AS other countries witnessed their general aviation sectors shrink during the economic downturn, Nigeria’s has thrived.
According to experts, the industry is expected to grow by 3.5 per cent this year. This follows a 2.5 per cent increase year over year in 2012 and a 2.5 per cent increase in 2011.
This growth has come from all sectors of the general aviation industry especially from business aviation, according to experts who spoke at the Nigeria Business Aviation Conference, with theme, “The Emerging Market In Business Aviation”, held in Lagos on Tuesday.
Business aviation is a specialised form of aviation catering for business travel, charter services and private jets ownership.
Meanwhile, the total private jets in Nigeria has been valued at $3.75 billion, just as stakeholders put the total entire private jets in the country at 150.
On the average, each jet costs $25 million, which carries both local and international registrations.
The total number of private jets in the country has made Nigeria the continent’s largest market of private jets.
Across the nation’s airports and private hangars are state-of-the-art Gulfstream (300. 450, 550, 650); Bombardier Challenger (604, 605) Global Express; Embraer Legacy; Dassault Falcon; and Hawker Siddeley (125 – 800, 900XP), with supply countries such as the United States, Canada, Brazil and South Africa.
Acquisition cost goes from $10 million to $65 million; excluding other associated costs like registration and legal; remuneration of pilot and crew; fueling and maintenance; insurance, landing, parking and overflying.
Depending on the jet usage and size, the associated costs can be $250,000 to $1,000,000 per year, according to experts, just as 70 per cent of jet purchases are made with cash according to industry sources.
South Africa is, unsurprisingly, the business aviation leader in the region, but that is not to say there aren’t other contenders moving up in the ranks. Data shows that Nigeria and Ghana are quickly emerging as the second and third strongest markets in the region.
Nigeria and South Africa are the two largest economies in Africa. With over 160 million people, Nigeria is the biggest market for private jet operators and other investments, after South Africa .
The country is home to close to 150 corporate aircraft, a number which is expected to rise as Nigeria’s economy continues to flourish.
It’s no secret that sub-Saharan Africa is one of the next big growth markets for business aviation. With an emerging class of high net worth individuals (HNWI) and growing political stability it’s no wonder that companies around the world are looking at the region as a budding business aviation hotspot.
Bolstered by poor ground transportation infrastructure and a lack of commercial airline connections, business aviation has found a welcoming home in Nigeria.
However, even private aviation has problems to overcome before business can really flourish.
Among the largest issues facing operators in sub-Saharan Africa today are the lack of an established regulatory environment leading to a variation of regulations from country to country, poor infrastructure, a lack of maintenance facilities and safety requirements, and a general shortage of experienced aviation personnel.
Within the region, South Africa is by far the strongest business aviation market, accounting for 18 per cent in the region.
The growing markets of Nigeria and Ghana, however, are beginning to make an impact with the former accounting for nine per cent of regional searches and the latter accounting for eight per cent.
For this sector to continue to thrive, the banks would need to play crucial roles. But how much role have the banks played to ensure that the business thrives? Their supports have been enormous.
It is ironical that while these finance houses shied away from supporting general aviation, this newfound business is receiving huge financial backing because of the low risks involved.
The description of aviation in Nigeria as high-risk industry has negatively hampered financing of aircraft by local banks.
While in the U.S., Europe, Middle East and some parts of South America, financial institutions are willing and ready to finance aircraft acquisition.
It is also the reason airlines like Emirates, British Airways, Air France, Ethiopian Airways, KLM and many other strong carriers can make over 30 aircraft orders in one fell swoop.
In these climes, interests on loans are single digit based, repaid over a long period of time, mostly between 10 and 20 years.
The reverse is the case in Nigeria where interest rates range between 25 and 34 per cent with short term repayable arrangement.
Also, because of the classification as a high risk nation in aviation, insurance premiums are very high for aircraft operated in Nigeria.
The Managing Director of Guarantee Trust Bank, Mr. Segun Agbaje, in his presentation at the forum, which brought together aircraft manufacturers like Embraer, Bombardier, Dassault Falcon, Gulfstream, aviation service providers among others, disclosed that the global private jet industry had experienced a resurgence since the downturn in the market between 2008 and 2009 occasioned by the global financial crisis.
His words: “About 150 private jets currently operating/owned in Nigeria; at an average cost of $25 million per aircraft, the market size is estimated at about $3.75 billion, making it Africa’s largest private jet market.
“Market grew 650 per cent from 20 jets in 2007 to 150 jets in 2012, making it one of the fastest growing private jet markets in the world with foreign and locally registered aircraft (though predominantly foreign). Current private jet owners include HNIs, operating companies, special purpose vehicles, clergymen, government, and charter operators”.