Monday, October 18, 2021

    Nigeria’s Aviation Sector Sees Modest Pick-up in Domestic Air Traffic in Q2 2021

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    Naija247news Editorial Team
    Naija247news is an investigative news platform that tracks news on Nigerian Economy, Business, Politics, Financial and Africa and Global Economy.

    Data from the NBS compiled from contributions by the Federal Airports Authority of Nigeria (FAAN) show that total passenger traffic through Nigeria’s airports in Q2 ’21 improved by c.73% y/y and 9% q/q to c. 3.2 million. Supportive data from the national accounts show that air travel grew by 4.98% in Q2 ’21.

    Despite the impressive y/y increase, Nigeria’s aviation sector is still recovering, with overall passenger traffic still below pre-pandemic levels, as shown in the chart below.

    While domestic air travel appears to have rebounded significantly, with a passenger load factor of around 80% of pre-pandemic levels, foreign air traffic remains low, at roughly 40% of pre-pandemic levels.

    The trend in Nigeria mirrors that of other countries, where strong domestic travel demand has helped to boost air traffic volume. As with most other nations, recovery in Nigeria’s international air traffic has been slow due to mobility limitations (re)imposed by various governments across the world, particularly with the emergence of new strains of the COVID-19 virus.

    Following the collapse of global air travel in 2020, most airlines were only able to remain afloat thanks to critical life support from their governments, totaling c. USD243bn (or c.0.3% of global GDP for FY ’20), according to an industry study published by the International Air Transport Association (IATA).

    In comparison, the total financial aid announced by the federal government is merely 0.02% of the country’s GDP or NGN27bn. The Nigerian Civil Aviation Authority (NCAA) estimates that the pandemic has cost the country’s airline industry c. USD1bn.

    Furthermore, Nigerian airlines have had to cope with the fx liquidity constraints, which has negatively impacted their operations, because service parts and maintenance checks are priced in foreign currency.

    We can only infer that Nigerian airlines are still losing money based on the lower load factors and issues mentioned above.

    According to IATA, international air travel is expected to improve in FY ’22. However, the recovery will be uneven. Also, countries with large domestic markets, faster vaccination rollout, and less restrictive government policies will recover faster than the others.

    For Nigeria, the pace of vaccinations (less than 5% of the population has been vaccinated) will determine the recovery path for foreign travel, and the sector’s full recovery.

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