Restructuring and Turnaround as a Tool for Developing the Aviation Ecosystem in Africa

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The earlier stages of aviation in the country are the pre-independence aviation period where we had colonial operators such as Air France, Imperial Airways, BOAC etc, and now there are some independent airlines such as Ghana Airways, Nigeria Airways etc.

The African airline industry is now at a crucial crossroads and the COVID-19 pandemic had a devastating impact on airlines globally, including in Africa. Many African airlines were already in a precarious state pre-COVID and the lack of profitability among African airlines has been a perennial problem for the African airline industry, and in recent months African airlines are emerging from pandemic-induced collapse in business.

The current turbulent global environment provides African airlines with a perfect opportunity to implement the 3 R’s which are :
• Restructure: Restructuring themselves into leaner, more profitable (and sustainable) operations.

• Reposition: Repositioning themselves competitively, especially in light of liberalized air traffic marketplace to be introduced by the Single African Air Traffic Market (SAATM), liberalized trade across the continent with the advent of the African Continental Free Trade Area (AICTA)

• Reset: Reset their overall business/competitive strategy going forward-take advantage of the lull in business

On the state of the aviation industry:

* Passenger traffic dropped by 64 % in 2020.

* Airline revenue losses since Covid had a cumulative total of 10.2 billion dollars 

* There is a 30 per cent less intra-Africa connectivity than in 2019

The change drivers are:
1. Africa’s economic resilience: This is the second-largest GDP growth region at 3% over the next 20yrs and it’s the second-largest traffic growth region at 5.4% over the next 20 years

2. Increasing urbanization rate: African cities are urbanizing while relatively poorer than when other developing regions began to urbanize. They are fragmented, with low levels of accessibility, and have high costs relative to their level of development.

3. SAATM, AFCTA, FMP: Noteworthy, these 3 AU flagship projects can be turned into a virtuous circle for aviation growth.

4. Affordability Imperative: 90% of Africa’s people are excluded from the aviation services because they cannot afford them.

The possible scenarios in the aviation industry going forward are:
* More and more countries invest in their National airline.
* Changes in the African Aviation system will depend on the Airlines’ strategies.*Access to market and access to financing will increase pressure on existing operators.
* Cross-borders Groupings

*Access to market and access to financing will increase pressure on existing operators.
* Cross-borders Groupings

REGULATION OF THE AVIATION SECTOR

Some Domestic Regulations include:

• The Constitution of the Federal Republic of Nigeria

• The Civil Aviation Act (CCA) 2000

• The Nigerian Civil Aviation Regulations 2015

• The Federal Airports Authority of Nigeria (FAAN) -FAAN At Cap: F5, LFN

• The Nigerian Airspace Management Agway (MAMA) ACT 48 of 1 of FRN

• Nigerian Meteorological Agency (NIMET)-NIMET Establishment Act, 200

• Accident and Investigation Bureau-5.79 of the DCA Act

The commercial and economic impact of the aviation sector includes trade Facilitation, Tourism, Business Enablement, visits to Family & Friends, Access to Healthcare, Access to better Education, and Major global Employer.

The ICAO Annexes & Service provisioning of FAAN include the Security of the airport (ICAO ANNEX 17 & S. 3 (J) of the FAAN ACT)
The security of the airport is a major responsibility of FAAN. S. 3 (J) of the FAAN Act mandates the authority to provide adequate facilities and personnel for effective security of the Airport as one of the principal functions of the Authority.

The Authority fulfils this function through its Directorate of Aviation Security Services (DASS) and Airport Security Committee comprising the Nigerian Police Force and the Para-military agencies at the Airport

The ICOA Annex 17 sats out the basis for ICOA Civil Aviation Security program and the Standards and Practices for the security of Airports and their facilities against unlawful interference against Civil Aviation.

Conclusion

African Aviation Industry is at a crossroads and there is a huge market opportunity for young people eager to travel. In addition, AFCTA will create cross-border business opportunities within Africa and Airports, Airlines, ANSPS will all benefit from these trends and consolidation, and building synergies is key for success.

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The above event took place on 24 May 2022 and the speakers were Abisola Akinrin; Company Secretary/Head of Legal Services at Custodian Trustees Limites, Seyi Akinwunmi; Partner Akinwunmi & Busari LP, and Kubi Udofia PhD; Partner Babalakin & Co Legal Practitioners

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