Chinedu Eze writes that efficient and profitable airlines will galvanise growth and development in aviation and other sectors of the economy. This he posits can only happen if the Minister of Transportation, Chibuike Amaechi, advocates policies to make indigenous airlines profitable.
During his recent tour of aviation agencies in Lagos, the Minister of Transport, Mr. Rotimi Amaechi stated that the federal government would be expecting more revenue inflows from its various parastatals in the aviation industry given its massive investments in acquisition and deployment of state-of-the-art technologies in the industry. What this meant was that government had given much to the industry, and therefore much should be expected from it.
But stakeholders in the industry reason that there could be a new chapter in the aviation sector and this will begin when President Muhammadu Buhari-led administration begins to implement policies that will support growth in the aviation sector.
Although what Nigeria has presently is Ministry of Transportation, led by Amaechi and the Minister of State for Aviation, Senator Hadi Sirika, but this merger, experts say has not in any way reduced the importance of aviation as the catalyst of any nation’s economy.
Industry experts argue that with very lean resources at their behest, Amaechi and Hadi must be creative to put aviation in the front burner and make it serve the purpose of galvanising the nation’s economy.
Their first major task, according to stakeholders should be to make Nigerian airlines viable and profitable. If this was achieved, it would solve a lot of problems in the sector. One, profitable airlines will not shy away from embarking on training of personnel; two, the airlines will employ more personnel; three they may get together to build the elusive Maintenance, Repair and Overhaul (MRO) facility with government incentive and four, viable Nigerian airlines will compete effectively with foreign carriers on international and regional routes.
Favourable Policies
For this to be achieved, government must make a turn-around in its policies. There are government policies that are inimical to the growth of indigenous carriers; that seem to subordinate Nigerian airlines to their foreign counterparts. These policies must be reviewed.
Government must give incentives to indigenous operators and one of such incentives is downward review of charges, from passenger service charge to landing and parking and to aeronautical charges. The aviation agencies must explore other avenues to improve their resources than to depend on monies made from indigenous carriers from aeronautical charges.
Also, government must review its commercial agreements with international airlines in their Bilateral Air Service Agreement (BASA) and should allow Nigerian airlines and the Nigerian Civil Aviation Authority (NCAA) to negotiate commercial agreement deals with these foreign airlines; not the Ministry of Aviation which is currently doing the negotiation whereby instead of protecting the interest of airlines and Nigeria they pander to parochial interests and favour these foreign carriers at the detriment of Nigerian airlines.
The Executive Chairman of Airline Operators of Nigeria (AON), Captain Nogie Meggison said these government policies that favour foreign airlines have put Nigerian carriers and Nigerian interests at a disadvantage. He said there is no need for Nigerians to lament about the capital flight by foreign airlines, which move huge amounts of money from Nigeria to their operational headquarters in Europe, America and Middle East every week because government policies facilitated such repatriation of funds without their investing anything in the country.
“As a capitalist myself and an entrepreneur, I do not blame and I do not believe and I don’t want to call it capital flight. I will look at fit rom the point of view that it is a policy issue, because if you put the policy that makes them do business here, as an open country that we allow friendly investors to come in and go out, if your policy is wrong and a man does business in your country, you cannot restrict him from taking the money out. So capital flight is not the issue, the issue is the policy that makes them generate that much fund without giving the local carriers or the local players an opportunity to take part in the game,” Meggison said.
BASA Policy
The Chairman of AON said capital flight will continue until that policy is changed.
He said: “You cannot continue to chase the wrong end of the stick, you have to treat the fire and not the smoke. So capital flight is not our issue, foreign carriers coming to dominate our markets and weakening the local players is not the issue. The issue really should be the policy that is on ground. That is why I want the present government, and I encourage them to look at the policy governing aviation today. To start with, the BASA that governs our policy should be reviewed. Yes it is being signed by the Ministry of External Affairs but BASA is a trade treaty that should be taken seriously.”
Meggison stressed the need to review the BASA treaty that was signed long time ago because so many things have happened in the industry since then. He alluded to the US, which has reviewed its treaty with the Gulf Carriers.
“This is because they (the US airlines) believe that $43 billion is being given to the three gulf carriers by their government to be able to come in and subdue the American market. We as Nigerians we have to look at it from that same point of view, if you have signed a treaty 20 years ago or 30 years ago it is time to revisit the treaty. But we need to get the right people, the technical people in place, if you don’t have the right technical people in place to know what a BASA is and what you are signing, we will continue to run on the wrong side. BASA should be mutually beneficial between two countries.
Meggison believes that if Nigerian airlines are made viable they would be able to contribute directly and indirectly to the nation’s GDP and this could be achieved by first, introducing policies that would make such goal realisable.
“Today there is really no reason why Nigeria aviation should not be contributing a minimum of 10 per cent to our GDP. Why we are having these issues today is because we don’t have the right driver in place, or the drivers that even come don’t stay long enough. I came back into aviation in 1983; between 1983 and today we have had 26 Ministers of Aviation, which gives you an average of one year two months per Minister. The Ministers before they came into aviation were not aviators after they left aviation. So really they come in as participants, they are not interested. It takes a very smart, upright person an average of 18 months to get a grasp of what is happening in the industry. We have carriers that are coming here and they are making money from our system. Until we can put our system right and put the right driver in place, put the square peg in the square hole, we may not be able to get aviation right,” he said.
Urgent Action
Many airline operators have described Nigerian operating environment as harsh and this is defined by high and outrageous charges, interrupted and high cost of aviation fuel, a lack of major maintenance facility locally, high interest rate and short term loans and dearth of highly skilled manpower locally.
The federal government can help solve the problem of high charges by ensuring that indigenous airlines pay one single charge, which is distributed by the agencies; it can facilitate a single digit, long-term loans for airlines, ensure reliable and uninterrupted source of aviation fuel by rehabilitating the Ejigbo-airport aviation fuel pipeline and rebuilding the hydrants at the Lagos airport. Government can also facilitate the establishment of MRO by encouraging the private sector along with the airline to build one. Arik Air had planned to build MRO facility so government can provide the incentives for the airline to establish the facility in conjunction with Lufthansa Technic.
Managing Director of Arik Air, Chris Ndulue said government ought to look at things like tariff in order to make the cost of air travel affordable to more Nigerians.
“This is because growth in the industry is driven by airlines and unless that the airlines are growing and getting stronger you can hardly find other stakeholders, players in the industry growing or getting stronger or benefitting from the industry. We need to look at things like tariff in order to make the cost of air travel affordable to more Nigerians. That is how we can grow the market,” Ndulue said.
On the multidesignation of foreign airlines to many entry points in Nigeria, which is retarding the growth of local carriers, Ndulue said, “I think that we need to look at the trade off. I have listened to arguments about multiple designations. Yes our country is a bit diverse but I think that, if you say an airline coming into Nigeria should choose one destination some will eventually end up saying they will go to Lagos. And I think that as time goes on as more and more airlines begin to go there, some will say okay we choose to go to Abuja. But we need to open up a maximum of two entry points, we can’t have all the international airports as entry points because the more we do this the more we suppress the domestic airlines. Because there has to be a balance between the convenient of allowing people to be able to travel out from different points and also allowing domestic airlines to be able to survive.
Reducing Entry Points
Ndulue suggested that government could start cutting down the destinations of foreign airlines in Nigeria by designating only two airports and asking the airlines to choose and then partner with local carriers to bring passengers to these two designations.
“You may designate the airlines; if that is not working you may compel them to fly into some points because that is what you offer them. We also go through the same issues when we go to other countries. I spent a lot of time in a meeting in Luanda with the Civil Aviation Authority of Angola and we were talking about just two more slots for the week. We were doing two slots a week, we spent two, three hours of very difficult negotiations asking for four slots a week, we eventually got one additional slot. So we now do three times a week, so why is it that countries place these restrictions but we don’t have such issues in Nigeria? Before people ask for these slots even while they have not reciprocated and allowed us to fly into their country, we allow them to fly into Nigeria as many times as they want,” Ndulue said.
Many Nigerians suggest that to make local carriers operate profitably, government must have to rejig its policies, refocus its interest in aviation and work towards improving the overall revenue generated in the aviation industry.
