ANALYSIS: THE FUTURE OF DOMESTIC AVIATION IN NIGERIA.

The domestic aviation industry in Nigeria has experienced dramatic highs and painful lows. The collapse of legacy carriers like Nigeria Airways and the recent exits of Dana Air and Arik Air from regular operations illustrate ongoing struggles. Despite these challenges, the sector is vital for connecting Africa's largest economy. A careful look at current trends, challenges, and emerging opportunities suggests a future that could be both uncertain and hopeful.

The Current State of Play

Today, the domestic aviation market features a few active players. Air Peace, Ibom Air, Green Africa, United Nigeria Airlines, and Aero Contractors, which mainly focuses on maintenance and charter, handle most scheduled operations. Overland Airways and ValueJet also serve regional and domestic routes. This marks a significant reduction from the overcrowded field a decade ago.

The key routes include the Lagos to Abuja corridor, which makes up nearly forty per cent of all domestic passenger traffic. The Lagos to Port Harcourt, Abuja to Kano, and Lagos to Enugu routes follow closely behind. These main routes are highly competitive, often featuring multiple daily flights with load factors averaging over seventy per cent. Unfortunately, lesser routes connecting secondary cities remain underserved or abandoned.

The Major Challenges Shaping the Future

Several key obstacles will shape the industry's future. The first and most pressing is the cost of aviation fuel. Jet fuel, known as JET A1, now represents over forty percent of an airline's operating costs, compared to about twenty-five percent globally. Even though Nigeria produces oil, it imports most refined jet fuel, and foreign exchange issues impact landing costs. Unless local refining of JET A1 becomes reliable and sufficient, Nigerian airlines will always face a cost disadvantage.

The second challenge is the foreign exchange crisis. Nigerian airlines must pay for aircraft leasing, spare parts, maintenance, and insurance in dollars, while ticket revenue comes in naira. The scarcity of dollars and the gap between official and parallel market rates mean airlines struggle to pay their foreign obligations. This situation has led to trapped funds, delays in maintenance, and sometimes aircraft being repossessed by lessors. The future of domestic aviation relies heavily on a stable and accessible foreign exchange market.

The third challenge involves infrastructure. Most Nigerian airports suffer from poor runways, inadequate navigational aids, and malfunctioning baggage handling systems. Passengers often face frustrating experiences, from broken escalators to aggressive touts. Although the federal government has concessioned some major airports, the results have been slow and uneven. For the aviation sector to thrive, ground infrastructure must support the airlines’ ambitions.

The fourth challenge is the high cost of aircraft leasing and insurance. Nigerian airlines are viewed as high risk by global lessors and insurers, resulting in premiums that are significantly higher than those faced by airlines in South Africa or Kenya. This cost inevitably affects passengers, making domestic fares among the highest in the world per kilometre flown.

Emerging Opportunities and Bright Spots

Despite these challenges, there are valid reasons for hope. The first is the rise of Ibom Air as a model of efficiency and professionalism. Owned by the Akwa Ibom State government, Ibom Air shows that disciplined management, on-time performance, and a focused fleet strategy can lead to profitability and reliability for a Nigerian airline. Its success has set a new standard for the industry.

The second opportunity is the increasing middle class and demand for business travel. Nigeria’s young, urban population is eager for connectivity. As road travel becomes riskier and more time-consuming due to poor conditions and insecurity, more people will opt for air travel for medium to long distances. The market is expanding, and airlines that endure the current challenges will benefit from this growth.

The third opportunity is the African Single Air Transport Market, an initiative aimed at liberalizing aviation and boosting connectivity. Though still in its early stages, Nigerian airlines could potentially expand into West and Central African routes, reaching larger markets beyond their domestic borders. Air Peace has already explored regional routes to Accra, Freetown, and Dubai, demonstrating that expansion is feasible.

The fourth opportunity lies in technology. New Nigerian carriers like Green Africa have adopted digital booking, dynamic pricing, and data-driven route planning. This approach allows for more efficient operations and appeals to younger, tech-savvy customers. As internet access improves, online booking and mobile check-in will become standard, lowering operational costs.

The Impact of the New Lagos Airport Terminal

The new terminal at Murtala Muhammed International Airport, though mainly for international flights, has improved passenger flow and provided benefits for domestic operations. The ongoing upgrades at Abuja's terminal and the new cargo terminal in Enugu also indicate gradual improvements in the airport system. For domestic aviation to flourish, these enhancements must extend to secondary airports like Benin, Yola, Sokoto, and Maiduguri.

Predictions for the Next Five Years

Looking ahead to 2030, several trends are likely to influence the industry. First, further consolidation is expected. The market cannot support many carriers due to high operating costs. Mergers or acquisitions could lead to two or three dominant players. Second, expect a shift towards younger, more fuel-efficient aircraft like the Embraer E175 or the Airbus A220. Older Boeing 737 classics will become too costly to maintain and fuel.

Third, anticipate regional expansion. Nigerian airlines will increasingly look to Accra, Abidjan, Douala, and Kinshasa as destinations. The domestic market alone will not suffice for profitability. Fourth, expect the resurgence of cargo as a significant revenue source. As e-commerce grows, the available space in passenger planes will become valuable for shipping goods between cities.liberalising

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