Nigeria in Need of Many Aircraft

Nigeria’s aviation sector is sliding steadily into lean and difficult times and may indeed grind to a halt if nothing strategic and definitive is done to save the situation.

With the return leg of the New Year rush, it became evident that the fast depleting fleet in the sector is inadequate for the teeming potential travelers. This is leaving hundreds of travelers stranded and frustrated at airports across the country.
Industry experts belief that by the time Nigeria’s domestic air travel figures for 2013 are compiled, they will likely drop significantly from 2012 figures. They add that　the case might be similar or worse for 2014 if nothing is done to address the local aviation sectors problems.

There are reasonable estimates that about　250,000 Nigerians with cash in their pockets would have wanted to travel by air over the Christmas and New Year periods in 2013. Many of these could not find seats due to low capacity of domestic carriers.

Half of Nigeria’s domestic airlines went out of service in 2013 alone. In January 2013 the country had ten domestic airlines. As at December, only five were still flying.

Local airlines operating in the country as at January 2013 are 　Arik Air, Dana, Aero, Medview, Chanchangi, IRS, Afrijet, FirstNation Airways, Overland Airways and Associated Aviation . Of these, only Arik, Aero, Medview, First Nation and Overland are still operational. The 73 aircraft on the fleets of the airlines at the beginning of 2013 have consequently depleted to 46.

The problems of the industry are numerous. Among the bottlenecks are: lack of operational funds; unavailability of major maintenance facilities; high cost of aviation fuel, as well as comparatively heavy taxation by the country’s aviation agencies. Local operators have difficulties raising funds, as a result of low investor confidence arising from poor safety records, among others. Another obstacle is putting a rule on age of aircraft, restricting anything older than 15 years. In our experience an older aircraft will work fine, as long as maintained well and flown by a competent crew.

Foreign aircraft leasing companies are also not willing to let out their aircraft, for the same reasons, it is said.

　The situation is so bad now (during the New Year rush) that some airlines delay flights by up to five hours because of　 aircraft shortages, leaving the departure halls brimming with disappointed passengers, many of whom eventually resort to road transportation. Even with these frustrating air travel service , ticket prices are continuing to rise.

To meet current air travel demand, aviation solutions company Tyrus Wings project that the Nigerian market requires at least 100 short to medium range aircraft. We recall that in 2012, the Federal Airports Authority of Nigeria (FAAN) recorded 14.3 million passenger traffic, as against 14.9 million in 2011.

There seems to be an absence of a strategic thinking and plan in the airline business. Operators rather than foresee difficult times and plan to avert such by consolidation or merger schemes, allow their operations to grind almost to a halt.
With domestic operators experiencing difficulties in meeting local travel schedules, we foresee foreign airlines coming into some busy and highly lucrative routes in the years ahead. For the travelers, this may ease off their travel pains.
The danger inherent in having an industry replete with weak operators and inadequate fleets is the temptation to compromise safety in the bid to cut corners in order to stay afloat.

Relevant regulatory agencies in the aviation sector must understand properly the evolving dynamics in the industry and intervene appropriately in a proactive manner rather than wait to wield the big stick when the damage has been done usually with colossal loss to the country.

While the Nigerian commercial aviation has not been performing the private aviation sector has been booming:

More exciting revelations have emerged that the penchant for private jets acquisition has cost wealthy Nigerians over N1 trillion in five years. The luxury trend actually rose by 650% between 2007 and 2012, this has increased the rate of private jet acquisition from 20 in 2007 to over 150 in 2012 which has placed Nigeria and china as the fastest growing private jets markets in the world.

Top ten private jets by wealthy Nigerians.

TYPE PRICE OWNER

1. Falcons 7X. $51M Mike Adenuga
2. Bombardier Global 6000 $45.5M Unknown
3. Bombardier Global 5000 $45M Aliko Dangote
4. Gulfstream G550 $40M Bishop Oyedepo
5. Gulfstream V $30M Bishop Oyedepo
6. Bombardier Challenger 604 $30M Mike Adenuga
7. Embracer Legacy 650 $30M Ifeanyi Uba
8. Hawker 900XP $20M Dr Kashim & Sir Aremu Johnson
9. Gulfstream G450 $15M Bishop Oyedepo
10. LearJet $13M Bishop Oyedepo & Dr Kashim

One of the prominent owners of Private jets in Nigeria is Bishop Oyedepo, dubbed ‘The Pastorpreneur’. Among Mr Oyedepo’s fleet of aircraft it is also claimed he and his wife, Faith, travel in expensive Jeeps flanked by convoys of siren-blaring vehicles. He is the senior pastor of Faith Tabernacle, a 50,000-seat auditorium in Lagos reputed to be the largest church in the world, and runs a publishing company that distributes books carrying his message across the world.

His other business interests span manufacturing, petrol stations, bakeries, water purification factories, recruitment, a university, restaurants, supermarkets and real estate. The latest addition is a commercial airline named Dominion Airlines.

Another prominent Nigerian private jet owner is Mike Adenuga. His net worth: According to the 2012 Forbes Billionaire List, is of $4.3 billion as of March 2012. Nicknamed “the Guru” in his native Nigeria, Adenuga debuts on Forbes billionaires list in 2011 after making waves with mobile technology, Nigeria’s second-largest mobile telecom operator. He made his first million at age 26 selling lace and distributing soft drinks. His telecom carrier Globacom launched a 4G network, and he’s invested $1 billion on a submarine cable connecting Nigeria to the rest of the world. He made his first million at age 26 selling lace and distributing Coca-Cola, then won a contract to build military barracks in the late 1980s. He owns a stake in the Equitorial Trust Bank and chairs Niger Delta oil exploration firm Conoil. Adenuga is a soccer devotee and sponsors a number of tournaments.

Nigeria also has some very sharp women Billionaires that own their own jets like, Hajia Bola Shagaya has proved that what a man can do, a woman can equally do, if not better.

Mrs Shagaya, a Kwara born billionaire has joined the league of top wealthy Nigerians with private jets. She has acquired the latest edition of a brand new Gulfstream G650 model jet reportedly worth $65M which is similar to the brand obtained by former governor of Borno state, Ali Modu Sheriff .The jet was acquired few weeks back in commemoration of her 55th birthday on October 10, 2014.

It is arguably the fastest civilian jet in the world, with a 8,000-statute-mile range and some of the most sophisticated avionics rivaling nearly anything in the sky. And it’s also perfect for doing business on a global scale. Gulfstream described the aircraft as ultra-high-speed, ultra-long-range business jet and the gold standard in business aviation.

The price of preowned Gulfstream G650s was sitting around S68M in 2013 and has already gone from $73M up to $76M and rising. This is the fastest civilian jet currently in service and many billionaires want one and are prepared to pay a premium to have one now and not have to wait 3 years for Gulfstream to manufacture one for them.

The four jets reportedly owned by these women of substance are worth over $162M. Aside Bola Shagaya, who now topped the chart, the second person on the list is Folorunsho Alakija who has a Bombardier Global Express jet which was bought for $41M.

The third woman whose jet raised a lot of controversies is reported to own a Bombardier Challenger 605. Its market value is $28M.

The last woman on the rung is Daisy Danjuma whose hubby has a Bombardier Challenger 605. The second one was speculated to have been given to his delectable wife. It’s a Hawker 900XP valued at $20M

NAME TYPE

Bola Shagaya Gulfstream G650.
Folorunsho Alakija Bombardier Global Express
Diezani Madueke Bombardier Challenger 605
Daisy Danjuma Hawker 900XP

Not only have the entrepreneurs caught the private jet bug but so has the Nigerian government:

The Jonathan government plans to buy a new plane to expand the presidential fleet, at a time many of the domestic airlines do not have enough planes to carry the mass of the people.

The aircraft is expected to cost about $44.5M, according to industry sources.

The rest of the payment will be spread over one, two or three years before the jet is built and delivered.

The expenditure is part of the projected spending contained in next year’s estimate, which was laid before the National Assembly last week by Finance Minister Dr. Ngozi Okonjo-Iweala.

The aircraft in the fleet of the PAF include two Falcon 7X jets, two Falcon 900 jets, a Gulfstream 550, one Boeing 737 BBJ (Nigerian Air Force 001 or Eagle One) being used exclusively by the President and a Gulfstream IVSP, one Gulfstream V, Cessna Citation 2 aircraft and Hawker Siddley 125-800 jet.

It is estimated that each of the Falcon 7X jets bought in 2010 cost $51.1 million. The Gulfstream 550 may have cost $53.3 million. And if the presidency aims for the GulfStream 650, it may cost a minimum of $65million.

However, none of the aviation industry Bluebooks will give the simple calculation accuracy of how much an aircraft really costs. A number of issues are responsible for the difficulty in presenting a clear figure for a make/model/year, of an aircraft to help accurately determine how much it really worth.

Some of the issues include: lack of central reporting of aircraft sales for either tax or licence requirements, the complexity of individual aircraft value calculations, the timing of sales (long timeframes from offer to closing during which time the market can go up or down substantially), multiple synchronous closings for jet aircraft in particular, international currency sales, and non-disclosure-of-price terms included in many transaction documents.

The new plane is coming at a time when the declining fortunes of the domestic airlines have made the Presidential Air Fleet larger than the fleets of three domestic airlines combined.

Chanchangi, MedView, and FirstNation airlines, all have one aircraft; Medview Airlines, three; while FirstNation has two.

IRS Airlines, with five aircraft in its fleet, has only one that is currently operational. The four others have been sent overseas for routine maintenance for a long time now.

Nigeria is now Africa's fastest growing aviation business with more new and pre-owned aircraft delivered to Nigeria, than South Africa in the last year. The country's private jet fleet is larger than the commercial aircraft fleet. Growth has been driven predominantly by the oil and gas industry however other sectors including finance, manufacturing, telecoms and agriculture are all contributing to a market which is set to grow by 20 per cent this year.

Any aircraft put on a 5N (Nigerian) registry will lose asset value by as much as 25% yet incur higher insurance premiums, up to 35% higher in some cases. Maintenance and service support still remains a challenge and whilst the fleet continues to grow there are no accurate figures for the amount of jets operating in Nigeria. Educated guesses say between 100 and 150, with an anticipated 350 set to be in operation by 2016, meaning the fleet will double by end of next year.

Chairman of the Nigerian Airline Operators Committee, Captain Nogle Meggison said that transport logistics within Nigeria also stimulated growth of the private jet subsector with poor roads, a limited domestic airline fleet and no train network meant that executive jets provide a solution to much of the logistical challenges in the country.

"The time saving, the convenience and the increased productivity that follows means business aviation is not a luxury but an essential tool for growth in Nigeria," Meggison said.

Captain Meggison emphasised that the government is supporting expansion stating it has removed import duties on new jets; has signed the Cape Town convention reassuring lessors about asset security; invested in new infrastructure including a private jet terminal that opened last year in the political centre Abuja; and does not impose a time restriction on the amount of time a foreign registered private jet can stay on Nigerian soil. Whilst this is stimulating growth he acknowledged that improved regulations, comprehensive MRO offerings, the implementation of structured safety management systems and local participation were all necessary for ongoing success.

Nigeria is in need of more commercial and private aircraft and it is certainly refreshing to see the government stimulating this type of development, this will overall give the whole economy a boost.