Covid-19; Nigerian Airlines To Start Down-scaling Due To Loss In Revenue
Written by: Travel Inn
The airline industry in Nigeria may have a new business mantra: Smaller is better. The COVID-19 outbreak is gradually leading to airlines taking painful but necessary decisions to reduce their fleet size or changing their business model to smaller and efficient aircraft.
As the pandemic swept through the industry, many airlines were trying to sustain their daily operations as demand for passenger flights hit an all-time low from March, April and July 2020. The situation has not significantly changed for the better up till now. While some carriers resorted to layoffs, operations’ down-scaling and restructuring of their business, major passenger airlines explored a new service – cargo transportation on passenger aircraft later known as “preighters.
The International Air Transport Association (IATA) predicts that African airlines will lose $6 billion in revenue this year due to the Covid-19 pandemic, with passenger numbers more than halving. In the highly fragmented sector, Nigerian operators are succumbing to the effects of travel restrictions and border closures.
As airlines rationalise their fleets as part of their survival strategies, narrow body and regional aircraft may become more important to their immediate recoveries. Many of them are walking a tightrope with the prediction that only two airlines in Nigeria may survive the deadly effects of COVID-19.
Leases on bigger and fuel guzzling airplanes do not make sense any longer. The lease rental on these aircraft is expensive. Nigerian airlines are bleeding as over 35 charges levied on airlines by different aviation agencies are no longer sustainable in the midst of low passenger traffic, high cost of aviation fuel among others at a period carriers are operating less than 50 per cent of their capacity.
Chief Executive Officer of Ropeways Limited and a former Managing Director of Virgin Nigeria, Capt. Dapo Olumide talking about the arising issues said that the problems are self-inflicted with use of the wrong type of aircraft for domestic operations. He predicted that by the end of this year, there will be no more than two airlines flying because of their overhead.