INTERVIEW
Industry consultant and CEO of Belujane Konsult, Chris Aligbe says government has to take urgent steps to revive the aviation industry, improve landing aids, and resuscitate the airlines, which are greatly affected by the current economic slowdown.Excerpts:
Industry analysts say that some airlines may go under because of the hard economic situation, which has resulted in traffic reduction. What is the way out?
Well, the truth of it is that there is no doubt about it; our airlines are distressed not just because of their internal problems but there are so many external factors impacting them that push them into the kind of distress they are. But people will say maybe it is not only the airline subsector, other industries are distressed because of the economic down turn but the airlines suffer it greatly, it is very, very visible. Road transportation may not suffer it as much as the airlines suffer it because of the nature of airline operation. Airlines have dollar component; they have naira component. We don’t have a maintenance yard yet or maintenance or repair yard yet; they are outside the country. Whatever they earn, they cannot even increase to the point to meet up the level of increase in the devaluation of the naira.
So they need more money today to pay for maintenance, they need more money today to meet their external obligations. Where do they make this money? It is in the country. And with the economic down turn, with the devaluation of the naira, with Central Bank fighting to manage our foreign exchange earnings, the airlines have come under severe stress. You can talk about their own challenges but the truth of it is that yesterday their internal challenges were much more, they were uppermost than the external challenges but today the external factor have become very serious and have over stepped their internal challenges. And so what we need to know first and foremost is to know that the industry is distressed.
When our airlines collapse that is when we see that it is very difficult having domestic airlines. If any major airline collapses today we will see the difficulty. If one should close his eyes and remove probably Aero and Medview you can imagine what will happen. Close your eyes and in that madness of closing your eyes, remove Arik from the scene, this country will collapse in terms of moving people from one point to the other by air. Because no matter what happens an airline that operates over a 130 flights daily is contributing so much in terms of moving passengers from one point to the other. Then you talk about the other airlines that have brought some competition, that competition as at least put more money in the hands of the consumer because it really changed the equations on the fares and the fare structure. So, we need them, we cannot allow them to collapse. It is in the interest of the country that these airlines don’t collapse.
So, we should look at it from that perspective; if we keep looking at it that these airlines are private, these are individual businesses if the owners cannot sustain them let the airlines collapse. The collateral effect and the negative snowball effect will be such that we cannot manage. It will be a question of national emergency. And we do not have a national carrier; there has been so much talk of creating one, which I think is long, long overdue. We don’t have it but even when these things happen we will have nowhere to go. So, there is need to help them, to help our country by helping the airlines.
That is why I have always said it that the first thing to do is to declare that industry an infant industry. If you declare it an infant industry, then put in place benefits of infant industry. There are so many of them: tax relief, all these customs duty, fuel, even charges since government still owns the airport for now while planning to concession. They should also review the charges because if you reduce your charges they are likely to reduce fare, they are likely to carry more passengers and the more passengers come the more the airports grow. But airports that passengers don’t go to you know what happens to them. Look at Kaduna, look at all of them that passengers don’t go to, Sokoto where you have some few passengers coming.
This was why Kano airport became completely deteriorated when nobody was going there; it is now that there is growing patronage. So something has to give in to help our airlines but I think the airline subsector should be declared an infant industry and then sit down with the stakeholders and say, these are the things that will help the airlines resurge. So you put it in place, you can say look the infant industry status is a 10 years status. A new airline or an existing airline you stay in 10years, if you come in new you stay as an infant for 10 years and at the end of 10 years if you cannot grow then it means you want to be a permanent baby. Nobody will accept a permanent infant, if you want to become a toddler all your life then stay out of where adults play.
After 10 years you can say you quit then you lose all the rights of infant industry, it is either you sink or you swim. I think that should be put in place. Americans have Chapter 11 where airlines in trouble declare bankruptcy and under chapter 11 no debtor touches them. You can no longer discus your debts and their indebtedness and whatever; the only thing is that you may not allow them to acquire more debts. But the ones they owe immediately they declare bankruptcy, you can’t even take them to court that they owe you. But they stay in that period to try to come out of the bankruptcy. One or two of them have managed to get out of the bankruptcy, at least some of them collapsed during the period.
Pan Am declared bankruptcy under chapter 11, Pan Am never succeeded; it was bought over and its debts were paid. Some of the things he sold were its route networks and made quite some money. That is why routes are money, so it sold some of its routes and when it entered chapter 11 it declared bankruptcy. So we should have something to protect our own airlines and give them a leeway to survive. They are trying, they have their challenges, it is only when you create this situation that you can come and say this is the situation, and we expect you to do this. There must be a carrot and stick approach. What we are doing today is only stick approach, we must bring in carrot into it so you have a carrot and stick approach to prod the airlines to come up. I also think that government should as urgently as possible setup the national carrier it is talking about it; we need it in this country.
Foreign carriers had considered reducing their operations late last year because of the fiscal policy of Central Bank of Nigeria. They said traffic may begin to ebb and they may face difficulty in repatriating their funds. What is your reaction to that?
Well at every point in time countries suffer economic recession, when economic recession comes airline will reduce their frequencies. It will hit the airlines because they are depending on the wellbeing of the people. It has happened in other countries whether it is Greece, Spain; it happens even where terrorist activities grow. Kenya suffered reduction in traffic and frequencies, when Al Shabab did what it did and Kenya became unsafe. Nigeria is not suffering because Lagos, the main airport and Abuja are far away from the northeast where the battle is raging, but you can find that airports in northeast have been abandoned.
This is the situation but what I think in terms of foreign airlines, if foreign airlines reduce their frequency, I hope it doesn’t get to the point where the cost of flying becomes higher. I hope it doesn’t get to the point where people will start leaving the country to Ghana to go and take flights to Europe. But the difficult thing is that where will you get the foreign exchange? Even if you slip out to Ghana where will you get the foreign exchange? You cannot get the foreign exchange, so the thing will become more and more severe. When such things happen, it is only your national carrier that can shore up. But I hope the question of remittance of their earnings will create a problem sooner than later. It happened before and I hope it doesn’t happen again where the CBN governor will be downgraded on his flight because they cannot transfer their funds.
It happened to late Ubah Ahmed who was former governor of Central Bank of Nigeria. He with his family travelled with a UK airline, he had a first class ticket, but they were downgraded in protest of the money the airline had in the CBN, which it could not repatriate.
There has been a kind of lull in the aviation industry, nothing seems to be done; we have not seen anything the government is doing in the aviation industry, what is your reaction?
I want to tell you the truth. Yes, there is perception of a lull; it is true, you will call it reality because sometimes there is a difference between perception and reality but you could call this perception a reality, there is some reality in it. But again if we are looking at government, the Presidency and then the executive as it were, you could say yes the government is yet to start implementing its policies for the sector.
But remember that when we were looking at government in our own situation, there are two major arms of government, the executive and the legislator. These are the two, so when we are talking about lull in government we are looking at these two situations. Yes, I know that when you look at the legislator, Senator Kwankwaso, the ad-hoc Senate Committee on Aviation, I think Kwankwaso had tried to move out to look at the industry to talk to industry stakeholders. I know they held series of meetings at the National Assembly with the industry stakeholders at least to begin to have a feel of what is happening in the industry, which for me I think was the right step to take, because before ever you can start working in any industry you must have a feel of the industry.
You must hear from those who are running the industry, what they think and what has gone wrong. To that extent the ad-hoc Senate Committee on Aviation has at least proven that they are up to it. But some people are looking at it from the ministerial point of view; we also need to know that it took quite some time before Ministers were appointed. And the industry asked for a professional to be there, I think that the President probably listened to that request because he put a professional in aviation even when Aviation Ministry has been, as it were, wound up and was brought under Ministry of Transportation. So Senator Hadi Sirika is the only Minister for State that he assigned position. All other Ministers of State did not have any position assigned but he specifically assigned position of aviation to the Minister of State and I think that was for a purpose.
Yes it is true that the two Ministers have come to Lagos to look at things, because they visited the facilities and some of the parastatals in Lagos. They may have equally gone to Abuja or to other places. And I know when the incident of Turkish Airline came up, I know that the Minister of State, Senator Hadi Sirika was there and took some on the point blank decisions with respect to that and instructed or directed investigations into the matter. You could say he acted promptly in that regard, but the truth of it and that is the basic truth, in spite of all these things the industry has not started feeling the presence of the Ministers. I don’t know whether it is the same thing with all other industries but I always refrain from talking about other industries because we want to remain in our core area.
Because there is great expectation from the industry, our industry is at the lowest ebb but for the great effort of the Nigerian Civil Aviation Authority (NCAA) and the Nigerian Airspace Management Agency (NAMA), I don’t think there will be anything to write about in the industry. I am happy the way that NCAA in spite of everything has managed to do its policing in terms of its regulatory effectiveness. There has not been too much noise about it but sometimes I follow it. I know that in terms of safety and airworthiness and security NCAA has been up to its beat, whether from the technical side, the airworthiness directorate, whether it is from the other section, the economic regulation directorate or consumer protection directorate, I know that over 14,000 cases have been resolved in the past year of complains about luggage mishandling. And I know that, that directorate is stepping up all that it is doing in terms of consumer protection, which has been a major problem in our country.
Hitherto there was no much effort along that line although it was at the twilight of Demuren’s departure that regulation 2012, spelt out completely things that should be done in terms of that came out. But in terms of implementation, it is now being implemented and they are being able to force compliance to make airlines do what they should do. But the challenges are mammoth and the fact of the matter is that many Nigerians don’t know what their rights are and they don’t even go to ask about their rights, only they will complain and go away. They don’t even know how much NCAA can help them and the consumer protection desk maybe at the airport or even at their headquarters. But then I have also followed enforcement and compliance in the area of airworthiness and safety. As at 2014 there were about four or five cases of enforcement and compliance but by last year it rose to about 14, 15 cases of enforcement and compliance enforcing the regulations on safety and airworthiness and insisting on compliance and airlines are beginning to comply.
Airlines now know that there is a serious effort on ground; that NCAA is not going to let anything slip by. Millions of naira has been raised in terms of fines, airlines paying fines for failure on compliance, so enforcement has been upgraded, it has been lifted to a level where it was not in the past.
Would you say that this was one of the reasons why Nigeria had not recorded any incident or accident for the past two years?
I will say that it is because of that. You know, there are quite a lot of complaints. You know when the current director general, Captain Murhtar Usman was appointed, there was quite a lot of petition against him, claiming that he would not be able to do the work. For some of us who knew it, looking at his profile, we thought that having been in Accident Investigation Bureau (AIB) and carried out some investigations, he knew the Achilles heels of the airlines, he knew where they play their pranks and he knew where they could be caught. And without mincing words NCAA still has quite some sound people on the technical side. If they fail it is because they want to fail or because it is a slip but if they do their job very well, like they are beginning to do it, airlines will not have it easy and it will the best for our country and that is why we haven’t had accidents involving commercial airlines. And probably they know that with the Director General in place he will not let anything pass by. Not that Dr Harold Demuren allowed things to pass by, Demuren had his own style of management, it was like Demuren was kind of everywhere, wherever you went you saw Demuren, that was the kind of personality he was.
He was an enforcer, visible enforcer. But the period of interregnum when there were Director Generals in acting capacity there was a low period. The low period created so many problems. I don’t blame the executive as much as I blame the legislature. The legislature then didn’t see that NCAA is place that you should never give a long period where there is no substantive head; that was what they did. The position should never be left because it is so critical to the industry. But if you look at what happened, the exit of Demuren to the emergence of Captain Fola Akinkotu, there was a great lull as people battled whether Akinkotu would come or he would not come, until he was brought in.
It didn’t take too long a time he was removed. And then followed another period of lull where the industry was moving on without a substantive head. Yes, there was an acting head but such a place is not a place to be left to any person in acting capacity. But the politics then created that void and so much went wrong during the period. But these were the things that maybe Usman himself had to start correcting, has to start pulling back. And in a situation where you had cleavages here and there, it is usually difficult. But thank God, for me that things have changed a lot, people are beginning to do their job. People have seen that there is no place to hide and so the credit will not only go to Usman, it should go to all major officers, the directorates that are responsible for regulation in all spheres. Whether it is technical side, whether it is economic side or consumer protection side. I think everybody now is up his toes.
We still have challenges?
But the challenges are there and we have seen them particularly in the area of consumer protection, there are immense challenges. But I think the new deal now with the Minister, because I heard the new Minister saying that if you infringe on the law, you have infringed the law, there is no Abuja connection. In the past people could call the Presidency or call a Minister but I think the present Minister has said, don’t call us, if you offend the rules you face the music. And that has helped a lot because now airlines know that there is no place to hide, they will face the wrath of the NCAA and nobody will save them. So I think NCAA probably has acquitted itself. I also think that NAMA in the last year, NAMA’s effort has taken this country, as far as I am concerned, to new heights. You have young people in NAMA if you look at the industry, yes, they are younger people, they are not the elderly people but they appear to me people who are committed and passionate about making sure that Nigeria’s airspace gets to global standards in terms of safety and management of the airspace. If you look at the quantum of training that has gone in NAMA or in NCAA, it is such that we have not achieved before.
And so today the people have taken off from what they met and then they are building heavily upon the foundation they met. And I think many years ago pilots overflew Nigeria’s airspace and declared it unsafe and the record was documented by International Federal of Air Line Pilots Association (IFALPA), today nobody talks about that. Many airlines come into Nigeria, over fly Nigeria’s airspace. And I think NAMA has also done great in terms of our airspace management and ensuring that management of the airspace is safe and properly managed. But we should not begin to think that we have got to the Eldorado, no, we have not got near the sky. In this country what one is looking forward to is that we should have a country where there is zero visibility landing. There must be zero visibility landing in our country. We should not wait anymore for it, if there is any area of investment, and it is not an area for NAMA, it is not an area for NCAA, it requires government investment. Before they think of doing anything with NAMA, whether they want to commercialise it or whatever, but we must head towards zero visibility in our country by providing the facilities. It is the responsibility of the government to provide that for the country whether it is Kano, Maiduguri, Calabar or any other airport, there should be zero visibility landing. It happens in other countries and it should also happen in our country.
What is your view about other agencies?
Having said that, for me there is great acquittal for NCAA and NAMA in their functional area, but when you come to airports, so far we have no global standard airports in Nigeria. I won’t even say global, African standard airports in Nigeria. We have none. And when you talk about airports, the first thing people think is that you are talking about the Federal Airports Authority of Nigeria (FAAN). FAAN does not have what it takes to make critical decisions. The question of our airports is a question of the Japanese proverb “Yo Shinai Yo kangai” “Good Thinking, Good Product”. We have not thought well over the years and it is not the people, who are in there now that should be held responsible, but those who think about the airports, those who own the airports, the government owns the airports. And we have told the government over the years to concession these airports. The International Civil Aviation Organisation (ICAO) has told the government over the years to restructure FAAN into a holding company to oversee concessioned airports and the development of the airports. They have not done it. And those who are in FAAN, those who are managing FAAN cannot take this decision themselves.
Many of them know that the way the airports are being managed that the system cannot work; it is no longer possible. You are centralizing the management of 22 airports in one place and hoping that it will work. It will never, never work. Also I heard people say oh yes they should concession the airports or privatize it in zones. I heard them saying eastern zone, western zone, like they did before with the ports, again it didn’t work. You cannot group Port Harcourt airport with Benin airport, you can’t group them and hope that they will be properly managed. What each airport requires is different from what the other airport requires. Put a different management, concession the airport and you will find that those who will take it over will think out of the box and make the airports what they should be. And that is what we need in this country, nobody should group airports together and say we are concessioning five airports to one person; again it will not work. What I think is possible if we are thinking of making sure that out of the concessioning we will get many good airports, let them twin airports. It is easier to put two airports together and say okay if you are taking Abuja you must take Sokoto.
Abuja will eventually be a money-spinner and then with that you can develop Sokoto and give Sokoto its own character. The Sokoto airport will have its own character as different from the one in Abuja but it takes somebody who has invested in it to take that decision. Again, if you want to take Enugu airport, new as it is, you can say okay Enugu, if you take Enugu airport, we will give you Calabar airport or we will give you an airport like Benin. So your investment is there, each one of them, Enugu has its own character as an international airport, it has the sitting in a traffic emporium, which you can look at and develop. Benin is sitting where it is sitting with its entire links toward the Ondo side, towards a place equidistant to Asaba, maybe Abuyo up to Auchi. So you create it with its own character and know the kinds of operations that will come in there. What you will have for aeronautical charges for Abuja or for Lagos or for Port Harcourt will be different from the aeronautical charges you will have in Benin because you are attracting flights, it could be low, it certainly could be lower than that; but you will create other things that will drive passengers to Benin airport. Benin airport as an airport has no pull factor; it cannot pull passengers into Benin airport.
There must be something you must create as a push factor for people to go to Benin but that you must think outside the box. And so we need to concession the airports, the blame is not that of FAAN, the blame is our inability to take the appropriate decision at the governmental level because government owns the airport. Nobody can sell government property without government permission. Nobody can take a decision to restructure the ownership of the airports without government taking that decision. So FAAN is saddled with something that it cannot manage even if you clear out the entire management of FAAN and bring in new managers and you leave the system, as it is you will still be there. And there is pressure on FAAN to make more money, look at what is happening, if you now go to park car as your are travelling, it was N200 before it is now N400 and when they see you parking Jeep they charge you N600. This has increasingly made our airports unfriendly, our airports have moved from becoming poor airports to becoming most unfriendly airports globally.
That is why I said there are so many things the Ministers should do even before waiting for money, the budget has not being approved. All the airports from information available to me, all the car parks in the airports have already been allocated. People took concession of the car parks, some have held it for six years, seven years and even eight years and they have not done anything to develop them. All these things should be cancelled straight away. Then they should advertise them with new conditions, which will include those willing to develop the parks to a given standard. Look at the Lagos airport before there were buses that convey passengers from the car park to the international terminal. But today the buses are no longer there; you now have to walk all the way to the terminal carrying your load. This is not found anywhere globally. So our airports have become increasingly unfriendly and they will remain so if decisions are not urgently taken.
It will be wrong to start blaming FAAN, we should first take that decision, government should be bold enough to take that decision. One to restructure FAAN, to restructure ownership of the airport, concession them and in concessioning they should do it openly and transparently. Look at what small Asaba airport is doing; they want to concession the airport. They openly advertised for transaction advisor and they called for bids for it and they had great bids, 14 bids from big companies, from Nigerian professional companies and that is what it should be. Government must enthrone openness in that concession and in most countries where these thing are done they not only advertise in local newspapers, they advertise in international magazines and when the process start they will tell you, when the bids come they will tell you who is bidding and how much has been bided,
How much the government is concessioning it for and that kind of a thing.
They should not sit somewhere and begin to call names, that we have engaged International Finance Corporation (IFC), we have engaged this company and they are going to advise on the concession. Advertise it and let people bid. First and foremost, if you are looking for advisers let people bid for it and you get the best globally not just from Nigeria but globally. So that is what should be done with FAAN so that we can move ahead. Today we know that we must have car park in Lagos that can take over 3,000, 5,000 cars at various points. It may not just be only one person managing them; you may have about four parks owned by different concessionaires. All that you need to do is to put a regulatory agency in place in terms of competition, in terms of monopoly. When there is competition they will lower the charges, make sure there is no corporative oligopoly. If you just have one person to take all the car parks in Lagos, Murtala Muhammed International Airport, for example, that person will be a monopoly and can determine what he wants and you start running around the person with an anti-trust law.
In all other airports outside Nigeria, do they charge money at all the car parks?
Yes, you must pay, in fact it is one of the sources of non-aeronautical revenues and it is accepted worldwide. There is no airport you park and you don’t pay and the way the thing goes is that they determine it in terms of how long you stay, it is not a flat rate. What is happening in General Aviation Terminal (GAT) is a flat rate, whether you drive in and you are going to stay 10 minutes you pay the same amount. Whether you stay here for five hours you pay the same amount that is not what happens overseas. Immediately you are driving into an airport you pick a card, I think MMA2 (domestic terminal in Lagos) is practicing that, they tell you the minimum is N200 or N300 for first one hour, subsequent hours you pay differently, that is how it is done. And then the airport access roads, they are there maybe; government will be waiting for money to do them that has to be concessioned. But for me, up till today I do not know why it is very difficult to issue a directive to empty the petrol tanker park at the Murtala Muhammed Airport. I have started seeing some of them in Abuja staying on the road again, which is terrible because Abuja airport has been sane. Immediately you enter that vicinity you know you are in an airport environment, but it is being spoilt now and sooner than later you will find people building tank farms around the airport. You can have one of two tank farms; after all, there had been petrol depots and tanks in the GAT area, Forte oil has been there, about three of them have been there.
What is now happening at Abuja airport is recent. This is a recent situation with the new tank farms being built along that area, but there should be an instruction that within the next three months no petrol tanker should be there. You see the pipeline that has been carrying Jet A1 into the airport from Ejigbo depot in Lagos has been in disuse for over 20 years. They used to take fuel to the hydrants. Since the past 20 years nobody has worked on it, but it could be rebuilt through public, private partnership (PPP). If you get somebody who is prepared to take it, put it in place and then run it, you can say for every liter of fuel dispensed maybe the person gets one naira or 50kobo or 20kobo for a certain number of years, so he will recover his investment. He will make money and the airlines will be better for it, there won’t be delays about fuelling. There were no delays before about fuelling at our airports. This is what should be done. There are so many things to be done and there are those to be done with money, there are those to be done without money. The instruction to clear that area of petrol tankers has nothing to do with money. Jet A1 tankers should not be seen around the airport. You put a fine on it, and you impound the tanker seeing it the second time. We need to take this decision, we need courage to take this decision; otherwise our airport will continue to be declared the worst globally and we start complaining or start quarrelling over the categorisation.
Parking vehicles at our airports, I don’t know how to describe it, but it is insane on all our airports, whether you go to Abuja or you come to Lagos, you go to Port Harcourt it is worse. Maybe it is the smaller airport like Benin, it is looking sane, you go to Enugu, it is sane because of the level of traffic but if we don’t build for tomorrow in Enugu it will become the same. So this is the time to look ahead, in 10 years time what kind of traffic are we looking at here? So in concessioning that is what should be done. Anybody who comes to tell you that concessioning should not take up to 20 years it is not true, some concessions go up to 40 years, 35 years but the only thing is that you put a milestone that by the 10thyear this airport you are taking the capacity is one million. By the 10th year this airport should be handling four million passengers. By the 20th year this airport should be handling this number of passengers; that is how you progress in concessioning. But when we come to that point we hope it will be done very well.
CULLED FROM THISDAY
