- Passenger aircraft concerted for cargo
Nigeria, as predicted, slipped into another economic recession. It was the second in five years. But, before the recession begins to take its toll on operators and businesses, airlines, ground handling companies, and other players in the aviation and allied sectors seem to know how to weather the storm. Many of them say that the recession offers an alternative window for operators to diversify their operations by deepening participation in the agro-allied/logistic value chain.
There is palpable fear in the economy.This is because of Nigeria’s slide into recession, the second in five years. Coming at a time the scars of the 2016 recession are still visible, requiring more time to completely heal, operators and businesses in virtually all sectors are jittery that the latest recession may be more devastating.
This apprehension is more pronounced in the struggling aviation and allied sectors. And this is understandable in view of the fact that the sector was worse hit by the COVID-19 pandemic, apparently because of movement restriction, globally, to contain the spread of the virus.
Nigeria entered into a recession, last week, according to the National Bureau of Statistics (NBS) which shows that the Gross Domestic Product (GDP) contracted for the second consecutive quarter, sliding further with negative growth of 3.62 per cent in the third quarter of 2020. The country had earlier recorded a 6.10 per cent contraction in the second quarter.
However, the interesting thing is that even before the harsh effects of the current recession begins to manifest and add to the sector’s woes, operators appear to be battle ready; they seem to have figured out what option(s) to take to weather the coming storm.
For instance, in anticipation of the reduction in passenger traffic, which will affect their finances in the coming months, one of the viable survival strategies is for airlines to diversify their operations to stay afloat. This, according to them, will allow indigenous carriers and other players to explore revenue opportunities in the cargo and logistics value chain.
The Group Managing Director, Nigerian Aviation Handling Company (NAHCO), Mrs. Tokunbo Fagbemi, put the situation in perspective. “In times like these, operators must explore opportunities to earn more revenue in the agro-allied cargo and logistics value chain.
“Nigerian carriers are yet to see the abundance of opportunities in these areas (agro-allied cargo and logistics) to enhance revenue. Operators need to think innovatively, get more creative and flexible with the aircraft in their fleet to accommodate more space for freight.
“Domestic carriers need to get more creative by ensuring that as they acquire newer aircraft, they do not need to discard older aircraft which could be converted to cargo planes. Airlines need to extract more value from this line of business to make money.”
Fagbemi was, however, quick to add that there was a need for restructuring of the regulatory regime to drive this potential revenue spinner for airlines.
Her words: “The business needs a lot of structuring and public awareness to drive growth. Most people do not know what to do. This is the reason airlines need a lot of structuring.”
The NAHCO boss, however, said conversations with airlines were ongoing to consider this line of business by fixing appropriate timing for people who need such services with good space to drive growth from that value chain.
While reiterating the need for structuring among airlines and people in need of local cargo freight to deepen participation into different airports, Fagbemi said to achieve this aim, there was a need for support from the Nigeria Civil Aviation Authority (NCAA) for people playing in that space.
The NCAA’s support, she said, would be in the areas of appropriate training, standards and regulation to drive growth for that area of aviation business. “This is key in ensuring standards, training and good practice in the handling of dangerous cargo and other products,” she stated.
According to Fagbemi, there has to be global standards that the regulator gives to everybody. “These are the areas that remain critical in packaging of goods that will be taken by the aircraft to different routes in terms of weight standards.
“These are areas we need help from government to drive growth for this arm of the business,” she said, adding that besides, regulation, there is need for customer enlightenment.
The President, Aircraft Owners and Pilots Association of Nigeria, Mr. Alex Nwuba, also said the sector could withstand the shocks of the current recession if airlines and others evolve explore revenue opportunities in the agro-allied/logistic value chain to make up for reduced revenues that will arise from dip in passenger traffic.
“We must not ignore new opportunities cargo inadvertently created by the challenges,” Nwuba, who is also the founder, Smile Airlines, charged his colleagues in the industry.
For Head, Strategy, Zenith Travels, Mr. Olumide Ohunayo, the expected dip in economic activity, following the slid into recession, should not be a death sentence, if airline operators could evolve survival measures by rejigging their aircraft fleet.
In fact, Ohunayo urged indigenous carriers to park large aircraft and return leased airplanes to their lessors as a way of cutting costs to ride through the times.
On her part, an NCAA-licensed Flight Dispatcher and Ground Instructor, Mrs. Victoria Jumoke Adegbe, said the economic recession provided a clear opportunity for airlines to convert some of their passenger aircraft for cargo operations.
Adegbe, who is also chief executive officer of Insel Networks Limited, said doing this could qualify as recovery for indigenous carriers which are currently struggling to keep their businesses afloat.
The Chairman, Domestic Airport Cargo Agents Association (DACAA), Mr. Monday Subair, said indigenous carriers were yet to fully exploit opportunities in the cargo and courier value chain with possibility of air lifting over 15 tonnes of cargo monthly.
He said this was an opportunity for airlines to earn huge revenues from such volumes of cargo if they deployed their aircraft for cargo haulage. He was emphatic that the economy’s slide into recession has thrown up opportunities for local carriers to tap into this revenue earning business by expanding their operations at a time passenger traffic is waning.
“Airlines should look beyond passenger operations and expand into cargo, which could be a huge revenue earner. Airlines which have large aircraft in their fleet could deploy some of it to service cargo,” Subair advised.
He said indigenous carriers with a good network of routes in the West African coast, such as Air Peace, could break new grounds in cargo operations to boost their revenue in Monrovia, Freetown, Accra, Dakar, Banjul and other destinations.
Such operations, Subair said, could be extended to the Middle East and Sharjah in Dubai, the United Arab Emirates (UAE).
On his part, DACAA Board of Trustee Chairman Mr. Ikpe Ukana said indigenous carriers needed to partner cargo agents to drive the sustainability of their business during hard economic times.
He said: “Airlines do not depend on passenger operations alone. There is the need to develop cargo. Airlines should go into cargo. They need to partner domestic cargo agents to leverage opportunities in the cargo sub-sector to keep their business afloat.”
