Experts Fault Local Airlines’ Global Competitiveness, Blame Individual Ownership Model

Aviation experts have raised fresh concerns over the declining global competitiveness of Nigerian airlines, blaming the dominance of individual ownership structures, weak access to institutional capital and rising operating costs for the inability of local carriers to compete effectively on the international stage.

They said that while Nigeria had recorded improvements in aviation regulation, safety, infrastructure and airspace management, those gains had not translated into a corresponding transformation of the airline subsector.

The experts, who spoke on the state of the Nigerian aviation industry, warned that without a fundamental change in the ownership and financing structure of local airlines, the country might continue to lose ground in the global aviation market.

The experts argued that while regulatory, safety, and infrastructure improvements are necessary, their benefits may remain limited if local airlines cannot secure capital, maintain their fleets, and develop the international networks required to compete globally.

Speaking to the issue, Aviation expert and chief executive officer of Belujane Konzult Nigeria, Chris Aligbe, said Nigeria had made progress in several areas of aviation but had failed to achieve a similar level of development among its airlines.

“We have made progress in regulation, safety, infrastructure and airspace management, but we have not achieved corresponding progress in the airline subsector,” Aligbe said.

He noted that although Nigerian airlines were beginning to make some progress domestically and within the West African sub-region, the country had virtually disappeared from the league of internationally recognised airlines.

“Our airlines are beginning to make some progress domestically and within the West African sub-region, but globally, Nigeria has virtually disappeared from the league of internationally recognised airlines.

“If you look at global airline rankings, you will struggle to find a Nigerian carrier making a significant impact.

“Even within Africa, our airlines are not where Nigeria used to be,” he said.

Aligbe, a former spokesman of defunct Nigerian Airways, attributed the situation largely to the ownership and financing model under which most Nigerian airlines operate, arguing that the model was inadequate for building a globally competitive carrier.

Asked whether he expected any Nigerian airline to emerge as a major global carrier in the next few years, he said: “Under the current model, I do not see it happening in the next four or five years.

“The models are simply not right. There is virtually nowhere in the world where an individually owned airline like the one we have in Nigeria can develop into a major global carrier without significant institutional capital, strategic partnerships, and a sustainable financing structure. The global airline industry has moved far beyond that.”

He said airlines required substantial and sustained capital for aircraft acquisition and leasing, maintenance, insurance, training, and other operational requirements, making it difficult for individual- or family-owned businesses to compete with carriers backed by institutional investors and stronger financing structures.

“You cannot expect a single individual or family-owned company to continuously provide the capital required to compete globally,” Aligbe said.

“The world has moved towards strategic institutional ownership, equity partnerships, leasing structures and stronger financial arrangements.

“Nigeria has to embrace those models if we want to produce a globally competitive airline.”

The aviation expert also expressed concern over Nigeria’s loss of its position in the US aviation market, arguing that restoring the country’s international standing would require an airline capable of operating into the US market.

According to him, Nigeria lost its Federal Aviation Administration (FAA) Category 1 status not because the country’s aviation safety regulation suddenly collapsed, but because no Nigerian airline was operating direct service to the United States for the required period.

“The solution is not simply to ask the United States Federal Aviation Administration to come back and restore the rating. Nigeria has to demonstrate actual operations.

“We need an airline that is capable of operating into the United States again. That is what will provide the basis for renewed assessment,” he said.

Aligbe said he did not currently see any Nigerian airline that appeared ready to take on the challenge of establishing direct US operations under the prevailing circumstances.

“Unfortunately, I do not see any Nigerian airline that appears ready to do it under the current circumstances. That is part of the problem,” he said.

He added that although London remained one of the major international destinations served by Nigerian carriers, the country lacked a strong international network capable of positioning its airlines as major global players.

“Nigeria is not where it used to be internationally,” he said.

Aligbe acknowledged the reforms and achievements recorded by the Federal Government and the Minister of Aviation and Aerospace Development, but said the ultimate test should be whether those reforms had produced tangible improvements for airline operators.

“Government may say it has achieved certain things at the macro level, but the industry has to ask whether those achievements have translated into tangible improvements at the micro level,” he said.

“Have they enabled our airlines to become internationally recognised operators?

“Have they created an airline capable of establishing direct operations to one, two or three major international markets? That is the real test.”

He called for a comprehensive reset of the aviation industry rather than another isolated intervention, saying the process should encompass airlines, airports, regulation, airspace management, financing, and the sector’s institutional structure.

“The entire industry needs to be reset. I am not talking about another isolated intervention. I am talking about a comprehensive reset of the aviation industry from A to Z,” Aligbe said.

He stressed that the responsibility should not be left solely to the aviation minister, arguing that aviation was closely linked to tourism, trade, investment and the wider economy.

“It should not be left to the aviation minister alone. It requires a holistic government approach involving the Ministry of Aviation, Ministry of Finance, economic management authorities, the Central Bank of Nigeria and other relevant ministries,” he said.

As part of the proposed intervention, Aligbe recommended establishing a structured financing mechanism of about $500 million for the airline subsector, specifically targeting aircraft maintenance and lease obligations.

“I am not talking about palliatives or simply giving airlines money to survive. For example, the government could establish a dedicated facility of about $500 million for the airline subsector, specifically targeted at aircraft maintenance and lease rentals.

“The funds should not be for general expenditure. They should be structured to address the two areas that can keep airlines operational and financially stable,” he said.

Supporting the call for structural reforms, the President of the Aircraft Owners and Pilots Association (AOPA) Nigeria and Second Vice President of the Aviation Safety Roundtable Initiative (ASRTI), Dr Alex Nwuba, warned that rising operating costs, foreign exchange challenges and multiple industry charges were putting increasing pressure on airline operators.

Nwuba said airlines might have little choice but to restructure their businesses and, in some cases, scale back operations to remain financially viable.

“The airline operators have to restructure their business to ensure that they can manage the cost of doing business, but one thing is certain: they will never cut corners because the NCAA is on top of them every second watching to see what they are doing,” Nwuba said.

He argued that the multiplicity of charges imposed by different government agencies was contributing significantly to the high cost of air travel.

“The government needs to restructure the entire industry. There are too many people with their hands in the pot, and they are free to charge whatever they like. Those costs are eventually passed on to the flying public,” he said.

Nwuba also warned that the financial pressure on airlines was already affecting fleet availability, with some operators unable to return aircraft undergoing maintenance to commercial service.

“What will happen eventually is that, in order to survive, airlines will have to cut their operations. You already see airlines with 20 aircraft, but only six or 10 are operational because they need funds and foreign exchange to bring others back from maintenance,” he said.

“There will be actual shrinkage by airlines. Some will voluntarily reduce operations because costs have become unsustainable.”

According to him, the problem goes beyond the number of aircraft an airline owns or leases, as a carrier’s real capacity is determined by the number of aircraft available for commercial operations.

He said prolonged grounding of aircraft could force airlines to reduce frequencies, consolidate routes or cancel services, leaving passengers with fewer travel options and potentially higher fares.

Nwuba also identified low passenger penetration as another major structural weakness in Nigeria’s aviation industry.

He said the domestic market had remained largely stagnant at about 15 million passenger journeys annually, with the bulk of the traffic generated by a relatively small group of frequent travellers.

“These 15 million passenger trips we keep talking about are really generated by about one million people. It is the same group of people flying year after year,” he said.

“We will not move beyond that number until flying becomes more affordable and more Nigerians can participate.”

He argued that lowering the cost of air travel through structural reforms could expand the passenger base, allowing airlines to spread their high operating costs across a larger market.

Nwuba therefore called on the federal government to rationalise taxes and charges imposed on airlines and to introduce targeted support measures to reduce operating costs.

“Costs must be brought down through structural adjustment in the industry. The government has a role to play. Around the world, governments provide different forms of support to strategic sectors, and aviation should not be an exception,” he said.