QUARTERLY · No 2 · AUGUST 2012

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Financial Derivatives Company Limited. Tel: 01-7739889 . Website: www.fdcng.com

Copyright © 2012 by Financial Derivatives Company Ltd

Publisher Financial Derivatives Company Limited

Production Coordinator Areade Dare

Editors Kathryn Stoneman Thessa Brongers-Bagu Cossana Preston

Editorial Committee Mrs. Adefunke Adeyemi Capt. Adedapo Olumide Ms. Lola Adefope Mr. Dennis Eboremie

Acknowledgments Damilola Akinbami Ayo Adesina

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Financial Derivatives Company Limited. Tel: 01-7739889 . Website: www.fdcng.com iPhone Wallpapers Front Cover images – Shutterstock, VectorsGraphic Dear Readers,

Hello and welcome to the 2nd quarterly edition of Travelnomiks, the magazine for tourists, business travelers and aviation industry professionals.

August has been a busy and exciting month worldwide, with the London Olympics dominating headlines. However, as the Olympics have now officially concluded and with Nigerian athletes returning home it is possible that we may now begin to wonder what the point of it all was; and, perhaps why we have all spent so many hours glued to our televisions! However, it is more important to recognize the overall message of the Olympics than to analyze ’s performance. As, the games are not just a celebration of sporting prowess, they are also an opportunity for the world to come together and to interact. They may also be the greatest visual manifestation of globalization.

This visual manifestation is most poignantly expressed in the opening and closing ceremonies when the athletes assemble with their respective flags. During these events the athletes come together to celebrate both their triumphs and losses, and they are bound together through their participation. However, this feeling is not one that is exclusive to the athletes. Across Britain, and around the world, the Olympics have heralded a sense of unity; as all of us, not just the athletes, have been bound together through our participation in these games; the result of both our national and global citizenship.

It is this bond that elicits an unintentional but foreseeable effect of the Olympic Games, the will or need to travel. Not only did spectators and athletes from around the world converge on London over the past two weeks but, the lasting effect of the games is expected to be an influx of tourism to the city. The Olympics therefore also represent a reason or purpose for travel. It is an example of what can motivate someone to board a plane, and in the first half of this edition we will examine a variety of other such reasons, a discussion replete with our usual helpful tips and suggestions (from how to select your air fare to understanding luggage fees). In the second half of this publication we will offer an industry update, examining key developments in Nigeria’s aviation sector.

We at Financial Derivatives Company (FDC) are all exceedingly proud of the success of the first edition and we hope that this second edition will build on that success. However, while appreciating the success of the first edition, we have never been a company to rest on our laurels; therefore within this edition we have sought to improve the publication, whilst responding to your comments and suggestions. You may have already noticed that the cover has been changed, one of several improvements to the publication. We have also upgraded our graphics, with the inclusion of original photography; and, we have increased the scope of information, while actually condensing the breadth of the publication. You will now find a broader range of travel-related information within these pages as we explore topics ranging from wedding destinations to the consolidation of the Nigerian aviation sector. We hope that you will view this edition as a welcome improvement on its predecessor; and, as always, we look forward to your feedback so we can continue bringing the best of travel to Nigeria.

Please enjoy this 2nd edition of Travelnomiks and thank you for taking the time to read it.

Sincerely,

Bismarck Rewane

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Financial Derivatives Company Limited. Tel: 01-7739889 . Website: www.fdcng.com

Table of Contents What’s New Deals and Steals – Naira Stretcher 4 Industry Shakeout The situation at continues to worsen Are You Being Ripped Off? 7 as the domestic carrier recently got suspended from the IATA clearing house. The The Cloud 9 Hotel 8 crash has reignited concerns about the level of safety in the Nigerian Aviation sector. In addition the Airline Operators of Nigeria (AON) A Night At Nigeria House 11 have called for the federal government to lessen the importation costs on aircraft spare parts An Exotic Wedding Destination 13 imported into the country.

Why One-Way Fares Are Expensive 17 Shifting Competitive Space Gulf carriers including Emirates, Etihad, Turkish Ecuadorian Experience 18 Airlines and Qatar Airways continue to expand their route networks in Sub-Saharan Africa Aviation Sector Update 21 (SSA). As a result, European carriers are making adjustments to their SSA networks. In addition, security concerns stemming from the activities Nigeria: Safety In the Skies 24 of terrorist sect “Boko Haram” has caused international carriers KLM and Delta Airlines to Time to Consolidate 25 suspend service to the Nnamdi Azikwe Airport in . In the West African region EasyJet Aircraft Financing: The Rise of Leasing 26 founder, Sir Stelios Haji-Ioannou has teamed up with conglomerate Lorno to introduce the low Baggage Fees 27 cost carrier “FastJet” in late Q3 2012.

Image courtesy of Airbus

3 | P a g e Financial Derivatives Company Limited Deals and Steals – Naira Stretcher Summer is traditionally known as a period for number of stopovers. You can be sure to find a exorbitant airfares, as discount airline tickets are great deal on airfares this summer. With the usually hard to come by; much to the disdain of entrance of international carriers into the Nigerian vacationers and budget travelers. Nonetheless market like Etihad Airlines, the quantity of flight there are good deals out there. If travelers look deals for budget travelers continues to increase. hard enough they can get a steal on those summer One destination that continues to grow in airfares. For instance, you can fly to Beijing (China) popularity is Dubai. A Economy class fare to Dubai from for N182,502 at a distance over costs N238,787. However, a passenger can save 11,753km; which is more than twice the flight 46% on their ticket costs by flying Ethiopian distance between Lagos-London. This is just one Airlines; 38% with Qatar Airways and 31% with example of the many deals to be had this summer. new entrant Etihad Airlines. Although Etihad flies to Abu Dhabi, it’s a thirty minute bus ride to Dubai. The trick is to be willing to plan ahead and be flexible on travels dates, flight duration as well as Other deals can be seen below.

LAGOS TO DUBAI (ROUND TRIP) Standard Fare ~ N238,787 Aug 19 – 31

Addis Ababa (< 2hrs) No Transit Visa Required 1 stopover N128,643

Doha (< 3hrs) No Transit Visa Required 1 stopover N148,000

30 min bus ride from Abu Dhabi to No Transit Visa Required Dubai Airport N163,710

LAGOS TO LONDON (ROUND TRIP) Standard Fare ~N175,840 Oct 19 – 31

Amsterdam (< 3hrs) 1 stopover Transit Visa Required N140,802

Direct flight No Transit Visa Required N175,480

Direct flight No Transit Visa Required N160,688

Source: FDC Research All standard fares are direct flights

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LAGOS TO NEW YORK (ROUND TRIP) Standard Fare ~ N526,653 Aug 19 – 31

Doha (< 8hrs) No Transit Visa Required 1 stopover N220,600

Istanbul (< 12hrs) No Transit Visa Required 1 stopover N385,518 ,688

Amsterdam (< 7hrs) Transit Visa Required 1 stopover N475,453

LAGOS TO ATLANTA (ROUND TRIP) Standard Fare ~N325,910 Sept 19 – 30

Frankfurt (< 6hrs) 1 stopover Transit Visa Required N288,812

Rome (< 4hrs) 1 stopover Transit Visa Required N289,000

Frankfurt (< 6hrs) 1 stopover Transit Visa Required N290,602

LAGOS TO HOUSTON (ROUND TRIP) Standard Fare ~ N634,294 Aug 19 – 31

Doha (< 9hrs) No Transit Visa Required 1 stopover N262,810

Frankfurt (<4hrs) Transit Visa Required 1 stopover N284,900

Amsterdam (< 6hrs) Transit Visa Required 1 stopover N294,100

Source: FDC Research All standard fares are direct flights

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6 | P a g e Financial Derivatives Company Limited Are You Being Ripped-Off? BY AREADE DARE airfares are priced and to do so one must understand the market dynamics that influence their pricing. 1. Amount of competition flying that route The number of major airlines operating a specific route influences airfares; and, the more carriers flying the route, the lower the airfare. Therefore, a route operated by few You’ve probably asked yourself why airfares for carriers tends to be more expensive. certain routes are always pricey. Why some routes 2. Types of passengers cost more than their longer counterparts; or why a Routes that feature many business travelers flight from Lagos to London is more expensive than tend to be priced higher, as business travelers one from to London? At times it may seem are less price sensitive. Additionally, airlines like airlines randomly set airfares, but rest assured may hike up the prices at the last minute. This they do not- and this article seeks to dispel the is because business travelers, who book their mystery behind the perceived madness. flights closer to their travel date, are willing to According to the Centre for Aviation, an October pay the cost necessary to clenching that deal 20121 Accra to London Business Class round trip or making that important meeting. On the ticket roughly costs N428,000 while a Lagos to other hand, if the route is patronized mostly London equivalent costs N526,000. This is a sizable by budget flyers, the airline charges lower difference in price of N98,000, despite the fact prices in order to maximize their capacity for that both flights are approximately the same flight the flight. distance. The truth is airfares have had little to do 3. Competition from low cost carriers with the distance being traveled for quite some The presence of low fare competition from low time. If distance determined airfares than short cost carriers on a route serves to drive airfares distance flights would never be more expensive down. As, these carriers influence the market than long distance flights. However, the fact is and force the larger airlines to match their every airline is attempting to maximize revenue on prices. Unfortunately, in Nigeria the presence every flight they operate. It’s a question of: “How of low cost carriers is currently negligible. much can I charge a passenger for this seat?” 4. Operating costs The pricing process for an airline ticket is complex, Fuel and labor costs also affect the pricing of and imbued with very little logic. As a result, it is airline tickets. In 2011, fuel costs alone virtually impossible to find the “cheapest” fare accounted for 40% of the operational costs of from point A to point B. In the 90s a group of MIT Nigerian airlines; and, labor costs were not too graduate students attempted to develop a solution far behind. Therefore, higher costs translate to to find the cheapest fare. A decade later they higher fares. concluded that it was “unsolvable”; and, here Through a process called “yield management”, we’re talking about the same individuals who airlines use the market dynamics listed above, in ended up using this same research to develop low addition to others, to determine how many tickets fare search engines for Orbitz, Kayak and they sell and at what price points. They also use numerous international airlines. In fact their computer programs to determine pricing, which company “ITA Software” was acquired in 2010 by are designed specifically to determine how many Google for US$676 million and rebranded as travelers will pay higher airfares, how many will “Google Flights”. Hence, for now we can regard actually show up and what the best time to raise “finding the cheapest airfare” as a pipe dream. airfares is. These programs charge what they However, it is still important to understand how perceive the market will accept; sometimes simply charging you a higher airfare on the off chance 1 From a sample of fares viewed in May 2012 from Virgin Atlantic. that you might just buy it.

7 | P a g e Financial Derivatives Company Limited The Cloud 9 Hotel BY AREADE DARE Seat layout: BLUE: First Class PURPLE/YELLOW: Business Class GREEN:Economy Class

Image courtesy of http://www.seatplans.com The Airbus A380 is somewhat of an engineering Communication and Entertainment) system and marvel amongst its peers, being the largest enjoy top of the line seats. commercial aircraft ever built with an all-economy The upper deck of the EA380 is dedicated entirely passenger capacity of 853. Moreover, the Airbus to premium class passengers. The deck includes A380 is also impressively, 50% wider than a Boeing fourteen seats for first class passengers and 747, the second largest wide-body aircraft. seventy-six seats for business class passengers. The Airbus A380’s expanded size has afforded airlines from Asia to the Middle East (e.g. Singapore Airlines & Emirates) the ability to enhance the level of comfort that they can provide to their premium and economy class passengers onboard. These airlines have also been able to configure the cabins of the A380 differently to reflect their own style. An excellent example of how the A380 can be modified to reflect an airline’s personality is Emirates Airlines take on the Airbus A380, dubbed the “Emirates A380” (EA380). Image courtesy of http://yesterdayssalad.files.wordpress.co The EA380 is split into two levels: the upper and m main deck. Soundproof cabins and mood lighting The fourteen first class passengers on the upper features; to ensure a pleasant flight characterize deck each enjoy their own private cabin; which each deck. In a bid to provide a peaceful journey features a comfy leather seat that can be the EA380 cabin also includes sound-absorbing converted into a spacious flat standalone bed. The curtains, which partition off the cabin, and sound- cabins are also equipped with an electrically absorbing carpet, to diminish footstep noise. The operated door, reading lights, a work desk with a EA380 also boasts a leather banquette seat in the built-in illuminated mirror, an electrically changing area. controlled mini-bar and a room service feature. Also within the cabin is a 16:9 wide screen LCD The main deck of the EA380 has 435 seats for that is connected to the Emirates ICE system. First economy class passengers. Each row has four class passengers can also utilize the Emirates middle seats that are flanked on each side by three communication program to send e-mails, text additional seats. Economy class passengers have messages or make phone calls to anywhere in the access to the Emirates ICE (Information, world. However, the real standout first class feature is the luxurious shower spas (the on-board

8 | P a g e Financial Derivatives Company Limited bathroom facilities). Each first class private suite is rejoice that the feature has made its return in the equipped with these lavish bathrooms comprising EA380 (and the Airbus A380 generally). of wide vertical mirrors, a five-star hotel-style The EA380 upper deck lounge space features two vanity area, separate wash, changing and toilet bar areas. Each bar is stocked with premium areas and a full-length mirror. Furthermore, branded liquors and spirits and a selection of hot Emirates provide first class passengers with and cold canapés and snacks. Premium passengers toiletries that include perfumes by Bvlgari and can kick back, relax on the lounge sofas, and shampoo by Timeless Spa. unwind with any one of the drinks on offer. It is important to note that only first class passengers have the use of the fully stocked bar, situated at the front of the upper deck. However, at the rear of the upper deck business class passengers have access to another fully stocked bar where their first class colleagues can join them.

Image courtesy of http://realitypod.com

Unfortunately, business class travelers will not be able to enjoy the private cabins or shower spas, as they are exclusively for first class passengers. However, business travelers can enjoy an electronically adjustable sleeper seat that can also be modified into a flat bed; and, passengers will be Image courtesy of able to tailor the flat-bed seats to their preferred http://www.smh.com.au level of comfort. Additionally, the seats contain a control panel that adjusts the electronic privacy Unfortunately, the airport infrastructure in Nigeria divider and the video monitor. Business class has not been upgraded to receive a jumbo jet like travelers also have access to a large-screen the Emirates A380. Therefore flights originating personal entertainment system, a personal storage from Lagos will be unable to enjoy the luxury and area and a built-in mini-bar in their seat. comfort of this aircraft. On the other hand passenger flights originating from cities like Dubai and London can key into the EA380 experience. Therefore when next you fly, your travel agent can book a reservation on the EA380 on the secondary legs of your flight. The Airbus A380 is a luxurious example of comfort in the sky. From the top of the range seats, to the private cabins, to the open bar spaces, the

Image courtesy of aircraft‘s offerings are truly awe inspiring. Whether http://hotel-pictures.net it’s worth the price is another question; however, what is undeniable is that the Emirates’ A380 In addition to the seating features that premium offering is enticing. So indulge in the five-star hotel passengers enjoy, the upper deck of the EA380 on wings and take a trip on Cloud 9. features several lounges (a concept similar to the upper deck lounge of older Boeing 747 models). However, the past economic hardships in the airline industry forced those airlines to convert their 747s’ lounge space into passenger seats for additional revenue; passengers can therefore

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10 | P a g e Financial Derivatives Company Limited A Night At Nigeria House BY KATHRYN STONEMAN

The Theatre Royal in Stratford East may now didn’t intend to take the stage until 9pm. It was as officially be considered the offshore home of though London time keeping had crumbled when Nigerian culture, well at least until August 12th faced with a group of Nigerians truly enjoying when its typical fare of British based theatre themselves; this had to be one of the nicest things returns. Until then, however, for Nigerians visiting about the night and of course that absolutely London for the Olympics, Nigerian athletes and nobody minded. Everyone was simply enjoying the Nigerians living in London Nigeria House may be brief (and likely fleeting) sight of sun in London, the closest thing to being at home. the good company, the good food and the music. Shortly after, I was chatting with a Nigerian, who On the 24th of July I made my way over to assess had never been to Nigeria, at the bar. I mentioned this little taste of Nigeria for myself and to watch that I would be writing an article on the event and Bez, Keziah Jones and King Sunny Ade perform. I he implored me not to mention the starting time, made the journey by tube and I will admit that not believing it was some sort of damning indictment. having the option of taking an “okada” did slightly A pity I thought as the night had obviously failed to dampen the ‘authenticity’ of the experience. rekindle, or awaken, the importance of “no However, what London lacks in vehicular transport wahala” in them. options it does make up for in rush hour tube traffic; and, the pungent heat of the 5 o’clock Then the ushers informed us that it was time journey did go some ways to recreating the sense everybody trouped in for what turned out to be, of traffic in Lagos for me. Sometime later, after a undoubtedly, the best concert I have ever had the short amble from Stratford station and after pleasure of attending. Bez, Keziah Jones and King making my way through the small collection of Sunny Ade were a true, and fantastic, stalls selling Nigerian products outside, I was there; representation of three generations of Nigerian and, I become one of the many visitors, who since music. the 20th of July, have been able to experience Nigerian films, plays, poetry, music and products at the venue. I have to admit I made a rookie error off the bat, perhaps proving that as a Canadian I never truly fit in Lagos- nor did I in this London- Lagos hybrid. My error was that I didn’t just show up on time- I showed up early. However, this decision did allow me 45 minutes in the bar prior to show time; which, I have to say between the jolloff rice, the Star beer and the sounds of Wiz Kid were thoroughly enjoyed. It did truly feel like I was back in Nigeria; although, admittedly the bar did lack Bez took the stage first and was immediately a hit the reassuring hum of a generator. However, with the younger generation. A few minutes later perhaps the greatest indicator that I was truly in a and the young be speckled crooner was a hit with London suburb of Nigeria came when chatting to the entire auditorium. Mixing Jazz, Soul and R&R one of the performers who informed me that they seamlessly, it is unsurprising that his debut album

11 | P a g e Financial Derivatives Company Limited ‘Super Son’ has been met with critical acclaim with the BBC World describing him as the ‘next big talent out of Nigeria’. The Boston Globe listed Super Sun as one of the top international albums of 2012 and (perhaps most impressively) he recently became the first African artist to debut a song on BET’s popular 106 & Park. Light, catchy and iconic Bez’s success is likely to spread.

It’s hard to believe that Sunny Ade is in his 60s. It was like he encapsulated the energy and buzz of Lagos and unleashed it on his audience one step at a time. It was truly something that has to be seen. However, at the end of his set the night was done. The bar had stopped serving at the ever so sensibly British hour of 11pm and the crowds were dissipating. It may only have been one night, luckily one night of many at the Stratford Theatre. I Next up was Keziah Jones, born Olufemi Sanyaolu. hope that for those who once lived in Nigeria it Jones strolled on stage with the swagger of a rock also gave them a reminder of home; and, that for star and within seconds had the entire audience in those (like the Ukrainian I met in the bar who had the palm of his hands as he strummed the Nigerian simply wandered in off the street) it will leave national anthem on his guitar. His is however a them with an image of Nigeria that is more musician who may be considered both the accurate than those splashed across their morning antithesis and predecessor to Bez. A hardened paper or their T.V. screen; because, Nigeria at the veteran of the touring scene Jones is two decades end of the day is more than oil or rolling blackouts older than Bez and arguably has yet to receive the or traffic or security threats. Nigeria is special critical acclaim of his opening act. However while because of the people who live there, their talents, Bez’s greatest strength may be his popish their aspirations and their perspectives. If this palatability, Jones’ is arguably his unrivalled wasn’t the case then those residing outside its technique and unwavering commitment to borders would feel at home simply feel at home highlighting social issues in Nigeria. It may not be sitting in rush hour or at home with the lights off- the easiest way to create a hit record but it’s but you don’t. You feel at home when you get a undeniably important; and, there are few taste of what Nigerians themselves are about: their musicians who can get a whole auditorium moving warmth, their talents and their aspiration. to a song about reparations, or about conjugating the verb ‘kpafuca’ however Jones manages to seamlessly educate and entertain at the same time. (He is also known for taking his shirt off in shows, which doesn’t hurt his popularity with the ladies). Finally, there was King Sunny Ade, the pioneer of modern world music and an artist to whom both Bez and Jones surely own a great debt. He was undoubtedly the big pull of the night. Like the Nigerian version of Tom Jones he crooned, sang and danced his way into the hearts of everyone in the audience.

12 | P a g e Financial Derivatives Company Limited An Exotic Wedding Destination (Mauritius) BY UWANA EKPAT when the temperatures are between 27°C and 30°C and humidity is fair.

Image courtesy of http://swetkiller.blogspot.com The wedding day is often considered to be the best day of your life, thus high standards are to be demanded of this day; and, the island of Mauritius will meet and then exceed these thanks to its Image courtesy of http://newspaper.li/mauritius/ stunning scenery, brilliant coastlines, crystal blue waters, white sand beaches, warm tropical climate and the natural hospitality of the Mauritian Getting married in Mauritius people. Resultantly, getting married in Mauritius is to get married in the perfect romantic wedding destination.

About Mauritius Located in the Indian Ocean, the Island of Mauritius is about 2400 kilometers off the South East Coast of Africa covering an area of 1,865 square kilometers. Its capital city is Port Louis, which boasts total population is approximately 1.2 million. Image courtesy of http://www.travelvivi.com Mauritius is famed for its heterogeneous heritage, with its mix-blend of diverse cultures and religions. A classic location to exchange vows is on a private The people originate from India, Africa, China and island just off the coast of Mauritius and luckily France; and, the languages spoken are Mauritian Mauritius is not short of choice in this regard. Creole, English and French. Options include the beautiful Île des Deux Cocos (the Island of Coconuts), a location so beautiful Mauritius is a tropical island with two seasons, that it is guaranteed to make your wedding extra summer and winter. Summer is November to April, special, where a yacht will take you for either a with temperatures ranging between 23ºc to 33ºc; beach or chapel ceremony. In the bosom of Blue and, winter is May to October, with temperatures Bay Marine Park, on the South-East coast of ranging between 17°C to 23°C. Although there is Mauritius, the stunning Ile des Deux Cocos rises no marked rainy season, most of the rainfall occurs out of the ocean to welcome you to Paradise. Ile in the summer months. Therefore, the ideal time des Deux Cocos is truly a unique island where to either visit Mauritius or have your wedding nature and man walk hand in hand in a ceremony is between September to December supernatural blend of colors; guaranteed to make for spectacular wedding photos.

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Being one of the most isolated island chains on the planet Mauritius’ crystal clear waters are incomparable; and, the sunsets seen on the north- west coast are legendary, but the best way to experience one is from the ocean. From the ocean you will see a symphony of colors in the sky, a mixture of red, purple, blues, pinks and mesmerizing yellow. This is indeed a beautiful and spectacular sight. However, couples still searching Image courtesy of for a more traditional wedding location could http://www.weddingchaos.co.uk Getting married under the sea is also something choose to have their ceremony on the grounds of that is unique. Saying ‘I do’ on board a submarine their hotel; for example, on the beach, in the many meters below the Indian Ocean is likely to beautiful gardens or in a specially decorated adorn every aspect of the day, and will assuredly wedding gazebo. Many amazing resorts in make the wedding photographs stand out. With Mauritius also offer wedding services, often in a the waves above you and your loved one at your complete package to ensure that everything as side, it could be one of the most romantic and simple as possible for you. Moreover in Mauritius; unforgettable moments you will ever experience; luxury resorts boast fantastic locations on their and, Mauritius is famed for such nuptials. Since the grounds for wedding ceremonies & receptions. ceremony is taking place under water you will be limited with your movements and your speech; How to get there therefore, the bride and groom may opt to write down their vows on a wooden plank before entering the water. Others write them out line by line as they are submerged so that their partner can see them one by one. Other ceremonies may include devices built into the mask, which are used for audible communication.

Image courtesy of http://www.policynetwork.net A visa is required to visit Mauritius and there are a couple of tourist companies in Nigeria that put together packages to Mauritius. These companies would be able to assist in the visa process, flight bookings and in finding the perfect hotel. Although Image courtesy of http://www.tropicscope.com there are no direct flights to Mauritius from Nigeria travelers can embark on the following A Sunset cruise on a gleaming white Catamaran is routes: definitely one of the most romantic wedding ideas in Mauritius, especially if you are planning a • Emirate Airlines operates flights to Mauritius combined wedding ceremony and reception. with an initial stopover in Dubai before Exchanging vows while sailing along the crystal proceeding to Mauritius. also blue waters in Mauritius inspires meaningful has a similar arrangement with an initial allegories such as ‘’Marriage can be seen as the stopover in Kenya before proceeding to greatest voyage of all’’. Catamarans are also very Mauritius. spacious so guests can walk around, and also be entertained, while cruising at a leisurely pace.

14 | P a g e Financial Derivatives Company Limited • You can also fly South Africa Airways to South undeniable tropical paradise is a fantastic location Africa and then fly to Mauritius. for a beautiful and memorable destination wedding. Travel time is approximately 13hrs with each of these flights, inclusive of stopovers, to get to Mauritius. The cost of a round trip is between $1,100 and $1,300 to fly from Nigeria to Mauritius, depending on whether the scheduled vacation is during the high travel period between June and September. Ferries, bus services and taxis are readily available to connect with other islands within Mauritius from a price range of $3 to $9, depending on the distance.

Food and Accommodation

Image courtesy of http://www.generaltravelinformation.info There are several luxury Hotels and apartments in Mauritius, ranging from small to medium-sized hotels and charming villas right through to luxury resorts. Each is as receptive as the next, offering the same quintessential levels of service. Credible international hotel brands such as the, Hilton, Maritim, Four Seasons and Sofitel are located in Mauritius. The hotel accommodation in Mauritius varies from $35 to $250 per night, which generally includes bed, accommodation and breakfast.

For the traveler on a budget, when dining out at Mauritius, bear in mind a three version menu system is conventionally used in their restaurants with prices aligned to low, high and peak seasons. Thus, eating out in Mauritius is typically most expensive from mid December to mid January. The low season varies from restaurant to restaurant, but for most restaurants in Mauritius, March to October is generally regarded as the low season as there are fewer guests and thus lower prices.

If you are looking to have an adventurous way of exchanging vows or an intimate private ceremony, Mauritius will definitely not disappoint you. An

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16 | P a g e Financial Derivatives Company Limited Why One-Way Fares Are Expensive BY CHINEDU MOFUNANYA and therefore higher fares are expected to act as disincentives, discouraging this act. There is logic to some of these reasons, while others border on bizarre. While it is safe to assume that business travelers will more often buy one- way tickets and vacation travelers will be more prone to purchase a return ticket (given the more predictable nature of their return) it is highly unlikely that a terrorist, who is probably financed Image courtesy of vector stock It by a third party and has been preparing for months is a bit of an absurdity that it remains cheaper to (if not years) for such an act, would be put off at purchase a return ticket than a one-way ticket. the last minute by an unfavourable Expedia quote. What underlies this apparent anomaly, and what However, we need to look at how prices are are some strategies to avoid the hefty prices? determined in the airline industry. Prices are According to the Washington Post, the Bureau of determined by capacity utilization and predictions Transportation Statistics reported one-third of all of the demand/supply balance by the airline, which airline travelers in 2011 did not fly a traditional is constantly updated. round trip, a steady increase from 19% in 2002.Economics states that cost should be equal to price multiplied by quantity. However, such simple economics does not comply with current airfare pricing schemes, where one way tickets can cost as much as three times the price of a return ticket.

Image courtesy of Getty Images So what options does one have when faced with that all too familiar dilemma of buying an expensive one-way ticket or a cheaper return Image courtesy of vector stock ticket. The easiest option is to buy a return ticket Various reasons have been put forward to explain and simply not to embark on the latter. However this anomaly, the most compelling of which is that this means that you give the airline the pleasure of business travelers who combine trips frequently earning double income on the seat by reselling it. purchase one-way tickets, and that their booking Another option would be to buy an inward journey agents usually do not mind paying more than full for far into the future and make it open and price for these ‘necessary’ expenses. In addition, flexible. Although you may have to pay a small fee airlines simply do not want travelers to fly one to reschedule, this method makes it possible to use way; one-way fares “upset “airline travel schedules that ticket in the future. There may not be any by creating unbalanced passenger traffic. Others right or wrong option to deal with this dilemma argue that airlines believe that most one-way but as your aim is to get good value for your travelers are emergency travelers and are money, take some extra time to search for the best therefore willing to pay a premium to get to their deals available via airline sites and travel portals. destination. Furthermore, there are also security This may be a time intensive strategy but you will reasons for these higher fares as it is thought that likely be amazed at what you can find: an terrorists are most likely to buy one-way tickets appropriately priced one-way ticket.

17 | P a g e Financial Derivatives Company Limited Ecuadorian Experience BY ADESOLA THOMPSON For lovers of nature and history, Ecuador is a Islands radiate peace and possess natural beauty destination in its own right. Quito, the capital, to be admired, making it the best time to visit. stands at 2,800 meters (9,186 feet) above sea level, making it the second highest capital city in the world behind La Paz in Bolivia. You can enjoy wildlife in the Amazon rainforest, haggle for a bargain in Otavalo and relax at a traditional hacienda. The steps of Charles Darwin can be retraced as you cruise amongst the wildlife rich Galapagos Islands.

Image courtesy of http://www.panoramio.com Ecuador is perhaps best known, however, for the Galapagos Islands, famed as one of the most exotic and incredible archipelagos in the world. The islands are known for their rich and unique bio- diversity, with 32 indigenous species of mammals Image courtesy of and over 560 plant species. Some rare species can http://www.tripadvisor.co.uk only be found at the Galapagos; such as the red Environment and blue footed boobies, scalesia, flightless Despite Ecuador’s diminutive size, it is one of the cormorant, and land iguanas. This alluring and most geographically diverse countries in the world. complex ecosystem is relatively young and of Its four regions and favorable location on the volcanic origin. The largest island, Isabela is located equator make a great destination. on the western edge of the archipelago and it is approximately a million years old. The youngest Island is Fernandina Island which is approximately 700 years old. It’s location to the west and on the far side of Isabela makes it one of the least visited Islands.

Activities The Galapagos Islands are a playground for exploration. On Bartolome Island, you will experience a dry landing and also have the opportunity to climb 30 minutes up a steep slope Image courtesy of to the summit of a once active volcano. Tower http://www.tripadvisor.co.uk Island is one of the most spectacular in Galapagos, The Galapagos Islands of Ecuador spreads over an with a wet landing on Darwin Bay’s coral beach. area of 30,000 square miles of turquoise oceans Here, you can wind your way past tide pools where with climate unlike any other in the world. In swallow tailed and lava gulls gather. At Prince December, the wind has less force, the ocean is Philip’s Steps, you can watch the famous red- calm and the currents change surrounding the footed boobies nesting in Palo Santo trees. The island create a definable weather pattern of hot Santiago Island is another wonderful location sunny mornings followed by clouds and occasional where you can find Octopus, starfish and other sea showers in the afternoons. These enchanted life caught in the tide pools. A glimpse of marine

18 | P a g e Financial Derivatives Company Limited iguanas can be caught at low tide, as they feed on All flight to the Galapagos Islands start from exposed green algae. Walking towards the mainland Ecuador (Quito or Guayaquil). Flights extreme ends of grottos in Santiago, you can depart in the morning and arrive late afternoon for encounter fur sea lions that were once on the both airports. verge of extinction in deep pools of clear water. If you’re looking for a more local experience, most Beyond the Galapagos, there is still much to see travelers use buses to get around. Small buses and explore in Ecuador. The old city of Quito is cover long distances quickly; larger auto buses are most often visited for its close proximity to the slower but tend to be more social and fun. UNESCO world heritage site and the equatorial line Transportation inside Quito is less than $1.00 for – the true middle point of the world. There you can buses and approximately $2.00 for taxis. enjoy and participate in fun experiments which can Interprovincial bus transport from Quito to only be done on the real equator line such as Guayaquil is approximately $6.00. balancing an egg on a nail, water draining straight Enjoy the vacation of a life time when you book a from the sink instead of clockwise or anti- tour to the city of Quito and the Galapagos Islands clockwise etc. Other major draws to Quito include of Ecuador. the abundance of galleries and museums throughout the city and the exquisite Spanish colonial architecture, which is a particular draw for photographers from around the world. A mind blowing site is; la lglesia de la Compania de Jesus (The church of Jesus Christ) built in 17th and 18th century. It’s beautiful for its gold leaf interior.

Transportation

Nigeria is six hours ahead of Quito, Ecuador. There is no direct flight between Nigeria and Ecuador but

Delta Airlines, Lufthansa Airlines and BA all fly to

Quito via various connections. For example, Delta

Airlines flies Lagos to Quito via Atlanta (Hartsfield

Jackson Airport).

Image courtesy of http://www.minihostels.com Quito’s international airport is about 10km north of the city centre. The nation’s other major airport is in Guayaquil, about 5km north of the city centre. Both are regularly served by buses and taxis.

19 | P a g e Financial Derivatives Company Limited The FastJet Invasion BY AREADE DARE respond to the competitive threat the new airline will pose. FastJet will bring its profound experience in LCC operations to the region and it is therefore safe to assume that the airline will be operationally efficient and will be able to offer low airfares, which Nigerian regional players may have trouble matching. Currently the domestic carriers operating within the regional market are experiencing serious financial burdens; and, the Image courtesy of Power Aviation Intervention Fund (PAIF) set up by http://www.fastjet.com Brace yourselves, the FastJet invasion is coming. the Central Bank of Nigeria (CBN) has not been EasyJet founder Sir Stelios Haji-Ioannou, in able to reverse the financial fortunes of its carriers. collaboration with EasyGroup and Pan-African Furthermore, an unfriendly regulatory conglomerate Lonrho (owner of budget airline environment, in the form of onerous taxes and Fly540), is preparing to set up a West African low charges, and inefficient operations further cost carrier (LCC). According to BusinessDay compound the challenges these airlines face. Nigeria (BDN), the conglomerate has agreed to sell its aviation business to the investment firm of Rubicon Diversified Investments, in which EasyGroup plans to hold a 5% stake. The conglomerate plans to base the airline at Kotoka International Airport (Accra, ); as, the Ghanaian market is less crowded than its Nigerian aviation counterpart by international and domestic carriers. In the last edition, we discussed the viability of As income levels continue to increase in West budget airlines in the West African region and African cities in the midst of rapid economic concluded the conditions weren’t feasible for LCC growth, demand for air travel will continue to operation. However FastJet intends to introduce grow. FastJet will operate in the highly competitive budget fares to facilitate inter-regional tourism regional international routes such as Accra-Lagos and business travel in the West African region. The and Accra-Abuja. By offering the region their first West African region was selected as it is currently taste of low fares, the budget airline should be underserved and represents an emerging market able to stimulate demand on such routes. The with immense potential. Two major hub cities, carrier will utilize Lonrho’s route network in Lagos and Accra are also located in the region. Ghana, Kenya, Tanzania and Angola after its Airbus predicts that both these airport cities will launch. The venture will then expand into other evolve into “airline megacities” by 2030; as, it is regional markets on the continent in the future, predicted that by this time they will be including Nigeria. According to BusinessDay experiencing passenger traffic of at least 10,000 Nigeria, the carrier plans to offer tickets within the travelers per day. According to the Centre for price range of N11,000-13,000 before tax and fares Aviation (CAPA), FastJet intends to lease 15 as low as N2,500-3,500 when booked in advance of aircrafts for the start of operations in October, travel. FastJet intends to expand across the later this year. FastJet has chosen the Airbus A319 continent and become the first Pan-African airline. as its aircraft of choice. The introduction of FastJet into the West African regional market is certain to ruffle the feathers of Nigerian regional players like Aero Contractors, Air Nigeria and ; unless these airlines actively

20 | P a g e Financial Derivatives Company Limited Aviation Sector Update BY AREADE DARE A litany of events occurred within the Nigerian In addition, the Managing Director of Asset aviation sector within a 24 hour period; during Management Corporation of Nigeria (AMCON) which, the Nigerian aviation sector witnessed 2 stated earlier in the month that distressed airlines accidents- a Nigerian cargo plane crash in Ghana currently owe the corporation N135 billion. and the Dana air crash. On June 3rd 2012, Dana Air AMCON has been buying up the non-performing flight 9J-922, originating from Abuja, crashed on its loans of these ailing airlines for the past two years. approach to Lagos airport. There were no The Federal Airports Authority Nigeria (FAAN) may survivors. This is the first accident the Nigerian request assistance from the Economic Financial aviation sector has experienced in five years. The Crimes Commission (EFCC) to recover about N22 cause of the crash was dual engine failure; and, it billion in debts, owed by past and present is speculated that the failure was a result of domestic airlines. contaminated jet fuel. Debt Held by Nigerian Airlines (2011) Another development in the sector is the move by State Governments to pursue, or expedite, the construction of airports within their jurisdictions. These plans include the proposal to develop the Lekki-Epe International Airport in Lagos State and the inauguration of the Airport Development Committee to speed up the construction of Bayelsa airport. Air Nigeria has confirmed that its aircraft lessor, General Electric Capital Aviation Services (GECAS), has repossessed the four -300s Source: US Embassy in Nigeria (registered as 5N-VNC, 5N-VND, 5N-VNE and 5N- The Minister of Aviation, Stella Oduah, issued a 30- VNJ) previously leased to the airline. The lessor day ultimatum in April to foreign airlines to reduce had written to the Managing Director, Mr. Knife their fares. However this threat was not enforced; Kahssaye, of its intention to terminate its lease therefore, the significant airfare disparity between and repossess the four B737-300s; due to non- Lagos-to-London and Accra-to-London remains, payment of accumulated monthly rentals. despite the Minister’s attempts to redress the Furthermore, the carrier was unable to commence situation; and, Nigerians continue to pay more to its new route to Johannesburg due to its inability travel to London than their Ghanaian counterparts. to honor its wet lease agreement with EgyptAir. Lagos/Ghana airfare comparison (in GBP £) The agreement would have provided a second Carrier Route Economy Premium Business First Airbus A330-200 for the route. Economy Class Class BA Johannesburg-London 697 1275 3097 6093 Heathrow Furthermore, Air Nigeria is considering cutting its BA Accra-London Heathrow 721 1039 1829 3074 workforce by 85% due to its precarious financial BA Lagos-London Heathrow 651 1164 2053 5888 VA Johannesburg-London 693 1294 3097 n/a condition. Twelve pilots and engineers have Heathrow already been terminated for their involvement in VA Accra-London Heathrow 726 1046 1711 n/a the organized strike against the airline, which VA Lagos-London Heathrow 663 1134 2103 n/a nd Source: Centre for Aviation occurred on June 2 . The airline’s woes exemplify From a sample of October 2012 fares viewed in May 2012. the culture of debt currently plaguing the local airline sector, a culture that has proved difficult to Finally, Delta Airlines is considering terminating its redress. It is a difficulty that persists despite the Abuja-New York route because of low passenger fact that the N300 billion Power Aviation traffic and security concerns. Security concerns in Intervention Fund (PAIF), set up by the Central the region have also prompted foreign airline crew Bank of Nigerian (CBN), has already disbursed N86 members (including those of British Airways) to billion to the ailing airlines. refuse hotel arrangements in the capital city. Many foreign carriers have entered into agreement with

21 | P a g e Financial Derivatives Company Limited Nigerian airlines to airlift their crew to Lagos/Accra Nasarawa State approved a N1 billion budget to to lodge, while BA is reported to have mandated carry forward plans to build a cargo airport at that its crews lodge on the plane. With mounting Kwandere, near the state capital, Lafia. security concerns in Abuja and the increasing unease of foreign carriers over the safety of their The Nigerian government has successfully crew, it is conceivable that Delta might not be the concluded a pilot project to move to a satellite only airline currently contemplating termination of based navigation system its Abuja routes. AeroMechanical Services signed a contract with NEW ENTRANTS the NCAA to provide a Safety Management System Regional Dashboard. Abuja-based Izy Air is offering charter flights with a fleet consisting of a Citation X, Learjet 60s and OUTLOOK Citation XLSs. The Dana Air and crash threaten to jeopardize the aviation sector’s “Category 1” Air Cote d’Ivoire will begin operating a domestic status, assigned to Nigeria by the United States route network by the end of this year. Federal Aviation Administration in 2010. Regulators of the sector have taken measures to International allay concerns about flight safety and a technical Etihad Airways has commenced its six-weekly audit of the domestic carriers’ fleet is currently service from Abu Dhabi to Lagos, operating its first ongoing. st flight on July 1 . An Airbus 330-200 operates the route. Airline income statements continue to face persistent pressure from recent increases in jet EXPANSION EFFORTS fuel prices. Furthermore, it is looking more likely Route Changes that they will struggle to repay their debts, despite Arik Air has dropped its Kano- route from its government intervention (via the PAIF). There are route schedule. fears that this cycle of debt and disbursement may lead to situations akin to that of the AMCON take- announced double weekday over of Arik Air. flights from Lagos to Asaba and flights from Abuja to Lagos on Sundays. Renovations and expansions of current airport infrastructure are expected to be conducted by the MARKET DEVELOPMENTS government in the future. These projects are First Nation Airways suspended its operations necessary to deal with increased passenger and temporarily for its fleet of three Aribus A320s on cargo traffic passing through Nigeria’s major th June 20 2012. The planes are been ferried to the airports. European Union (EU) for maintenance. The domestic carrier resumed operations in early July.

Delta State Government has approved a N7.4 billion contract for the demolition of hills surrounding Asaba Airport to allow for larger aircrafts to land. However, the airport still has to pass the necessary safety audits.

Kebbi State Government has disclosed that it will upgrade the Ambursa Airstrip to an international airport; it is currently functioning as a domestic airport.

22 | P a g e Financial Derivatives Company Limited

23 | P a g e Financial Derivatives Company Limited Nigeria: Safety In the Skies BY ADEBISI IDRIS-ANIMASHAUN After the Dana plane crash, many are now area of Lagos have caused the Nigerian public to questioning the safety of Nigerian skies. However, call such beliefs into question. the real wringer is what’s being done to prevent Everyone agrees that stern measures should be such a horrific occurrence from happening again. taken to prevent such crashes from happening According to the Aviation Safety Network, the again. Amazingly, there are no preventive country has seen about 110 aviation accidents measures in place to mitigate the future with a combined death toll of almost 1,500 people occurrence of tragedies like the crashes that have since 1943, yet Nigeria has a top US ranking for air happened. The typical Nigerian culture is to safety. Is this a contradiction? Or is it that most investigate the causes without generating a people are unsettled simply because their specific outcome or solution. questions are not properly addressed. In fact, a simple remedy like adhering to the legal Early crashes include the 1969 , a age-limit of aircraft continues to be a major government-owned plane, which was travelling concern. The most recently crashed plane was from London and crash-landed in Lagos, claiming beyond the legal limit of 22 years old and it is clear the lives of about 87 passengers. Some of the that domestic airline operators are still continuing worst that followed include: with old aircraft, unable or unwilling to buy new Boeing 707 plane crash in Kano (1973) killing planes. 170 Nigerian Muslims and 6 crewmen returning However, the Federal Government has now from Mecca. constituted a new committee to enhance air safety A NAF C-130 Hercules from Lagos to since the Dana crash, the Technical and (1992), which crashed in Ejigbo, Lagos killing all Administrative Review Panel on Domestic Airlines 158 military officers. (TARPDA). The committee is required to Boeing 737 (2005), carrying investigate if the operators are adhering to the 117 people on board and crashing at Lissa Ogun Nigerian Civil Aviation Authority guidelines on State soon after take-off from Lagos. airlines. In the same year (2005), DC-9 crashed at the Airport and Necessary measures the airlines need to take will claimed the lives of 101 passengers on board. then include: Among those killed were 62 pupils of the Loyola Increased maintenance survey of aircrafts Jesuit School, Abuja. Stronger efforts to separate government In 2006, ADC Airlines crashed shortly after take- oversight agencies from political interests off from the Abuja International Airport. The Expansion of the spotty radar coverage across Boeing 737 contacted the ground and caught the country fire. The crash killed 92 passengers onboard. Airlines are currently forced to invest more in After completing a five-year run without a single maintenance outside the country as we presently aviation crash, many believed the worst to be do not have the capacity to do so within. We need over. With the award of “Category 1” status from to learn to keep up the act of maintenance and not the United States Federal Aviation Administration continue to manage. Nigeria’s historic reactive in 2010, the belief was further reinforced. The approach to safety has led to catastrophic losses of designation meant Nigerian airlines could fly lives and property. However, if all the safety directly to the US and the award was tagged as ‘a measures discussed and more are put in place, it is sign of faith in the nation’s domestic carriers’. believed that the Nigerian skies can actually be However, the June back-to-back crashes of Allied safe. Nigerians deserve better and further plane Air in Accra, Ghana and Dana Air in the Iju-Shaga crashes need to be prevented.

24 | P a g e Financial Derivatives Company Limited Time to Consolidate BY AREADE DARE Things aren’t looking good for Nigerian airlines. It’s A potential merger between Arik and Aero like a bad episode of your favorite hospital TV ARIK AERO drama where the doctor diagnoses the patient Hubs: MMA Hubs: MMA with some exotic disease. The clean shaved doctor NAIA will usually say, “I’ve run some tests and it doesn’t Fleet size: 23* Fleet size: 11 look good.” After which he digresses into an Destinations: 32 Destinations: 12 infinite string of medical jargon you, the viewer, Deep regional and Possesses an AMO couldn’t possibly comprehend. In the end the international routes certificate patient is keenly aware that they are in trouble. The same can be said for Nigerian airlines, which are facing challenging times. With the inevitable arrival of West African low cost carrier “FastJet” in the medium term things aren’t looking good. It doesn’t help matters that Nigerian *The airline has 17 additional orders pending for additional aircraft MMA – Murtala Muhammad International Airport carriers are severely in debt and operationally NAIA – Nnamdi Azikiwe International Airport inefficient; evident from flight delays caused by inability to buy fuel on credit, unpaid staff salaries Through consolidation, passenger airlines could etc. The “big three” Nigerian airlines (namely Air collapse from nine to three major airlines; and, the Nigeria, Arik Air and Aero Contractors) have been airlines would be able to restructure their finances struggling to turn around their operations and and operations to become more efficient. The have enjoyed little success in their endeavors. In combined capacities of these airlines would May, Arik was taken over by the Asset provide economies of scale to the new merged Management Corporation of Nigeria (AMCON) due airlines; and, they will be able to consolidate and to serious indebtedness. Between June and July Air rationalize their combined route network. Nigeria lost four aircraft to its lessor, had its Therefore, the merged airlines could concentrate regional and domestic operations suspended and on the routes that are financially viable and drop suffered strike action from its staff. Furthermore, those which are not. Through shrewd financial despite access to AMCON funds Aero Contractors management and assistance by regulators the still struggles to survive. Airlines may not admit it, three new airlines can turn into financially stronger but the situation is reaching the precipice. As Dung outfits. Pam, President of Nigeria Aviation Safety Initiative Possible Industry Consolidation (NASI), said: “They must merge or die”. The airlines Current Airlines New Merged Airlines have to seriously consider consolidation; likely Dana Air through forced mergers akin to those enacted in Arik Air AIRLINE 1 the Nigerian banking sector in 2004. Air Nigeria Aero Contractors For example, as two of the “big three” airlines AIRLINE 2 continue to operate regional and domestic routes First Nation a merger between Arik Air and Aero Contractors could be possible. As, despite their financial IRS Airlines AIRLINE 3 hardships, both airlines have redeeming attributes Overland Airways including extensive domestic route networks. Arik Source: FDC Research Air has a deep regional and international network; The industry needs to start thinking earnestly and, Aero Contractors owns an Aircraft about consolidation. The airlines might not like it Maintenance Organization (AMO) certificate that but they may not have a choice if their financial enables it to do third party aircraft maintenance condition continues to worsen. It’s clear that the and repairs for other airlines. Combining their operating model of current Nigerian airlines is not strengths they have a better chance of survival sustainable. than they do individually.

25 | P a g e Financial Derivatives Company Limited Aircraft Financing: The Rise of Leasing BY AREADE DARE Recently, domestic carrier, Air Nigeria, had its four established carrier undergoing route expansion. Boeing 737-300s repossessed by aircraft lessor Operating leases also come in two forms, “wet” General Electric Capital Aviation Services (GECAS). and “dry” leases. In a wet lease, the aircraft is It was revealed that the carrier was not paying its leased together with its complete crew; while in a rentals for an extended period. It is evident that dry lease a crew is not provided. A financing lease, the majority of Nigerian carriers are financially in comparison, allows the airline to recognize the troubled and Air Nigeria’s recent financial leased aircraft as an asset and the airline is given challenges add to this notion. the option to buy the aircraft at the end of the leasing agreement. However, this obvious benefit The fact is that aircrafts cost a lot of money and is not without a price as financing lease purchasing these assets requires extremely shrewd agreements usually exceed 90% of the fair market financial management. It is a critical decision that value of the aircraft. an airline’s management must get right. International Aviation Transport Association (IATA) Top 10 aircraft lessors by fleet value (2011) Chief Economist Brian Pearce puts it best, saying: “Airlines must get the financing right for a sustainable future.” According to IATA over 12,000 new aircraft are scheduled to be delivered through 2020 representing an investment of $1.3 trillion. Currently an aircraft can be purchased through a variety of approaches. These methods include raising funds in capital markets, leasing, acquiring secured loans through export credit agencies and taking out a traditional bank loan. Over the years, leasing has emerged as the more attractive financing method for airlines. According to ORIX Aviation, the number of leased aircrafts as a percentage of the world airline fleet has grown from 0.5% in the 1970s to 36.5% in 2011; and, ORIX projects that in three to five years that percentage will grow to 40%. These figures serve to outline the growing relevance of aircraft lessor in the aircraft financing market. Currently, GECAS and International Lease Finance Corporation (ILFC) are the two largest aircraft lessors, by fleet value and size. At the end of 2011, Source: Aircraft Finance 2012 (Flightglobal Insight) GECAS had over 1,750 aircrafts estimated to be $34.6 billion, while ILFC owns in excess of 1,000 Going forward, the market is creating new aircrafts worth $27.8 billion. The advantages financing opportunities. Examples include: aircraft offered by leasing include the flexibility afforded to financing through the issuance of Islamic Bonds airlines to introduce new routes and aircraft types, and Chinese Bank Financing look to improve and increase or lessen capacity, quickly. The financing options. Nonetheless, aircraft leasing is airlines also have to commit less capital and can emerging as the financing option of choice for access the latest aircrafts. global airlines and the prospects for aircraft lessors are promising. Furthermore, it is evident that There are numerous leasing options, which include aircraft leasing will continue its growth well into operating and financing leases. An operating lease the next decade. is generally short term (under 10 years). The availability of short-term option makes an operating lease attractive to a start-up airline or an

26 | P a g e Financial Derivatives Company Limited Baggage Fees

OVERWEIGHT BAGGAGE

Airline Baggage Allowance per Free number of Overweight Baggage Charge per Hand Luggage Concept Max weight of any piece (kg) Baggage Pieces piece Allowance (kg) one piece allowed Economy Business Economy Business Economy Business Economy Business onboard (kg) Air France 23.00 32.00 2.00 2.00 $100.00 Spec Auth 12.00 18.00 PC 32.00 Air Nigeria 32.00 32.00 2.00 3.00 NA NA 6.00 6.00 PC 32.00 Arik Air 30.00 30.00 2.00 3.00 Cargo Cargo NA NA PC 30.00 British Airways 23.00 32.00 2.00 3.00 $140.00 Cargo 23.00* 23.00* PC 32.00 United (Continental) 23.00 32.00 2.00 3.00 $200.00 $400.00 NA NA PC 45.00 Delta 23.00 32.00 2.00 2.00 $75.00 $200.00 NA NA PC 45.00 Emirates 30 (total) 40 (total) - - $70/kg $70/kg 7.00 12.00 WC 32.00 Etihad 23 (total) 40 (total) - - $20/kg $20/kg 7.00 12.00 WC 32.00 Ethopian Airlines 30.00 40.00 - - $8/kg $8/kg 7.00 8.00 WC 32.00 Iberia 23.00 23.00 2.00 3.00 $60.00 $60.00 8.00 8.00 PC 32.00 Kenya Airways 30 (total) 40 (total) - - $7/kg $7/kg 10.00 10.00 WC 32.00 KLM 23.00 32.00 2.00 2.00 $100.00 Cargo 12.00 18.00 PC 32.00 Lufthansa 23.00 32.00 2.00 2.00 $150.00 $300.00 8.00 8.00 PC 45.00 Qatar 23 (total) 32 (total) 2.00 2.00 $13/kg $13/kg 7.00 15.00 WC 32.00 23.00 23.00 2.00 3.00 $100.00 $100.00 10.00 10.00 PC 32.00 60 (total) 90 (total) - - 1.5% per kg** 1.5%per kg 8.00 8.00 WC 32.00 Turkish Arilines 23.00 32.00 2.00 2.00 $80.00 Cargo 8.00 8.00 PC 32.00 Virgin Atlantic 23.00 32.00 2.00 3.00 $50.00 Cargo 6.00 12.00 PC 32.00

ADDITIONAL BAGGAGE KEY Weight restrictions follow that of Economy class PC Piece Concept1 Airline Additional 1st piece Additiona pieces Max number of WC Weight Concept2 Economy Business Economy Business extra pieces NA No Information Available Air France $200.00 $200.00 $200.00 $200.00 NA * Must fit in Overhead locker Air Nigeria NA NA NA NA NA ** Of the One-Way Adult Economy Class fare Arik Air $200.00 $200.00 $200.00 $200.00 NA *** 3rd Additional piece & more is $350 British Airways $60.00 $140.00 $140.00 $140.00 10 Spec Auth Special Authorization required United (Continental) $200.00 $200.00 $200.00 $200.00 10 Cargo Must be shipped separately as "Cargo" Delta $200.00 $200.00 $200.00 $200.00 10 Emirates $70/kg $70/kg $70/kg $70/kg 5 Etihad $20/kg $20/kg $20/kg $20/kg 5 1) Passengers are permitted to check two bags with a per- Ethopian Airlines $8/kg $8/kg $8/kg $8/kg 5 bag weight of up to 50 pounds (23 kilograms) for Iberia $60.00 $60.00 $60.00 $60.00 10 Economy Class, and up to 70 pounds (32 kilograms) for Kenya Airways $7/kg $7/kg $7/kg $7/kg NA Business or First Class. KLM $200.00 $200.00 $200.00 $200.00 NA Lufthansa $200.00 $200.00 $200.00 $200.00 NA 2) Each passenger is permitted to check a total bag Qatar $13/kg $13/kg $13/kg $13/kg NA weight in however many bags they have Royal Air Maroc*** $150.00 $150.00 $250.00 $250.00 NA South African Airways $150.00 $150.00 $200.00 $200.00 NA Turkish Arilines $150.00 $150.00 $150.00 $150.00 NA Virgin Atlantic $60.00 $60.00 $140.00 $140.00 10 Source: FDC Research Information as of 21st June 2012

27 | P a g e Financial Derivatives Company Limited Feel free to submit your recent experiences in the

Nigerian Aviation sector whether it is on an airline or at an airport. Your submission might be published in the next issue of Travelnomiks. We would greatly appreciate your input.

- The Travelnomiks Team

Send your travel experiences in the Nigerian Aviation sector to [email protected] 28 | P a g e Financial Derivatives Company Limited