Operators, stakeholders differ on airlines’ profitability

The controversy trailing the profitability or otherwise of local airlines operations in Nigeria has come to the fore as operators and stakeholders in the sector have differed on the issue.

While many of the stakeholders interviewed by MARKETING EDGE said that local airlines were making a lot of profits judging from passengers’ surge, which stood at 15 million annually and estimated to rise to 24 million when the new six new international airports begin operations, however, many others disagreed, saying that due to the economic crunch in the country that air travel has been affected negatively.

Stakeholders have often lamented the hostile business environment in the country which has equally affected the aviation sector as airlines operate under multiple taxation, scarcity of aviation fuel, otherwise known as JET A1, high maintenance cost due to absence of Maintenance Repair and Overhaul (MRO) facility, operational cost. among others, making them to suffer losses.

Speaking on the issue, Chief Executive Officer, Aero Contractors, Captain Fola Akinkuotu, stressed that in spite of all the challenges the aviation sector was facing, they still manage to make little profit of between one to five percent, adding, however, that high cost of maintenance was one of the major challenges facing local airlines and was negatively affecting their profit margins,
But President of Aviation Safety, Round Table Initiative (ART), Mr. Gbenga Olowo, said he could not specifically say whether airlines in Nigeria were making profits or not, saying that this could only be ascertained in their financial reports.

Olowo, however, explained that all over the world, airlines were facing crisis, and Nigeria was an exception, noting that their patronage depends on the people’s financial state.

He said:”Airlines will be there because they provide essential services and people pay for these services. So the airlines even though are facing hard times still make money and that is the reason why more people are moving into the sector. If they were no profits, people won’t venture into the sector.”

Earlier, the outgoing Director General and CEO of the International Air Transport Association (IATA), Mr. Tony Tyle had said that member airlines would earn about $39.4 billion this year. Tyler disclosed this at the opening of the 72nd IATA Annual General Meeting in Dublin, explaining that airlines would earn more this year than initially projected.