An expert in aviation safety management and aircraft accident investigation, Captain Uche Ojadi posits that Nigeria cannot have viable airlines without government’s support. He also spoke on safety and how to ensure airlines abide by regulations. ChineduEze presents the excerpts:
Why are domestic airlines not doing well; one, they don’t make profits; but they make revenue. Why can’t they turn things around?
Primarily, it has to do with the management of the airline, then secondly the economy. A structured management will cover every aspect. For example, before you start an airline you go to the financial drawing board and ensure that it is going to work. Airline is not a diversified business; you just carry passengers and cargo for money, so there is no possible mid-way you will make a change to or branch to see if it will work. So you must get it right from the onset. So if people don’t get it right from the onset and mid-way they want to start correcting it, a lot of flaws might have come in before then, so effectively correcting it becomes a problem.
For example, we see an airline applying for its Air Operator Certificate (AOC) and it has already brought in an aircraft which are on ground, they could be on lease or purchased. When they are on lease, for the time they are not operating who is paying for that? It becomes a burden of loss that accumulates. By the time it starts operating it is already financially deficit. If it is purchased, the aircraft will be due for maintenance and for not operating for so long you lose revenue; meanwhile, you are paying for it, paying for the parking and every other thing that is involved. So the problem is primarily management, which is number one.
Number two, the economy of the country affects it; you are talking about pricing and a few other things, then again the policies of the government. For example, a lot of international carriers fly direct to different airports in the country, when they do that it is now impossible for the domestic carriers to carry passengers to those places and the revenue they lose is quite high in that area as well. For example, if an airline lands in Lagos the passengers from those airlines who are travelling to other destinations within Nigeria will now have to use the local carriers. But now if you give the foreign operators the approval to land in Lagos and Abuja, Kano and Port Harcourt, they fly directly to those areas, the domestic carriers will not have any enough passengers to take to those airports. In the past Lufthansa used to partner with Aero to take passengers to Port Harcourt when it lands in Lagos. But now such partnership is not necessary because the international airlines can operate to any airport of their choice.
Nigerian airlines employ expatriates as engineers and pilot and even in other aspects of operation; don’t you think this is eating into their revenue?
Well it is eating into their revenue, yes because the programmes for setting up a system have not been implemented properly. I will give you a good example, in the past we had a lot of pilots and the airline could make a choice of who they want, now changes in the system had affected the training of pilots. The salaries paid to pilots at some time did not justify the cost of their training. You will find out that if you sponsor yourself for training as a pilot and come back, that salary will not even pay the interest of the money you took as loan. So it becomes a lost prospect. If you pay like N10 million to do your training, when you come back, what you are being paid? If you took that money on loan, that money you are paid cannot cover that loan, so it doesn’t make any sense. So, effectively a lot of people who wanted to train as pilots decided to go into other profession.
Then as time went on many existing pilots retired, some left the country and there were no replacements, so in the end you find out they don’t have enough pilots anymore. So the operators are now forced on employing foreigners who are quite expensive. In the area of opportunity cost, when talking about economics now, you find out that there are many pilots who are on high demand so their salaries, judged by the economy, grows high. So effectively you find them on the same level now as the foreign operators. So either which way, the airliners are the losers based on government decision not to adopt a training programme for pilots. It is a decision that took a long time to manifest. Apparently that is what we are going through now: inadequate pilots to cover the domestic operations, so they have to employ foreigners and then the domestic pilots salaries have to go high too because of demand.
There is this notion that the expatriates that come to work in Nigeria are not well skilled in what they claimed to have acquired; that they come here to upgrade themselves to be qualified to take up good jobs when they go back to their countries. The Dana flight crash and Bristow helicopter were attributed to inexperienced expatriate pilots. What is your reaction to that?
If you look at the aspect of qualification for example, the airline has the responsibility to ensure that they gather the right people that are properly qualified. So if they don’t get the right person then it is a failure on their own part. This is because aviation is not just something you can sit down in the office and do, you have to go through thorough assessment to elect technical crew personnel. Around here we don’t have that kind of facility to do the assessment because they are considering cost and things like that. If you are looking at the Bristow crash for example, the pilot in command had clocked 10 years. 10 years is reasonable enough for somebody to become a captain. However, the oil rigs, depending on his experience, the oil companies have minimum prequalification they require before they entrust such contract to operating companies and so the operators make sure that these people meet these qualifications. I cannot talk much in this area in general because it is not proper to talk about accident investigation that has not been published, it pre-empts thinking in the wrong direction. So this is just the most I can say for now.
In terms of recruiting expatriate for airlines, what is the responsibility of the Nigerian Civil Aviation Authority (NCAA)?
NCAA does not have a responsibility in that respect, if an airline presents an employee for either a validation or certification, we will do it if the documentation they present is in order. NCAA does not assess personnel that work for airlines. However, the airline documentation, that is their manuals, will say the minimum requirement before somebody is assigned to a position in the airline. It is when they go below this minimum that NCAA steps in to say, you are going below your approved standards. That is particularly the area of responsibility, outside that we do not decide for the operators who to hire.
From your experience, what will you suggest government and the airlines should do in order to train locals and reduce expatriate quota in the industry?
Well, it is a bull to be grabbed by its horns. Aviation is expensive. In the past the government has sponsored pilots training as well as operators. Now because of the operating cost and because of the market, the operators are not very comfortable with spending such amount of money to train a pilot or an engineer and at the end of the day the person will walk away to juicier offers.
For example, it has to do with their pay package, the remuneration package for the person they have trained. Although the airline and the pilot may be under bond but you can take an alternative that allows you to liquidate that bond and continue flying for another airline if you have a good pay package. So that is one area that the airlines have issues on and you cannot uniformly harmonise the remuneration package for the staff. So that area is difficult to address but then if the government feels there is a responsibility to enhancement of aviation in the country they can now also grant scholarship for people to train. Because ultimately this capital flight that is going to the foreigners will be in Nigeria if majority of the pilots are indigenes, the economy will improve based on that.
People say if we have maintenance, repair and overhaul (MRO) facility in Nigeria it may not run profitably because the country relatively has few aircraft. But Nigerian airlines spend so much money maintaining their aircraft overseas, could there be a midpoint?
You see, when you look at such prospect you find out that it is not as easy as speculated. For example, for a maintenance facility to have the required equipment it is highly capital intensive. Aviation is capital intensive. And it is not easy for somebody to sit down, make such an investment and in this our environment, where people are after quick money, and expect to recoup back that money in another 15 to 20 years. And Nigerians are not inclined to do that kind of business; they want their money quickly. So you can see that interest in this area is very low because of how the revenue comes because aviation is just barely marginally profitable if it is properly handled. It is government that can facilitate the project.
If it is properly planned and there is investment in this direction, properly managed, in the long run it will still benefit the economy because the money didn’t go out and since it is not something you expect to benefit from tomorrow, the government lays the plan, the infrastructure, probably they will start reaping the benefits in another 20 years. But it needs to be properly planned, structured and financed, that is the only way the government can get this thing done. This is because if you government leaves it for individuals they will not do it because they won’t recoup their investment in a short time. So it is an area that still requires government support, in most countries the government intervenes in these areas to enhance the economy of the system and these are areas of responsibility where we expect the government to take care of.
The life span of an average airline in Nigeria is about 10 years, do you think that the cost of maintenance is one of the reasons why local airline don’t do well. Considering the money they bring in as revenue and the money they take out overseas for repairs, do you think it is one of the reasons why they close shop early?
They all add up. For example, 20 years ago cost of fuel used to be one naira per litre right now it is over 150 naira a litre. It is now accounting for over 50 percent of the operating cost of the airlines. Nigeria has oil and we produce oil, now there are ways the government can help the people, we produce oil, and I don’t think it is so much of implication to us. If you reduce the cost of aviation fuel to the operators to sustain these airlines, to enhance them rather than throw it open to the common market it will help them to survive.
A lot of countries trade by barter using oil, they acquire facilities and infrastructure by exchange of oil and it is exactly in the same vein I am saying that if the government is able to provide this fuel, because it is not something they need to buy outside and say it is expensive. The government can control the price to the operators, now if the government is able to handle this and bring the price down, it will enhance the lives of these airlines. But bearing in mind if the operator is genuine and has genuine intensions to operating this airline; because some people are there, they will want to find a way of extracting money from the government. So there should be a thorough audit of the system before granting such concessions to operators.
It is not just like giving them money and the money disappears in the system without proper accountability. You expect them to pay back, if that money is not used to enhance the operation of the airline to generate more revenue then they will not be able to pay back. The money goes into individual pockets. So there is a lot of management input into the system that will make it work. So it is not something you can just give and let it go; otherwise, some operators will benefit from such concessions of the government at the expense of the country.
Do you think an airline, because of the cost of changing an engine or landing gear can decide to defer it for two, three months, is this possible?
You see there are safety implications in whatever decision you take. You cannot defer it if it is due for a change unless the regulations makes provision for that deferment; otherwise, you are looking for disaster. So in the audit system that is where the NCAA comes in and you know what audit is like, you probably may not be able to oversee defective items in the system, you take some percentage sampling and you do it. If you miss some of these things out then what are you going to do?
If an individual airline decides to do that deferment how would NCAA discover?
That is what I am talking about, NCAA does periodic audit of the operators. So if you go for an audit and take a sampling if it does not cover that particular aspect you will know. So in auditing you don’t audit everything, you do some sampling and this is acceptable in the system. So it just a stroke of luck if it is included in the samples you audit. But the onus is still on the operator to operate safely not NCAA. The NCAA will not take responsibility for such things when they do their job well.
If an airline decides to sabotage or do things their own way until NCAA sees they don’t you think it will be a very big risk for the industry?
It is not for the industry but for that operator in particular because if you don’t carry on with the safety requirements, for example, when something is due to be changed at a particular time it has to be changed at that time otherwise it becomes a safety risk. And in the course of the operator carrying out its functions those aspects can fail. If they fail in a very bad situation them you cause accidents and people die. So for those who do not really understand aviation and they delve into such practices the cost can really be very devastating. Because like we say, if you think safety is expensive, try an accident.
Does NCAA audit the engineers that work on every airline? What is the relationship between the technical team of an airline and NCAA?
The technical team of an airline, we are talking about oversight here, the Authority licenses them after they qualify and after they are have shown that they are capable of doing the job properly, the Authority will license them. And for each type of operation there are documentation that details what steps should be followed, that documentation are approved by the authority after a thorough review and a comparism to make sure they meet safety requirement. These are the documentation the operator will use to do the job in conjunction with the manufacturers documentation. So the authority oversees it and then the authority schedules audits according to minimum audit requirements to make sure that the documentation is in order and these jobs are done in accordance with the approved manual. Like I said when they do audit, it is not in totality, is like sampling, so you get some, you lose some.
What are the consequences of Nigerian airlines operating with very lean budget?
There is a presupposition that when you don’t have money you cut corners. Of course it is true that these things may happen but in the presence of the economic scenarios we are facing and so on, this bankruptcy is not uncommon. If you look at the banks and the failures in the system, sometimes it is very difficult for them to give money to operators. So in a properly planned operation for example, you are starting an airline, you don’t have money, you go to the bank to take loan. So from the onset you don’t even have any money. It is the prospect the bank will look at. It will look at the feasibility and say yes it is worth it and give you the money. Now down the line if you are not performing according to the programme you have given to the bank, they might withdraw their finance because they don’t want to continue the losses.
So under that circumstance the airline will have problems, in salaries they will not be paying, if they are paid they will not be paid on time, operation will suffer, maintenance will suffer and they keep going down. So for the desperate ones, if they don’t have good management personnel to run the team, you will see them taking chances and that is where problems come. But if you have good management personnel they will say I can’t work with this and that.
Why is it that Nigerian banks are reluctant to lend money to the airlines and isn’t there any possibility of government coming in?
Like I said it depends on the sincerity or honesty of the operator on what he wants to do. Some of them entered into the airline business because they see it as a quick avenue of making money from the system. So on that premise, they will never do a good job and they have not been able to do a good job. In that case, there is no way an airline can run properly. So it is not something the government will come and give them money because in recent times when they were given loans, these loans, from my own view, were not properly utilised.
So a lot of it would have gone into people’s pockets, used to salvage wrong things. Meanwhile, the main purpose of these loans is to get the airlines back to recovery and strength. So you find out that those loans are wrongly channeled.
To what extent do you think lack of airfield lighting impedes the success of airline operation?
Airfield lighting is a completely different aspect on its own. The lightings come into need when you have bad weather and at night in particular otherwise during the day time they are not really that important. But when the weather is bad or at night and the lighting is not there airline cannot operate into those airfields so they lose revenue. Most of the airfield lighting was reasonably handled by the people responsible for it. There was a time when that was a big problem in Lagos here because the local runway was not lighted, so all airplanes had to land at international. Now consider the taxi from international to domestic for an airplane, you burn about 500 kilogram of fuel going and 500 coming back that is about a thousand kilogram. And if you consider that for like 20 flights a day that is 20,000 kilograms and then for one year and this thing persisted for several years.
The losses accrue to the operators that operated under that circumstance was enormous. So you see these things no matter how small they seem have their implications. Of course, cancelling a flight means a lot not just to the airline but to the passengers. The airlines did not sit down to quantify these losses and make a presentation and push for the government to do something. We give you a guarantee that most airlines lost hundreds of millions of Naira taxing to international to depart instead of using the local runway.
I think the problem lies with not having people that have experience about the industry as ministers?
Not necessarily, you see I have a different view to these things, if you appoint the right person that has the right resource and intelligence, he will know what to do to get things working. Of course, having the experience adds a lot but does not mean that he cannot do it without the experience. Because if you use your experience to get the right resource you will know the people that will give you the right information and you get them and put them in places. But mind you, there is a high level of political bias in Nigeria’s decision when it comes to such things; that are where the problem lies.
Do you think the industry is growing?
No it has not been growing for a long time.
What are the things that government could do to make it grow?
Just like we have talked about, it is true that individuals run these airlines but if they can submit their books for proper audit to people that are qualified to review these things, it will help in establishing whether government can help them or not. There should be a monitoring team to monitor disbursement and the use of the money that is disbursed to the operators. So that if they start derailing you can call them to order. Because the money disbursed in the past was not properly used to enhance their operations. But if the government says, okay for you to get any support this is what you have to do, present us with a financial plan on how you want to use the money, how it will progress and then they review it from time to time.
Then they can say okay this plan is feasible; let the financiers have a part in the implementation so that in control and disbursement could be handled. This is necessary now because all the money that was given in the past nobody knows how it was used. So it is important to say, look let us now have this as a control before disbursement of the money. And with that they can control disbursement and make sure they are used appropriately to enhance these airlines.
There is this mantra that government should not be in business in aviation. Do you think it is possible for us to have effective airspace management without government support. Do you think those things can be ceded to the private sector?
If you decide to cede it to the private sector without control it will become a difficult issue. Because where there is control, then there is a chance for cost control and effective management. When there is no control, people do whatever they like. The government will have to establish a competition in the system. Competition helps business to grow healthy; if there is monopoly then anything can happen. And worst case scenario is when the price gets so high and it is cheaper to import, people will start importing. If you go to World Bank and you want a loan for example, you submit your proposals, they review it and see how feasible it is. When they have confidence in you they will give you the loan and expect you pay back as scheduled.
But our environment is riddles with fraud, dishonesty, and all those kind of things. And you will now find out that giving out loans by banks is like a waste, that money becomes a bad debt and never get to be recovered. So to control and handle this effectively they have to put some things in place.
They are going to build rails, roads; do you think the air transport industry has a future in Nigeria?
There is nowhere in the world that air transport industry does not has a future. Air transport supports the economy but it is not very gainful but it is a catalyst without which the economy does not survive. Rail could be rail, road could be road, for example; if you want to get to Abuja, if you are going by road you are talking about almost 12 hours journey, meanwhile if you follow a flight schedule, it is like a businessman that has a private jet, he can plan to be at the airport by 10am leave by 10.05 am and he is in Abuja by 11 am, that is not possible by road or rail. I don’t think we have developed enough to be able to have high speed trains, so forget about it, it is not going to work. Without aviation we will have economic problems.
