BUSINESS MODEL MISFIT AND AIRLINE OPERATIONS IN NIGERIA

HOW REGULATORY AGENCIES CAN ASSIST AIRLINES IN ADOPTING OPERATING BUSINESS MODELS THAT CAN ADDRESS THE CURRENT AVIATION FUEL CRISIS IN NIGERIA.

There is no doubt that the Nigerian aviation industry has made significant progress in terms of the number of operating airlines, the expansion of operating routes, safety, and many other areas, but efficiency and profitability remain unanswered questions.

This is not far from the obvious reality that the business model used by Nigerian airlines does not fit the industry's unique challenges.

While we applaud the new entrants into the airline industry, it is unfortunate that some of them came in to simply add to the numbers without providing a clear solution to the industry's problems. When I worked for an airline a few years ago, they usually pay for all of the fuel to be consumed in advance, so you end up with situations where marketers are lobbying to supply us with fuel even during scarcity.

If you've been in the industry long enough, you'll recognize that the issue of fluctuating aviation fuel prices and availability in Nigeria is a recurring one, and no airline owner has the moral right to claim ignorance of the fuel challenge. So, what happened to the chief operating officers, director of operations, and operations managers who were unaware that this challenge was resurfacing, and if they were aware, what efforts did they make to mitigate it?

This implies that the major issue for airline owners in the industry is not a lack of fuel, but rather an unwillingness to redesign their business model to accommodate recurring fuel scarcity.

With all due respect to the efforts of the NCAA's current leadership in achieving this level of growth in the industry, such commendable efforts should be encouraged if this growth is to be sustainable. In this article, I will discuss how regulatory agencies can assist airlines in adopting operating business models that can address the industry's well-known issues.

In accordance with the civil aviation act 2006 part I, “ The minister shall be charged with the responsibility for the formulation of policies and strategies for the promotion and encouragement of civil aviation in Nigeria and the fostering of sound economic policies that assure the provision of efficient and safe services by air carriers and other allied service providers as well as greater access to air transport in a sustainable manner and to assist with ensuring that Nigeria’s obligations under international agreements are implemented and adhered to.”

Additionally, part IX subsection 2(h) conferred the powers on NCAA to make regulations: generally, for securing safety, efficiency, and regularity of air navigation and the safety of aircraft and of persons and property carried in           aircraft, and for preventing aircraft from endangering other persons and property”

According to the quotes above, regulatory authorities and all stakeholders have a responsibility to review the current policies governing the sector or ensure full implementation of the existing ones in order to promote efficiency,  safety, and profitability in a sustainable manner because, according to the records, the current operating business model is not sustainable couple with the increasing prices of Jet A1.

              It is every airline's corporate responsibility to find solutions to their problems rather than forming an alliance that threatens to shut down operations. We have foreign airlines operating in these airports, and they are not threatening to shut down operations due to fuel price increases; instead, they are finding ways to stay in business.

As a result, I believe it is time for regulatory authorities to review their regulations in order to include clauses and phrases that will compel airlines to design business models that will provide solutions to the industry's existing challenges, just as during the process of obtaining the AOC or recertification, airlines demonstrate to the authorities how they plan to ensure safe and efficient operations by submitting contract agreements with AMOs, ground handling companies, and so on but nobody scrutinizes their business model to confirm its suitability to the market.

I believe that requiring airlines to prove to authorities their aviation fuel agreements with fuel marketers or the availability of forex to pay for fuel on delivery for at least three months will go a long way toward ensuring operational stability in the sector, promoting safety and profitability.

RECOMMENDATIONS

1.     Authorities should scrutinize airlines' business models prior to awarding AOCs or recertification to ensure the business model has the capacity to guarantee safety, compliance, efficiency, and profitability in terms of how they plan to deal with the industry's current and future challenges.

2.     Before issuing or renewing an AOC, an aviation fuel contract agreement with a fuel marketer should be made mandatory. This means that airlines must prove to regulatory authorities their ability to guarantee fuel availability for operations, either by displaying evidence of contract papers indicating all parties' consent to ensure a smooth supply of Jet A1 for at least the next three months.

3. Airline's capacity to procure aviation fuel or guarantee continuous supply should now become a criterion for approving flight schedules because there is no need to allow an airline to sell tickets when it doesn’t have the fuel capacity to do the flight according to the schedule.  

4.     Airline owners and investors should demand their director of operations, and chief operating officers develop operational plans that can mitigate the impact of the aviation fuel crisis in the future.

5.     Airlines should make use of their data to analyze patterns that can threaten the safety, efficiency, and profitability of their operations and use them for making decisions.

6.     Airlines should adopt upfront payment for fuel according to their flight schedule to avoid service disruptions.

CONCLUSION

I am confident that if some of the above recommendations are seriously considered by Nigerian airlines and regulators, operations growth, efficiency, safety, and profitability will be sustainable.

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