Does Cross River State Really Need Cally Air?

By Tayo Ojuri

Among news currently making headlines in the Aviation sector is the recent move by the Cross-River State Government to launch a state-owned airline “Cally Air” in partnership with Dana Group. While this move is lauded as a step in the right direction towards boosting the state’s tourism, certain factors must be brought to light in the interest of sustainable development.

It is imperative to understand the rational and economics of airline operations and management prior to delving into the business just for the sole purpose of promoting tourism. Airline business in particular and aviation in general is a veritable engine room for any economy but this must be based on objective analysis of economic drivers such as  Cross River’s GDP, demography, disposable income of citizens, route analysis, economic drivers and other important business and technical justifications. It would be dishonest to embark on a project that would not be able to outlive the tenure of the present accommodation.

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According to Boeing, starting an airline is tough. Running a profitable airline is even tougher. From startup airlines to established industry leaders, the process involves constant learning and adaptation. Few businesses have as many variables and challenges as airlines. Airline business is highly capital-intensive. Competition is fierce. Airlines are fossil fuel dependent and often at the mercy of fuel price volatility. Operations are labour intensive and subject to government control and political influence. And a lot depends on the weather.

Cross River State government certainly does not have the capacity, resources, time and all withal required to grow and nurture the proposed Cally Air into successful airport operations as they have other front burner issues and government commitments such as provision of health care, infrastructural development, education, security to grapple with. Even the engagement of Dana Airlines as technical partners raises a big flag on issues of conflict of interest, choice of Dana and the expertise of Dana management team in successfully managing a commercially viable airline venture.

Airline operations are a heavily capital intensive investment, with thin profit margins, and typically require short-term and long term planning for present and future cash flows before entry. It is a high risk industry, where players frequently suffer fragile reputations capable of negatively impacting demand. Rather than investing scare resources into Cally Air, Cross River State government should provide a sustainable environment for tourism to blossom which will naturally attract visitors to these attractions using inter-modal means of transportation thereby expanding revenue sources for the state. If properly managed, this expected growth in Cross River’s tourism industry, will inadvertedly attract other established carriers with a larger fleet and lower cost per mile. Thus, we envisage a scenario where future profits will be out-competed by more experienced and recognized Carrier brands, threatening the sustainability of the state-owned aircraft.

Considering the seasonality of tourism demand, the annual cost of operating an aircraft will significantly exceed the seasonal demand for tourism activities, unless attention is given to develop an all-year round tourism plan for the state. Suffice this to say that the Government’s premise that providing transportation to a place will boost tourism, is analogous to putting the cart before the horse, for if the destination is properly developed, that will in itself catalyze the profit opportunities in transporting tourists to that location, the only exception being if the cost of transportation is made ridiculously low, such as to invite spending from even the minimum wage earner; and this is unsustainable given the high costs of operations for airlines.

It is interesting to note at this juncture that while the Federal Government is jettisoning its hold on airports because of insufficient funds, lack of adequate infrastructure and other inefficiencies coupled with the fact that full-fledged privately run airlines like Aero Contractors, First Nation, Arik and even Dana are gasping for breath. It would be expedient for Cross River State to invest the allocated funds meant for Cally Air on farming, as there would be multiple fold return on investment than what Cross River State would earn from any airline investment. As a corollary, Cross River State should develop the roads to the tourism sites, so that driving through the roads will be another tourism experience through establishment of site-seeing objects along the way. ‎In essence, once a tourist lands at Calabar Airport tourism starts!!!

Alternative Solution on building tourism

Since Cross River State government’s goal is to boost tourism in other to diversify internally generated revenue and showcase the state through cultural events, ambient locations, ecotourism, history, it would be more expedient and viable to embark on the development of tourism activities, which will have the dual-effect of boosting government spending in the state, and raising the value offering of tourism sites. In essence, efforts should be focused on the development of a sustainable Tourism plan that will encourage a growth in demand for tourism, and boost local spending in the state. Such efforts include and are not limited to:

–          Provide a safe, secure enduring environment with provision of security systems and measures for safety of tourists.

–          The development of ecological, cultural-historical and recreational tourist attractions.

–          Develop Cross River as a tourist attraction, highlight and promote the locations, events, festivals.

–          Promote a scent of place and Cross River hospitality for conferences, seminars and retreats through advertisement, apps etc

–          Engage tour operators and airlines to build traffic Development of tourism supporting services, such as boat rides, nature themed parks. Golf resorts, and relaxations spas in partnership with local businesses.

–          Development of tax incentives for tourism boosting local enterprises.

As Cross River State develops its tourism potentials, we should also embrace international best practices as highlighted by the World Travel and Tourism Council to promote responsible ‘tourism for tomorrow’. As we grow tourism, we should ensure the following:

  • Impacts natural and cultural environments in a positive way
  • Provides benefits to all sectors of society, including young people, women and indigenous peoples
  • Attracts and develops a skilled workforce to support growing demand
  • Stimulates consumer demand for sustainable products
  • Uses latest technology to find innovative solutions to future challenges

In conclusion, tourism is an increasingly vital part of Cross River State economy. Throughout the world, tourism brings money to cities and countries. Tourism also provides jobs for the local residents, further benefiting the destination. While Cross River State has realized the profits available from this sector we hope that aforementioned suggestions will go a long way in achieving the set goal of promoting tourism.

Ojuri, the Managing Director of Aglow Aviation Support Services wrote from Lagos.