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TPM00229 - IMPACT OF PRIVATE PARTICIPATION IN AVIATION INDUSTRY IN NIGERIA


CHAPTER ONE

INTRODUCTION

1.1       Background to the study

            Air transport is the transportation of passengers and cargo by aircraft and helicopters. It is a transport system that involves the movement or carriage by air of persons or goods using airplanes and helicopters. It has become the primary means of common carrier traveling. Greatest efficiency and value are obtained when long distances are involvedand high value payloads are moved . Although the time and cost efficiencies obtained decreases as distance travelled is reduced. Air transport is often worthwhile even for relatively short distances.           Nigeria is classified as an emerging market and is rapidly approaching middle income status with its abundant supply of resources. The large size of the country as well as it population coupled with geographically diverse regions, difficult terrain, water bodies etc necessitates the use of efficient air transportation.

                Until the advent of military intervention in Nigeria’s politics, the country had a dynamic, virile and growing aviation in industry. At the time, there was enough traffic on both local and international routes to sustain the industry. Aviation business is reasonably profitable.

                However, the neglect past administration has left Nigeria with a weak and overburdened aviation sub-sector. Today, about 21 airports across the nation operate at below 40% operational capacity. The challenges facing the aviation industry in Nigeria are many, they range from regulatory requirements, adaptation to technological changes, to technical support and management.                                                                                                                        

                Today, the Nigeria aviation industry need improve funding and more investment in technologies give the sector the capacity to profitably meet the need for  fast  growing market  and fit into the aviation industry of the 21st century. The new vista of democratic experience inNigeria has created an investors haven.                                                                                                Private participation has several benefits such as reduce Government bureaucracy, reduce state  monopolies, reduce bad management, increase ability to diversify, increase in the quality of goods and services, reduce corruption and controlby government, increase staff quality and supervision, improve market analysis, free government fund for more pressing problems, create employment, reinvigorate the local economy, expand capital markets, redistribute wealth, improve technological transfer,  enhance  trade control regulation etc.

  • Statement of the problem                                                                    

                It is necessary to emphasize that the state of airlines activity in Nigeria today is a true reflection of our economy. Intermittent air crashes is one of the major problem affecting air transport services, this has led to dwindling confidence of passengers. The passengers will be afraid to travel by air and thus will eventually lead to low traffic volume.                                                                          

                Government policy on this sub-sector of the economy have been  largely inconsistent due to poor leadership and  instability in government.This has affected  the operations, functions,efficiency and productivity of the industry. It has as well lead to the demise of many airlines.                    Mismanagement of funds have over the years affected air transport industry. This problem has portrays Nigerians as bad managers who can not sustainably and profitably manage public corporations and thus had to join hands with foreigners. It has also led to the decay of facilities and has contributed to avoidable accidents.                                                                        Decaying facilities in our airports gives Nigeria a bad image and thus investors from abroad are unwilling to come and invest in the country. Lack of  maintenance also result to decay of facilities. Loose security and closure of airport for a long time affects the economy negatively. Furthermore, the system is continuously manipulating, feasting on and pushing the financial envelope of airlines by inflicting multiple taxes and  levies to the extent that airlines are groaning under pressure and some are bankrupt.

1.3        Research Questions

  • What are the factors influencing private sector participation in the Nigerian airline industry?
  • Is there any relationship between the level of private sector participation and provision of airline services in Nigeria?
  • What effect does private sector participation have on the Nigerian airline industry?
    • Objectives of the study

Objectives of this project are as follows

  • To examine the factors that influence private participation in aviation industry in Nigeria.
  • To determine the relationship between the level of private sector participation and provision of airline services in Nigeria.
  • To examine the effects of private participation in aviation industry on profitability.

      Research Hypothesis

  • Private participation in airlines activities in Nigeria will not remove stagnation in the country’s aviation industry.
    • Significance of the study

            Air transport has been progressively liberalized for the past 20 years, particularly since the deregulation in 1978 of the aviation industry in the United State of America. In fact, the seed of liberation was sown in 1944 with the signing of the International Air Service Transit Agreement that multilaterally liberalized exchange of over flight and technical landing i.e the first and second of the air that allow aircraft to fly over member airspace and land for technical reasons.

            Moreover, from ICAO data over eighty open skies bilateral agreement have been signed. In view of this, the Nigeria Civil Aviation policy has been revised in line with Global Air Transport Liberalization trend and with specific reference to the Yamoussoukro decision. These include the privatization programme of government, integrated transport network, insurance policy etc. The overall objective is to build an effective, efficient, customer focused, quality, technology and market driven air transport sub-sector.

            Therefore, there is need to critically appraise the trend and analyse the basis for private participation in Nigeria air transport activities in meeting the above objectives.

  • Scope of the study

            This project will examine the airline market situation and investment in Nigeria. The factors responsible for low investment in the aviation industry will be exposed. In addition, the contribution of private participation in the aviation sector to the economy will be revealed.       

  • Limitation of the study                    

            This research work encountered some constraints during the cause of gathering the properly documented and thus becomes difficult in getting relevant data due to lack of proper record keeping.

            The time available for the study were also constraints and thus limit the quantity of data collection. Another problem faced was financial constraint due to huge amount involved to get primary data.

Uncooperative attitude of the respondent in giving out information regarding their daily activities and the problem they faced. Some of the respondent believes the information is only acquire just for fun sake and that nothing will be done.

However, despite the above constraint and problems the necessary information was obtained to achieve the stated objectives.

  • Definitionofterms

Aviation: This involves the design, development, production, operation and use of aircrafts. Aviation is derived from the Latin word avis, meaning bird.

Over flight: The over flight canbe defined as an aircraftflight overaparticular area, especially overforeignterritory

Transportation: It is the  movement of humans, animals and goods from one location to another

Liberalization: In general, liberalization refers to relaxation government restrictions, usually in areas of social or economic policy.