Shadrach Swante Kambai
The strategy your business uses to generate revenue is called a business model. It explains how you provide your clients with value at a reasonable price. It also describes your target market, the goods or services you intend to sell, and any charges that may be necessary (Parsons, 2019). Every business environment has its strengths, weaknesses, opportunities, and threats, but by carefully analyzing and comprehending the political, economic, social, technological, legal, and environmental variables, it is possible to design the ideal business model that will guarantee sustainable profits.
There is no denying that the Nigerian aviation sector has advanced significantly in terms of the number of active airlines, the growth of operational routes, safety, and many other areas. However, questions about efficiency and profitability remain, and this is not far from the obvious fact that the business model employed by Nigerian airlines does not suit the sector’s unique challenges.
Review of Challenges in Nigeria’s Aviation Industry
The current difficulties that airline management in Nigeria is facing are neither improbable nor unique to Nigeria. If you’ve been in the business long enough, you’ll concur with me that the majority of them occur every year, and no airline owner has the moral right to deny knowledge of the problem.
However, the questions begging for answers are,
- what happened to the chief operating officers, director of operations, and operations managers, are they unaware that these challenges are going to resurface again? and if they were aware,
- What efforts did they make to mitigate it?
- Do they have the right support from management to execute the business model?
- Is the business model fit for the business environment?
- Is the business model flexible enough to curb the changing problems in the industry?
- Are they taking advantage of technology like data analytics to enhance their operations?
- Is the management just deliberately unwilling to review the business model or they are unaware of how much the wrong business model will affect their performance?
Although changing the business model will surely have an effect on human resources, the proper business model needs the right employees with the appropriate skills, enthusiasm, and commitment to execute it. Consequently, corporate laxity rather than the difficulty of the Nigerian market might be blamed for the management’s unwillingness to modify its model to meet the market.
The Regulatory Authority and Airline Management
With all due respect to the efforts of the NCAA’s current leadership in achieving this level of growth in the industry, such commendable efforts should be encouraged if this growth is to be sustainable. In this article, I will discuss how regulatory agencies can assist airlines in adopting operating business models that can address the industry’s well-known issues.
In accordance with the civil aviation act 2006 part I, “ The minister shall be charged with the responsibility for the formulation of policies and strategies for the promotion and encouragement of civil aviation in Nigeria and the fostering of sound economic policies that assure the provision of efficient and safe services by air carriers and other allied service providers as well as greater access to air transport in a sustainable manner and to assist with ensuring that Nigeria’s obligations under international agreements are implemented and adhered to.”
Additionally, part IX subsection 2(h) conferred the powers on NCAA to make regulations: generally, for securing safety, efficiency, and regularity of air navigation and the safety of aircraft and of persons and property carried in aircraft, and for preventing aircraft from endangering other persons and property”
According to the quotes above, regulatory authorities and all stakeholders have a responsibility to review the current policies governing the sector or ensure full implementation of the existing ones in order to promote efficiency, safety, and profitability in a sustainable manner because, according to the records, the current operating business model is not sustainable couple with the increasing prices of Jet A1. It is every airline’s corporate responsibility to find solutions to their problems rather than giving excuses or transferring all cost to passengers.
As the call for aviation industry policy review is on the way, I believe it is time for regulatory authorities to include clauses and phrases that will compel airlines to design business models that will provide solutions to the industry’s existing challenges, just as during the process of obtaining the AOC or recertification, airlines demonstrate to the authorities how they plan to ensure safe and efficient operations by submitting contract agreements with AMOs, ground handling companies, and so on but nobody scrutinizes their business model to confirm its suitability to the market.
1. Authorities should scrutinize airlines’ business models prior to awarding AOCs or recertification to ensure the business model has the capacity to guarantee safety, compliance, efficiency, and profitability in terms of how they plan to deal with the industry’s current and future challenges.
2. Before issuing or renewing an AOC, an aviation fuel contract agreement with a fuel marketer should be made mandatory. This means that airlines must prove to regulatory authorities their ability to guarantee fuel availability for operations, either by displaying evidence of contract papers indicating all parties’ consent to ensure a smooth supply of Jet A1 for at least the next three months.
3. Airline’s capacity to procure aviation fuel or guarantee continuous supply should now become a criterion for approving flight schedules because there is no need to allow an airline to sell tickets when it doesn’t have the fuel capacity or the aircraft to operate the flight according to the schedule.
4. Airline owners and investors should demand their director of operations, and chief operating officers develop operational plans that can mitigate the impact of the aviation fuel crisis in the future and adopt upfront payment for fuel according to their flight schedule to avoid service disruptions.
5. Airlines should make use of their data to analyze patterns that can threaten the safety, efficiency, and profitability of their operations and use them for making decisions.
I am confident that if some of the above recommendations are seriously considered by Nigerian airlines and regulators, operations growth, efficiency, safety, and profitability will be sustainable.
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Parsons, N. (2019, April 18). What Is a Business Model? Business Models Explained – Bplans Blog. Bplans Blog. https://articles.bplans.com/what-is-a-business-model-business-models-explained/