By Patience Chat Moses
As the Nigerian aviation industry continues to grow, domestic airlines face increasing competition and pressure to stay profitable. While ticket sales remain the primary source of revenue, domestic airlines must think beyond traditional sales to remain competitive.
According to the Federal Airports Authority of Nigeria (FAAN), passenger traffic has gradually increased, but profitability remains a concern for many domestic carriers. The reliance on ticket sales, often priced competitively, creates narrow profit margins.
FAAN reports that domestic passenger traffic while recovering from pandemic lows, faces challenges related to infrastructure limitations and rising operational costs.
Fluctuations in the Naira’s exchange rate significantly impact fuel costs; a major expenditure for Nigerian airlines.
According to the International Air Transport Association (IATA), ancillary revenue, which includes non-ticket sources of income, accounted for 12% of global airline revenue in 2020. Airlines worldwide are adopting innovative strategies to diversify their revenue streams. Nigerian domestic airlines can tap into this trend by exploring alternative revenue sources.
Providing ancillary services to passengers can be adapted to engage substantial revenue. This includes; baggage fees like charges for oversized or excess baggage, seat selection fees can also be collected for offering premium seat selection, with options for extra legroom or preferred locations, which cater to passenger preferences and add value. In-flight services like in-flight entertainment, Wi-Fi access, and premium food and beverage options can provide a significant revenue boost.
Maintenance, Repair, and Overhaul (MRO) Services is another revenue strategy. Aero Contractors, Nigeria’s oldest domestic line has adopted this strategy. It is the first Airline in Nigeria to get certification to perform heavy checks on Boeing 737 aircraft with maintenance activities across African countries like Ghana, Congo etc. Establishing or expanding in-house MRO capabilities that can serve both the airline’s fleet and provide services to other airlines in the region is a huge source of revenue aside from sales of tickets. Investing in specialized MRO facilities can attract international clients and generate foreign exchange. This reduces the need to send aircraft overseas for maintenance, saving costs and time.
Creating training academies for pilots, cabin crew, and ground staff in the form of aviation training and education can generate revenue and contribute to the development of the aviation industry. Offering specialized training programs for aviation professionals in the region can attract international students.
Additionally, partnering with brands to display advertisements on in-flight screens can generate significant revenue.
Also, leveraging existing aircraft capacity for cargo transportation, especially for time-sensitive goods, can generate consistent revenue. Developing partnerships with e-commerce platforms and logistics companies can create new opportunities for cargo delivery. Developing a strong cargo network, and utilizing the nighttime hours, when passenger flights are less frequent, can increase asset utilization.
Dana Air, a Nigerian domestic airline, has successfully diversified its revenue streams by offering ancillary services, such as in-flight meals and extra legroom. The airline has also partnered with local hotels and resorts to offer package deals and promotions. According to the airline’s CEO, Jacky Hathiramani, “Diversifying our revenue streams has helped us stay competitive in the Nigerian aviation market. We’re committed to continuing to innovate and find new ways to drive revenue.”
Implementing loyalty programs that reward frequent flyers can encourage customer loyalty and retention. Airlines can partner with local businesses to offer exclusive discounts and promotions to loyalty program members.
Nigerian domestic airlines must think beyond traditional ticket sales to remain competitive. By diversifying their revenue streams and leveraging technology, airlines can increase revenue, improve customer satisfaction, and stay ahead in the competitive aviation industry. As the Nigerian aviation market continues to grow, airlines that innovate and adapt will be best positioned for success.