05 August 09

VIRGIN NIGERIA CEO RAISES HOPE FOR AIRLINES SURVIVAL

Lagos Nigeria, 5th August 2009: Chief Executive Officer of Virgin Nigeria, Captain Dapo Olumide has said that a strong beacon of hope lies ahead in the survivalibility of Nigerian Airlines, cautioning however that flexibility to business approach remains the key to staying afloat.

Speaking at the breakfast club of the Lagos Business School in Victoria Island, Lagos yesterday, Captain Olumide said there would be the need to match Nigeria’s growing demand in passenger traffic with a fast track on infrastructural improvements for the industry.

At the lecture titled “Challenges of the Global and local Aviation Industry”, Olumide noted that efforts to concession parts of the four major Airports and Airport Infrastructures by the Federal Government would ultimately help to drive the process of restoring confidence in the Aviation Industry.

Captain Olumide while x-raying the Domestic Aviation Sector noted that lack of access to long term capital still remained the bane of Civil Aviation practice in Nigeria.

“Access to long term funds and the gestation period in repayment has made borrowing very expensive and prohibiting this in turn has translated to high cost of doing business for locally based airlines” he said.

He listed increasing costs in terms of passenger taxes at airports, excess capacity on domestic route, appropriate training, weak corporate governance structures, non compliance to global IT trends, administrative and policy changes as challenges the Aviation Sector in Nigeria would have to scale before swimming in robust profitability.

But for now, Capt Olumide noted that the grim outlook of World Aviation may not neccessarily be ascribed as national crisis. “The outlook is not a crisis for global airlines, it is crisis for individual nation’s economic growth”,he said.

On the Global scene, the Virgin Nigeria boss said with the prediction of the International Air Transport Association (IATA) of a huge loss of $9 billion, African Airlines had so far lost $600 million, Europe lost $1 billion while Asia with $1.7billion are the hardest hit with a net loss of $2.7 billion.

‘’ World Aviation industry revenues are expected to fall a further 12% this year, reflecting a rapid deterioration of Global Aviation economic conditions with an expected global passenger traffic falling further with 3 percent.’’ he said.

He listed sharp decline in passenger and freight volume, unfavourable fuel prices and hedging, swine flu impact on travel in Latin and North America, the global economic downturn (Recession in major economies as agents bedeviling Airline businesses globally.

While noting that Africa was still heavily regulated, Capt. Olumide explained that the open skies has increased capacity and competition which in turn had also lead to market saturation and consolidation of legacy carriers.