Why It Is Difficult Running An Airline

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• Air Peace Chairman, ALLEN ONYEMA

The challenges facing Nigeria’s aviation industry came into focus during the 70th birthday get-together of Chisco Group founder, Chidi Anyaegbu, where Air Peace Chairman, Allen Onyema, spoke about the difficulties of running an airline in the country. Onyema used the occasion to highlight the financial pressures, multiple charges and levies confronting local airlines, as well as the high cost of maintaining aircraft and operating flights in Nigeria.

Speaking at the event, Onyema stated the high cost of operating airlines in Nigeria, multiple charges and levies imposed on operators, the cost of aircraft maintenance and the difficulties of accessing financing. He also spoke about the role of government in creating an environment where private businesses can survive and grow.

According to Onyema, the challenges facing Nigerian airlines have persisted for years, with several airlines entering the market and eventually shutting down. He argued that despite the huge revenue generated by airlines, their profit margins remain small because of the high cost of running the business.

Below Onyema also acknowledged some interventions by the administration of President Bola Tinubu, particularly the removal of certain charges affecting airlines, while calling for further action on other levies he said were putting additional pressure on operators.

Allen Onyema: They slap you and don’t want you to cry. But we must continue to talk. I’m not going to be a prisoner of my own doctrines, because as our very former president said, President Obasonjo, government has no business in business.

It is the business of the government to provide a noble environment for the private sector to thrive. And I want to thank you especially for producing so many billionaires from Nigeria. Those billionaires are not just feeding their families, they are equally touching the lives of millions and millions of Nigerians.

With only the private sector we can move a nation upwards. The democratic nature of government does not allow it to do business the way business is supposed to be done…

No Nigerian airlines will make $1 million as gain . Meanwhile, we might have a revenue of over half a trillion, with just less than $700,000 as gain . Meanwhile, you’re having about almost $300 billion loan on your head.

And when you complain, some people sit somewhere and write, make mockery and post it. I don’t know what joy we get in seeing private businesses close down.”

In the aviation industry over 54 charges, to the extent that IATA, in faraway Rio, said that Nigeria is the worst place to do airline business, that they don’t know how Nigerian airlines are surviving under 54 charges, levies and all. Nobody is trying to pay a bid to this. It didn’t start now. It’s been there. Over 60 airlines have come and gone in Nigeria.

The owners of these businesses succeeded in other businesses. Why are they failing when it gets to aviation ? Because they see the cash coming in, and they think it’s there for everyone to take. Just one first flight, and you’re spending $17 million to run it.

Meanwhile, you fly from here to Abuja, and you’re carrying about 170 passengers there, that barely scratched $15 million, and you give them best flight. And they tell you that one part grounded in the engine would be about $4 billion. So how did it happen? You’ve already incurred a loss of about $6 billion on a 45min flight. That is aviation for you. It’s highly regulated, it must be safe. If it’s not safe, nobody takes the risk. But in Nigeria, we are overtaxed. We are being taxed to death.

But I believe that the president, as usual, will come to our rescue. Because sometimes people, the customs introduced a 4% FOB. And I was with the dealer, and I met the control general of customs, when I met him, and I complained to him.

He said, “What? Is it going to hurt you?” I said, “Yes, it is going to hurt us.” Fantastic man, he said In that case, let’s go and see Mr. President. Within 24 hours President Tinubu  removed the 4%, so it doesn’t hurt us. And then, they introduced a 7.5  He removed it for us. They put a 7% on customs duties that never existed. They removed it for us. They have removed VAT. The one they have not removed is 5%, because the president has not heard from us.

I believe you presidents here, Every president has an ambition to succeed. Mainly the people around, and the people consuming the products. I believe today they will meet us. They will address the issue of that 5% because they are killing airlines. We cannot go and borrow money from Nigerian banks with 30%, the highest anywhere in the world.

And somebody will stand somewhere and collect 5% of your business. You didn’t set up the business with us. We don’t even make 5% gain on aviation. Oki, he knows that. He is the master in transport. He knows that.

So when somebody is telling you that he is a passenger, if I want to start flying today, itis tomorrow. I want to encourage people to fly. The direct operating cost of every seat on an airline is about 160,000 Naira.

Yet we still charge 90,000 Naira per seat. The direct operating cost in this country is about 160,000 Naira per seat. If I decide to now encourage people to fly, I will give you an example.

I will put 50,000 just to bring them. They will now come collect 5% of our 50,000. Causing  more problems for you. And when you speak, then you become a villain. But we will never stop speaking because it is our nation, it is our country. Oki you are a pace setter, you set the pace and others follow. We’re following your footsteps, you are a success story and may God continue to bless you.