Private sector aviation investment rises to $5bn in three years

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Nigeria’s geographical location makes it an attractive choice to be a hub of aviation in West Africa but lacks all the desired ingredients.

This was disclosed by aviation expert and President, Sabre, a Global Distribution System [GDS], Dr. Gabriel Olowo.

Airline hubs or hub airports are used by one or more airlines to concentrate opassenger traffic and flight operations at a given airport. They serve as transfer (or stop-over) points to get passengers to their final destination. It is part of the hub-and-spoke system.

Hubs work by pooling regional demand from leisure passengers, international transfer passengers, business passengers and freight, to make more routes and regular flights viable.

While some airports in Africa have metamorphosed to become strong hubs, serving airlines across the globe and enhancing connectivity, Nigeria, the most populated country in West Africa, which has a market strategically located at the centre of Africa has failed to leverage its potential to build an aviation hub for the region.

Nigeria’s potential to become an aviation hub for Africa, using its natural advantages such as its central location on the continent, huge population and a growing middle class, is being stymied by poor aviation infrastructure and lethargy from a government, which urgently needs to diversify its economy away from oil.

There are strong hub airports in East Africa, South Africa and North Africa, which account for most of the scheduled capacity in Africa.

Oliver Tambo International Airport, Johannesburg (South Africa) is the busiest and largest airport in South Africa and on the continent. In 2016, the airport handled a total of over 20 million passengers and it is expected to reach between 24 and 28 million passengers in the coming years.

Cairo International Airport is located near the capital city, Cairo, 22 km northeast of the city center in the district of Heliopolis.

It is one of the busiest airports in the Arab world and Africa. The second largest airport in Africa after ORTIA, it serves as the primary hub of various Egyptian airlines, including EgyptAir, Nile Air and EgyptAir Express. The airport processes over 14.5 million travellers passing through annually.

Cape Town International Airport is now the second largest airport in South Africa (after ORTIA) and the third busiest on the continent. It is located 20 kilometers east of Cape Town and is considered to be one of the best airports in all of Africa. It has five terminals that are easily accessible on foot. The airport is utilised by more than 8.5 million passengers every year.

Olowo told New Telegraph that there are very tangible assets in the aviation industry going from airlines to airport, to terminal building that could attract investment, provided the policy thrust are driven by political will.

His words, “There is no doubt that the Nigerian aviation sector is underperforming relative to its peers in Africa and elsewhere in the world. The sector still contributes a paltry figure – less than one percent to the country’s GDP – yet it has the capacity to put in at least five percent.

“Based on available statistics, relative to the country’s Gross Domestic Product (GDP) of N80.3 trillion ($509.9 billion), Nigerian aviation contributes a meagre $0.7 billion or 0.4 percent as at 2015.”

A former Minister of Aviation had put the amount of private sector investments needed in the sector at about $5 billion in three years.

Aviation experts say for Nigeria to really tap significantly its potential in aviation business, it must attain the position of a regional hub, connecting more destinations across Africa and other continents.

Immediate past of Minister of Aviation, Hadi. Sirika also agreed that Nigeria has the capacity of being a regional hub because of its strategic location, population and resources hence his commitment to promoting the initiative.

To fast-tract developments in the sector, he said the private sector must invest hugely in aviation with the Federal Government providing all necessary enablers.

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Godwin Okafor is a Financial Journalist, Internet Social Entrepreneur and Founder of Naija247news Media Limited. He has over 16 years experience in financial journalism. His experience cuts across traditional and digital media. He started his journalism career at Business Day, Nigeria and founded Naija247news Media in 2010. Godwin holds a Bachelors degree in Industrial Relations and Personnel Management from the Lagos State University, Ojo, Lagos. He is an alumni of Lagos Business School and a Fellow of the University of Pennsylvania (Wharton Seminar for Business Journalists). Over the years, he has won a number of journalism awards. Godwin is the chairman of Emmerich Resources Limited, the publisher of Naija247news.

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