Friday, December 27, 2013

Foreign private jet operators scramble for Nigerian market


[Punch] Private jet and chartered aircraft companies from Europe and North America, especially the United States and Canada, are bracing for a boom in the Nigeria’s private jet market as the nation gets ready for general elections in 2015, findings have shown.

Top aviation officials disclosed that a significant number of the companies from Europe, the US and Canada were already submitting applications through local representatives to the Nigerian Civil Aviation Authority and the Ministry of Aviation to bring in aircraft into the country for charter operations.

It was also learnt that some foreign private jets had started coming into country in preparation for the boom, expected to begin as early as the first quarter of 2014. The source said, “I think 2014 is going to be a very booming year for private jet operators in the country. The local operators are warming up for this seriously. But the interesting and surprising thing about this is that a number of foreign companies, especially from Europe, the US and Canada, have submitted documents, seeking permission to bring in private jets into the country for charter operations.

“Well, government is still looking at those applications because you know the recent reform in the general aviation sector has changed the landscape of the charter business. We don’t know what the Ministry of Aviation will do about it.”

According to another top official of the Ministry of Aviation close to the matter, some of the applications by the foreign companies were actually submitted by their local representatives.

The official, however, pointed out that the recent aviation law, which barred foreign-registered jets from carrying out charter operation business in the country, had brought the application process into a ‘suspense’ and nobody could say what could be the next action on the matter.

The official said, “Some of the foreign companies applying for permission to bring airplanes into the country are actually doing so in partnership with some local representatives who are submitting these applications on their behalf.

“The challenge now is some of these foreign companies may not be ready to de-register their planes and make them Nigerian-registered. If government insists, they may look for a leeway because a number of them are desperate to come in to enjoy the boom.”

Politicians had spent N2.52bn on charter flights within 10 weeks preceding the April 2011 elections, according to investigation by the PUNCH.

The politicians, it was learnt, used the charter flights to move from one campaign venue to the other as the April elections closed in.

Investigation by our correspondent also revealed that each of the four major indigenous charter jet operators, who conveyed politicians to various parts of the country for electioneering, made about $420,000 (N63m) every week.

Industry sources said each of the operators worked for about 70 hours a week with the fee for each hour fixed at about $6,000 (N900,000).

As at 2011, the four major indigenous charter jet operators in the country then were Kings Airlines, Wings Aviation, Top Brazz Aviation and Overland Airways.

However, findings showed that other airlines, including Associated Airlines, also engaged in charter services occasionally, while some non-aviation companies, which own private jets, rented them out to their politician-friends for charter services.

Currently, the charter aircraft operators in the country include Hanger8, Kings Airlines, Top Brazz Aviation, Wings Aviation, Overland Airways, Arik Air, Vistajet and Aero Contractors.

Further findings showed that Nigerians, notably public office holders and businessmen, spent about N29.7bn on charter flights in 2012.

Statistics from the Nigerian Civil Aviation Authority, Federal Airports Authority of Nigeria and Nigerian Airspace Management Agency, showed that the nation’s airports handled an average of 50 charter flights per day in 2012.

Charter flight operators said politicians, state governors and other clients paid an average of $7,000 per hour for each flight.

Charter airline operators at the Murtala Muhammed Airport, Lagos, said each of the charter flights took an average of one and a half hours; hence, the operators generated about $10,500 in revenue from each flight.

This means that eminent Nigerians who patronised the services of the operators spent about $525,000 (N81.38m) on charter flights each day in 2012.

Consequently, the Very Important Persons must have spent about $191.625m (N29.7bn) on charter flights in 2012 at $525,000 multiplied by 365 days.

The statistics for 2013 could not be obtained from the aviation authorities.

Lately, a number of private jet and charter aircraft terminals have sprung up across the country, aside the ones being built by the Federal Government through the remodelling project of the Minister of Aviation.

The growth in the purchase of private jet in Nigeria as well as the frequent use of charter aircraft have also led to the development of multi-million dollars private jet hangars, where repairs and maintenance could be done in the country.

Some of these are Execujets Nigeria Hangar, Caverton Hangar and EverGreen Hangar, all located at the Lagos airport.

The Managing Director of ED Aviation, Mr. Edward Young, however said about 70 per cent of the charter jet business in the country was still being done with foreign-registered planes.

Young, who noted that some aspects of the foreign operators’ business were questionable, however, said the recent crackdown by the government had reduced this considerably.

An industry expert and analyst, Captain Ken Wemambu, said a lot of foreign companies were applying to come into the nation’s charter jet sector because “it is very robust.”

He said the foreign companies seeking to come into the country would capitalise on certain clauses in the recent aviation reform law to enable them to get approval to operate in the country.

He said, “The private jet and charter jet sub-sector is booming. Already, we have close to 200 private aircraft in the country. Others will still come in. A lot of companies have also been applying to come into the country. If you compare this with the scheduled passenger sub-sector, there is a huge difference. Many private jets in Europe and North America have been parked because there is no business. Many people are no longer doing the charter flights in Europe and America. Since we are preparing for elections, most of them will want to come here to partake in the boom.”

Early this year, foreign private jet manufacturers had also taken interest in Nigeria’s private jet market.

Barely two months after Dassault Aviation, a French private jet manufacturer brought some of its latest business aircraft to Abuja and Lagos on a sales tour in January, Cessna Incorporation of United States arrived the country for a similar display.

The aircraft were brought into the country by a Cessna’s agent, Jetalliance, an Austria-based company, in conjunction with a Nigeria aviation company, Airfirst Limited.

Earlier, Bombardier Business Jets Incorporation of Canada also came to Lagos for a sales tour and static display of one of its latest jets, Global 6000.

The team was led by the Sales Director, Africa, Bombardier Business Aircraft, Mr. Robert Habjanic, who said Nigeria was the company’s largest market in Africa, with about 35 Bombardier-made private jets currently flying its airspace.

He noted the aircraft market had been growing tremendously in Nigeria in the last five years and attributed this to the fact that “Nigeria is an emerging market.”

Economic downturn in Europe and America has led to a sharp decline in the demand for private jets in the regions and luxury aircraft makers are looking at Africa, Asia and the Middle East, which are now the main markets for use of private jets.

According to industry analysts and players, Nigeria and China constitute two of the fastest growing private jet market in the world.

An industry expert, Mr. Olumide Ohunayo, said, “The economy is expanding, with increasing investments within the country and the region. This will invariably necessitate instantaneous travel that scheduled airlines cannot provide.

“Also, the privacy needed in a country filled with paparazzi can be an issue. Increasing political and religious issues are contributory.”

In May, the Federal Government introduced the National Civil Aviation Policy, 2013, which directed that all foreign-registered private jets should no longer be allowed to stay in the country beyond 15 days.

The policy, however, said foreign-registered private jets on special mission in Nigeria would be allowed to stay for only 60 days, following a special approval from the office of the minister.

Government has also hoped to cash in on the rise in the private jet market for more revenue. For instance, a few months ago, the government came up with a policy, asking foreign-registered planes to pay $4000 luxury tax, while Nigerian-registered were to pay $3000.

After serious of legal tussle between Airlines Operators of Nigeria and the NCAA, the Senate directed the government to suspend the fee.

Industry players believe the recent aviation law banning foreign-registered planes from carrying chartered business in Nigeria will affect the future of the business.

Currently, government has yet to say whether it will review the law or not.

But Wemambu said, “Whether the government reviews it or not, the foreign companies will still look for some clauses in the law and hide under it to come in.”

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