 12KM operational road at Minna Airport

ONGOING

150,000,000

ERGP1102251 Expansion of Apron at Owerri Airport (Phase 2 - 3)

ONGOING

42,736,386

Provision of Transit Hotel at MMIA

ONGOING

82,992,586

Procurements and Installation of Air Conditioning System at ONGOING

183,067,903

MMIA, Lagos Procurement and Installation of Solar Powered Airfield ONGOING

87,842,332

Lightening SystemBudget at 10 Airports Source: 2018 Nigerian

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Construction of Accidents Rescue Centre NAIA, Abuja.

ONGOING

1,556,337

Procurement and Illumination of Flood Lighting of 16 Airports

ONGOING

135,850,669

Upgrade and Refurbishment of NAIA Departures and Arrivals ONGOING

27,827,473

Lounges Including Provision of Food Court.

Construction and Installation of Furniture at Benin and Ibadan.

ONGOING

Upgrade/Remodelling of Margaret Ekpo International Airport ONGOING

7,018,967 295,469,861

Calabar (Phase 2) Installation of Airfield Lighting (AFL ) at Owerri Airport

ONGOING

47,171,495

Upgrade and Remodelling of Terminal Building at Port Harcourt ONGOING

97,195,399

(Phase 1) Airport Procurement and Installation of Air-conditioning System at ONGOING

500,000,000

Kano and Abuja Airports.

Maintenance Services for Airfield Lightening System Including ONGOING

313,331,756

Spare Parts for the Nation’s Airports. (Lagos, Kano, Abuja and Port Harcourt).

Remodelling and Upgrade of Terminal Wing D, NAIA, Abuja ( ONGOING

173,287,158

Phase 2-5).

Upgrade and Rehabilitation of Domestic Terminal Minna

ONGOING

73,007,836

Production and Installation of Signages at Abuja, Lagos, ONGOING

61,686,229

PortHarcourt, Kano and Enugu Airports Procurement and Installation of Conveyor Belt at Kastina, ONGOING

200,000,000

Maiduguri, Lagos GAT, Owerri and Kano Airport and Construction GAT Terminal Akure (Completion) Construction of BI-metal Lattice Post with Expanded Metal ONGOING

144,260,738

Perimeter Fence at Kaduna Airport Production and Installation of information desk at Akure, Benin, ONGOING

105,000,000

Maiduguri, Markurdi, Minna, Owerri, Sokoto, Yola and GAT-

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Construction of General Aviation at Wing D Abuja.

ONGOING

156,194,249

Procurement and Installation of Conveyor Belt at Kaduna ONGOING

268,915,936

Airport.

Construction of Baggage Sorting Sheds at MMIA

ONGOING

Procurement And Installation Of Air-conditioning System At ONGOING

23,215,271 162,243,666

PortHarcourt Airport.

Construction of 2 Fingers and Installation of 4Nos Avio bridges ONGOING

500,000,000

at MAKIA Kano Cladding of External Surface of Airline Offices, Lagos GAT

ONGOING

61,494,917

Local 2. From ApapaOshodi Expressway Link to International ONGOING

10,280,532

Terminal Airport. 3. Airside Road-Hajj And Cargo Terminal to International Terminal. 4. AP Filling Station Junction to Agege Motor Road Junction Through Domestic Terminal Upgrade and Rehabilitation of MMIA (International) Airport ONGOING

41,050,686

Terminal Building. (Balance Payment) Expansion and Upgrade of MMIA, Wing D & E Fingers (Phase 2- ONGOING

87,250,777

3) Rehabilitation and Upgrading of Terminal Building at Ilorin ONGOING

8,885,061

Airport (Phase 2 - 1).

Reconstruction and Upgrade of GAT-Protocol at MMIA.

ONGOING

16,917,147

Construction of General Aviation Terminal at MAKIA, Kano

ONGOING

86,386,333

Mechanical/Electrical Consultancy for the New Enugu Airport ONGOING

31,582,902

Terminal Repairs and Construction of Internal Roads at Port-Harcourt ONGOING

366,413

International Airports (Phase 2-3) Construction of Aviation Rescue Centre, Lagos. ( Balance ONGOING

19,286,683

Payment) Refurbishments and Upgrade of MMIA Passengers Processing Area, Lagos

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ONGOING

78,637,003

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Construction

of

Second

Run-Way

of

NnamidiAzikwe ONGOING

8,317,825,619

International Airport Abuja.

Upgrade and Remodelling Of Terminal Building At NAIA, Abuja.

ONGOING

18,891,855

Rehabilitation of the Fire Station and Provision of GAT Protocol ONGOING

9,035,699

Lounge at NAIA, Abuja.

Production and Installation of Information Desk at Akure, Benin, ONGOING

65,775,351

Makurdi, Minna, Owerri, Sokoto, Yola and GAT at Lagos Airport Production and Installation of Information Desk at Abuja, Lagos, ONGOING

71,673,971

Kano, Port-Harcourt and Enugu Source: 2018 Nigerian Budget

Akure Airport runaway

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ACTIVITIES AND RECENT ACHIEVEMENTS25 Nigeria’s Federal Ministry of Transportation recorded the following achievements in 2017: •

Comprehensive Repair of Runway and the Taxiways at the Nnamdi Azikiwe International Airport (NAIA) Abuja to as a step towards ensuring safe and secure air transport system.

A section of the Nnamdi Azikiwe Airport runway before 1 A section of the Nnamdi Azikiwe Airport runway before reconstruction

The same section of the Nnamdi Azikiwe Airport runway

reconstruction

•

Completion of the Controller Pilot Data Link Communication (CPDLC) in Kano and Lagos for improved communication between the Pilots and air traffic controllers.

•

Installation of low level Wind shear Alert System at Katsina, Ilorin and Kaduna Airports to enhance safety of Aircraft operations and retention/upgrade of NIMET ISO 9001:2008 Certification.

•

Nigeria has achieved a Category 1 air safety rating from the U.S. Government under the Federal Aviation Administration’s (FAA) International Aviation Safety Assessment (IASA) program. NCAA in November 2017 in line with ICAO doc 9774 certified Lagos and Abuja airports.

As gleaned Credit:from FAANinformation provided by Nigeria’s Federal Ministry of Transportation and Aglow 26 1 Picture

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NIGERIAN AVIATION INDUSTRY STAKEHOLDERS The under-listed are the key stakeholders in the Nigerian Aviation sector:

Airline Ancillary Services

Ground Handler

Inflight Catering

Meteorogical Services

Aviation (FAAN)

Regulator (NCAA)

Hotel Crew

Aviation Security Screening

Air Navigation Service Privider (ANSP)

Fuelling Jet A1

Cargo

Regulators: these include the Ministry of Aviation, Nigerian Civil Aviation Authority (NCAA), International Civil Authority Organisation (ICAO), and International Air Travel Authority (IATA) Airport Managers: Airport Managers include the Federal Airports Authority of Nigeria (FAAN), the Nigerian Airspace Management Agency (NAMA), the Nigerian Meteorological Agency (NIMET), and Bi-Courtney Aviation Services Limited.

Airline Operators: these include Aero Contractors, Air Peace, Arik Air, Azman Air, Dana Air, First Nation Airways, Med-View Airlines, and Overland Airways.

Aviation service providers: the activities of aviation service providers include station management and administration, passenger and airline services, airport protocol services, ground handling and other support services, engineering design and maintenance services.

Air travellers: these include inbound and outbound passengers.

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THE WAY FORWARD

A

viation is a commercially viable enterprise, so it is important to create a safe security environment for passengers and operators. Government cannot afford to finance the management and operation of the aviation sector because of limited funds. Hence, we advocate a trust-based partnership between the government and the private sector (in the form of Public-Private Partnerships – PPP - and/or other similar models) to unlock the needed funds for the provision of critical infrastructure in the sector.

By so doing, the Government will no longer be concerned with financing infrastructure and maintenance of the airports, but will only restrict its activities to making effective regulations to guide the activities of the operators of the airports.

The Nigerian Government has taken a step in this direction as it plans to concession four viable major airports in the country through PPP. Private sector involvement will help ensure that the nation’s airports are of high international standard with world-class facilities.

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Transparency in the concessioning process: Transparency in the system is very important as PPPs can be susceptible to corrupt activity if not carefully planned and designed, as with general public procurement. The Government should also strive to rebuild confidence in the concessioning process given the problems that attended some of the recent attempts in this regard. A clear will and desire to keep to the terms of the PPP need to be demonstrated, while provisions that will attach serious financial and material harm for any attempt by the government (or any party for that matter) to reverse the terms.

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Routine Maintenance of Runways: Runways are the biggest asset in airports and therefore routine maintenance of the runways is very crucial. There is also need for runways de-rubberization.

Image showing a runway that is not derubberized

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BusinessDay Research and Intelligence Unit

NIGERIAN AVIATION INDUSTRY REPORT 2018

Derubberization is the process of removing the rubber deposits left by aircraft tyres on airport runways.

This is a crucial part of routine maintenance of airport runways as it helps to improve landing grip (friction between the plane tyres and the road) as well as reducing the chances of runway overruns and aircrafts sliding off the runway. There should be constant use of runway pavement coefficient to measure the runways in order to find out the effect of the breaking friction of the aircraft. Maintenance of these runways at the right time reduces cost and ensures safety and best international practise.

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Navigational Aids: These should be upgraded to the best category such that with performance based navigation and GPS, aircrafts can land at zero visibility using instrument landing rules. Efficient navigational aids will enable the aircrafts to land, operate and take off as at when due and guarantee cost efficiency for both the airlines and the airports as the airlines will attract more passengers and the airports attract more airlines.

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Nigerian airports also require expanded functional LED compliance terminals that will meet the increasing passenger traffic, create business opportunities and jobs, create befitting airport experiences for the traveller sand ensure a seamless facilitation of passenger from drop off to check–in.

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There should also be provision of automated security systems that will facilitate communication, coordination, intelligence gathering and surveillance through linkages as well as adequate control towers, conveyor belts, constant power supply, appropriate Cooling System, comfortable waiting areas as well as efficient taxiways.

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Continuous intensified trainings should be given to the aviation security personnel, engineers and pilots to get their skills to international standards.

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Provision of suitable storage, processing and transportation system for massive export of farm produce to international markets should be emphasized as this is anticipated to increase the wealth of the country and improve the agricultural value chain.

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There is also a huge need for setting up MRO in Nigeria. This will remove the cost of flying out the aircrafts to other countries for maintenances as well as the cost of buying forex. With the commencement of Aero Contractors Maintenance Repair and Overhaul (MRO) facility Nigeria will be able to save N22.3 billion the airlines spend on C-checks alone in every 18 months, given that the country operates about 73 Boeing aircrafts

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Nigeria is an import-dependent nation. This can serve as an advantage to the Nigerian Aviation Industry as lots of these imports are done through cargo and air travel. With Nigerian aviation facilities brought up to global standards, more international airlines will be attracted to the country, which will open doors to foreign markets. There are presently 15-18 million diaspora Nigerians1 that send close to 21 billion dollars remittances annually28. This is a pointer to the immense opportunity that an enhanced aviation sector could take advantage of and achieve its long desired dream of being an aviation hub with good infrastructure, safe environment, and experience and capacity to drive it.

27

UNDP

28

World Bank

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NIGERIAN AVIATION INDUSTRY REPORT 2018

Airport Construction Cost

T

he cost of constructing a standard air-

Therefore, the overall cost of rehabilitating an air-

port in Nigeria cannot be placed at a fixed

port runway in Nigeria is about 7 Billion naira.

amount because of variations in the cost of

Hence, it will cost up to N175 billion to rehabilitate

logistics, planning, Environmental Impact Assessment, land required and acquisition process, constructions of airside (runway, apron and taxiways), terminal building, landside facilities, and installation of critical equipment. Cost also varies according to the economic state of the country at the time of construction.

Depending on the economic situation in Nigeria,

the runway of about airport 25 airports in Nigeria.

MRO is a key infrastructure that should be present in the Nigerian Aviation space. For Nigeria to have MRO, the government must be sufficiently committed to this cause to provide favourable incentives that will attract investors to the aviation sector. Investors consider the cost of securing required hangar space, equipment and tools relevant to the proposed type

the construction of a standard airport in Nigeria can be estimated at a range of US$ 3 - 7 billion. The airports constructed in Akwa-Ibom, Delta, Kebbi and Jigawa states were deemed to have cost about 150 billion naira, but they are presently not viable given that a standard airport will requires more than just the infrastructure to be viable - there should be complimentary economic drivers that will stimulate passenger traffic to and from the airport.

The cost of rehabilitating the Abuja international airport runway, a repair carried out by Julius Berger

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of maintenance activities. These costs are estimated at about US$32 million, accentuating the relatively capital-intensive nature of setting up an MRO.

Company in Nigeria, was estimated at N5.8 billion

Lastly, Nigeria needs to build the human capacity

according to a 2017 report by Nwafor Polycarp, an

and maintain partnership with a reputable interna-

aviation industry expert. The cost of rerouting pas-

tional company for regular supply of spares. Onedot

sengers to the Kaduna Airport was put at over 1.134

Aviation, and most recently, Aero Contractors, has

billion naira.

commenced C-Check

BusinessDay Research and Intelligence Unit

NIGERIAN AVIATION INDUSTRY REPORT 2018

CONCLUSION

The Nigerian Aviation Sector has contributed to the growth of the country’s economy. However, for Nigeria to optimize its potential benefits in this sector, the government must provide the environment that engenders good financial management and operation measures in the sector.

This can be achieved through transparent partnership with private enterprises, through either PPP or concessioning or a combination of both models. As many industry analysts concede, partnership with the private sector is expected to unlock the funds needed for the provision of necessary infrastructure in the sector.

Furthermore, airports should be constructed in line with the requirement of the international aviation regulatory bodies to ensure maximum safety of the passengers and crew.

Given that the global aviation sector has been pivotal to the economic growth of many countries, The Nigerian Government could use the sector as a tool for economic growth and development. Managers of the sector in the country should therefore devise more effective strategies that will attract both passenger and cargo traffic to the sector and keep it viable.

BusinessDay Research and Intelligence Unit

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