Aviation Expert Lists Reasons Airlines Fail
Poor business model, absence of proper planning and lack of financial discipline are among the factors responsible for the frequent collapse of Nigerian airlines, an aviation
expert, who has 40 years experience, Mr. Fola Akinkuotun, has said.
Statistics have shown that an average life span of Nigerian airlines is eight years, which is lower than that of airlines operating in other parts of Africa and the world.
But Akinkuotun, who was a former Head of flight operations, Air Nigeria and currently the Rector of the International Aviation College, Ilorin,Kwara State, told THISDAY that Nigerian airlines lack properly articulated business plan and are unable to wait for a long time to make profit, hence many of them often collapse.
Besides the Nigeria Airways Limited, which was liquidated by the Federal Government in 2003, there have been many airlines that started but collapsed after a short period of operations. The airlines include: Bellview, EAS Airlines, Afrijet, ADC, Sosoliso, Okada Air .
Explaining the reasons for the collapse of some of these airlines, Akinkuotun said: “My immediate outlook is that for you to succeed in the business you must have a model. You must properly articulated business plans. Then you have to ask yourself, do I understand this business? I think that some of the reasons we have not been successful in running airlines are because we have notx done proper planning. We do not know the business and our business models may not be right. And what I consider key is that we do not have fiscal or financial discipline.”
He noted that entrepreneurs who go into the airline business are usually impatient to recoup their investment and make profits, stressing that for an investor to make profit in the business he has to wait for a long time and also should not see the huge cash inflow as robust financial situation for the airline.
“The airline industry is not that of immediate profit, but it is a cash cow. This is a business where the last airline I worked for was making N3 billion every month. But how much of the N3 billion is profit? Extremely little, if any. So if we understand that the money is not ours to take, then we should understand that there should be financial discipline. Yes, a great level of discipline and creditability,” he said.
The rector added that that the problems sometimes, also, is that when a Nigerian airline leases an airplane the airline management does not recognise the fact that money would be expended on fuel, spares and these are bought on credit and for spares, in foreign exchange, and therefore does not earmark funds to offset these debts.
“So when the requests for the payment of these debts come, the airline may not be financially disposed to offset the debts and that begins its collapse,” he said.
Akinkuotun said airline owners get the wrong perception that the airline is making profit just because it is making cash from selling tickets.