Industry consultant and CEO of Belujane Konsult, Chris Aligbe appraises the kind of minister the aviation industry needs as well as the urgent need to revive the sector. He spoke to Chinedu Eze. Excerpts:
What kind of Minister would you want to head the aviation industry?
As far as I am concerned, today’s aviation unlike yesterday’s aviation that was purely technical issues, today’s aviation is technical and business. It is really more of business than technical but the two must be properly combined, you will not have business alone without looking at the technical side, it will collapse and if you stay only on technical without looking at the business side it will also collapse because globally aviation has become a business in its entirety.
So the minister that we need will be a minister who understands the industry, what it requires to stabilise the industry, integrity and then turn the industry into the business which it should be in all ramifications. Whether from the airline side of it or from the airport side of it, it should be business, while global standards are maintained. So the business side does not rob off from the global or technical standards as required in aviation. But if you make it purely technical then government will have to be funding it, because if government doesn’t fund it, it will collapse and I don’t think governments these day fund aviation.
Governments these days fund aspects of aviation like radars and all those things you find mainly in airspace management and then maybe Accident Investigation Bureau (AIB) on accident investigation, all these things are not supposed to be commercial. And maybe some aspects of the Nigerian Civil Aviation Authority (NCAA) because NCAA is not supposed to be a commercial outfit but the driving elements in the aviation-industry –airports and airlines, these are the two area that will turn the business engine on for the industry and if they are not properly turned on to be in full circulation then the industry will still be crying over funds. So I am saying that the person must be able to combine the two.
In addition to a possible national carrier, we can say that privately owned airlines have not been doing well but there are still certain things government must do to just give them a kind of opportunity. How do you see the sale of fuel, landing and parking and what are other possibilities of giving lifeline to Nigerian airlines so that there could be competition in the market?
Let me tell you the truth, if you are talking of landing and parking without addressing the challenges of airport management you will not get anywhere. That is why I have said and I will say it again, our domestic airlines need assistance but the kind of assistance they are asking for is not the way they should ask for such assistance.
I have said and I will say it over again, our airline industry is still operating like infant industry. They are perpetual infants; they are not growing, so first and foremost is for us to recognise this and then declare the industry an infant industry. If you want to declare it an infant industry, there is a status you create, an infant industry status is such that you say, look, because this is an infant we will still give it baby milk for the next number of years, we will still provide soft landing for the next number of years in this area and in this area.
There are many areas they are going to work on, like tax holiday, you can give tax holiday for 10 years and say this 10 years are enough for you to grow. That has happened in many places, it happened in our country, in the textile industry; if you declare the textile industry an infant industry, we were at top point before where we had grown, we were at least producing our own material suddenly everything went down. Importation killed the industry, now they are trying to re-grow it and government should declare it an infant industry and once you give it that status then you can say look all textile companies you have a textile holiday for five years or of ten years.
You can import the materials you need at a reduced customs duty. There are so many things you can do, just like during Senator Stella Oduah; they were trying to say airline parts for maintenance would be imported duty free, I don’t think they are coming duty free now. They are complaining that customs is not even allowing them do that. That is why I said they are not doing right, they ask for one thing, they go back, tomorrow they are coming back to say we should not be paying for VAT ;another time they come back and be asking for landing and parking fees to be reduced.
All these things can come under an infant industry status. If you say today we have declared this industry an infant industry status, any new operator or any existing operator will stay under this status for 10 year and after 10 years if you have not been able to grow, sorry it means you cannot grow. But those which can grow within these years enjoy these privileges, which include tax holiday, none payment of VAT, reduced duty for whatever you require.
A whole lot of things come under that status and there are about 10 items under that status. So that will help them to grow because we need them to grow, even if there is a national carrier this country needs vibrant private airlines. They are not mutually exclusive; that is why I think that those who are fighting against national carrier, private operators fighting against national carrier are making a mistake. They are making a mistake because they are looking at it as if two of them are mutually exclusive, but they are not mutually exclusive.
British Airways is there, Virgin Atlantic is there, they have all been there over time and so you cannot because there is a national carrier sponsored or engineered by government and say there should be no private carriers, no there should be. And we need to help them because that national carrier cannot do all that we need to do, just like private carriers are not been able to do all that we want them to do.
But we must help them to grow because we need airlines to grow in this country. But what they are asking for they should ask for it in a manner that it will not be a nuisance to government.
Recognising the reluctance of government to part way with airport management, looking at the reality and not the theory in Nigerian circumstances, what is the urgent recommendation you will have for effective airport management for Nigeria?
For me there are no two sides to it, we have tried the system we are in, government running airports, we have tried not only government running airport, we have central management system of the airport where the Federal Airports Authority of Nigeria (FAAN) is within an end, it stays here and it is managing the airport in Sokoto, Yola, Calabar, it is not possible to successfully manage airports that way. And airports have different peculiarities in their environments.
An airport in Calabar could find what will make it generate funds and be successful in a different way than the airport in Minna will find. And so when you look at that situation, for example airport in Minna has nothing about tourism that it can develop but the airport in Calabar can latch itself on tourism and use it to develop a vibrant operation. Once an airport develops such vibrant operation it will reduce aeronautical charges. It might now charge 60 per cent of what the airport in Abuja is charging in landing and parking because it is generating more from non-aeronautical sources.
So, gradually non-aeronautical revenue will take over in term s of the percentage of revenue coming in; that is what we should look at. So when we look at things that way, that airport are in different environments and each environment has its own peculiarities which a visionary management can turn into vast revenue and then be able to operate an airport successfully, and even expand the airport. So toddy what we are doing is not helping in that matter, FAAN is battling to manage all the airports.
The little revenue it earns not enough to manage all the airports, not even enough to expand Lagos and then to expand Abuja and make them world class airports. They are spreading the revenue they are earning in administering it over too many airports which should not be. I don’t also believe that we are at a stage of privatisation of the airports, so what we should do is to concession the airports.
When you concession it you will see the manager who now owns the airport turn it into what it should be but once you concession airports, like I always say, you must put in place an anti-competition system that will make sure that people don’t become anti-competitive. You must also put in a system that will stop them from being a cartel. All airports are monopolies and monopolies don’t care what they do with customers because they now see that the customer has no choice, users have no choice, operators have no choice.
Immediately you have it you must put in place a standing user’s charges committee, that before any new charge is brought in all the users of the airport will come together and the owner of the airport will justify what he is bringing in and why he is bringing it in and then all of them will agree, once they agree, they set a date. He can say, by June 2016 these charges will come in, so everybody had time to adjust because they are monopolies. FAAN is a monopoly as of today, NAMA is a monopoly; all of them are monopolies.
So we have not put in place systems that will check charges by monopolies, we need that but we need to concession the airports. If we keep managing our airports the way we are managing them today none of them will ever grow to become a world standard airport and government cannot continue to fund the airports. I think that these airports where new terminals are coming up, the process of concessioning them should immediately be put in place and the government should get the best advice.
The person who owns Gatwick and some investment in some other airports round the world is a Nigerian, if the President today calls him and says, look we want to do this, come and please tell us how best to do that, we can go ahead to do it, he will do it as a Nigerian. Every Nigerian anywhere once they are invited wants to help this country and the man is in Diaspora, he is not looking for money. Somebody who owns Gatwick, he is well-off by all standards.
So if you call him and say look this is the state of our airports, we think that the best way for us to do is to concession them, please come and advise us, he will. I think the new minister should be able to do that even if it doesn’t take the President to call, based on the mandate he has been given to turn the industry around. Our industry needs a total turn around, every aspect of the industry.
What do you expect the new minister to do immediately he is appointed?
Once a minister comes in, if he is a minister that has no grounding in the industry, the first thing he or she will have to do is to get the industry stakeholders together. It is not the party committees or getting people together in parties, (former Minister, Osita) Chidoka adopted that kind of approach as a way of listening to the industry. Today he calls a segment, he listens to them, tomorrow he calls another segment and listens to them; he cannot synthesise the problems by himself alone. He couldn’t. There was no way anybody can do it. If he is such a person listen to the challenges of the industry, read what the past ministers have done if you want to but if you don’t want to listen to what is current in the industry. Because the industry moves in such a fast rate that what was discussed last year by this year things have happened to change the situation. So get together and then assembly the views, when you have assembled the views, setup a crack team, a knowledgeable committee that will now put together what has been said and make it a presentation for the minister for him to see what the position of the industry is.
And then what the minister will do then is to again throw it out and then say that will set priorities and that is the charter he will take to the President and say this is what we need, this is what the stakeholders think we need to turn this industry around, so he will have kind of blue print.
There are things that have been done in the past that are very good, like Oduah’s airport city, Oduah’s airport city remains relevant today as it was yesterday. Nobody should jettison that vision, she had a good road map. This is not a defense about her. Like I will say, if you don’t accept and commend the good things somebody or anybody has done you have no moral right to condemn the bad things he has done; put them side by side. There were things that people found objectionable but there were things that were sound which she put on ground.
Lagos airport as no place for airport city any more, the surroundings have been taken up but Abuja presents you an excellent place for an airport city. And it has to be done now before all the surroundings will be taking over but there is enough land to do that. There are places you can do the airport city; maybe if you look at Calabar airport you can check what is possible. Maybe if it is not possible, maybe what Calabar airport is good for is Tinapa and tourism, it is not a place for airport city. But any greenfield airport like Abuja presents an opportunity for an airport city.
Jos airport is pretty far from town, you have land around it, it presents you opportunity for airport city, it presents you opportunity for tourism. Minna is fallow; it presents you opportunity for airport city because airport city needs land around them. Having said that, those without large portions of fallow land sometimes can build what they call airport oasis. That is what Cairo airport did; they maximised the little land they have.
I told my governor in Delta State that Asaba airport, even though people have taken up quite some land there, is still some good portions of land that he can turn into an oasis. But the fact of the matter is that many of these people don’t know airports generate so much revenue, so much employment if they are properly handled. They are just looking at airport as a technical place, they say yes we have an airport, airplanes come, they land and they go. So we are encouraging more airlines to come into the airport that is not the money. The money is in creating the business side of the airport and making it vibrant, then it gives you revenue; it creates huge employment directly and collaterally.
So these are the things we need to do in our country. But different environment, different approaches to airport development but we need to concession the airport. FAAN cannot handle these things that we are talking about; they will only have it on paper, they will never attract money to do it. But concessioning should be properly done and then we see how it goes.
Again, like we have talked about the airlines, what should be done to the airlines, declare the industry an infant industry. The national carrier must go on; there is nothing mutually exclusive so it must go on because we need it. If you leave private airlines, even if you give them the best of conditions and give them a 10 years infant industry period, in the next five years they will not grow enough to meet the challenges that we need in the industry. And in as much as they don’t grow enough to do that other airports will be demanding for foreign airlines to come into them.
That is part of the reason why foreign airlines have been granted so many landing rights. Airlines know it that because we cannot provide for the airports and the airports are crying, sometimes the governors of those airports turn it into a political issue, like the Kano people did to Oduah and accused her of not allowing foreign airlines to come to Kano. You know when that airport was opened, Kwankwanso didn’t even want to go there. He was quarrelling with Oduah and they reported that she was preventing foreign airlines to come.
Port Harcourt has been a major airport, Air France was going into it, I think it is still going into it. It started when Nigeria Airways was there but it was in corporation with Nigeria Airways, it was a code share arrangement. Because there was no double entry in our country then, so it had to sit and negotiate with Nigeria Airways. It was Nigeria Airways slot that it was operating.
The next thing that the minister should do immediately is to improve revenue generation so as to have a slot allocation system in place. It is very urgent for us today to have a slot allocation system. That is very critical; he can do it before even concessioning so that revenue will come through slot allocation. Once revenue start coming in through slot allocation you will find that revenue of international airport will improve whether it is Abuja, Lagos or any other place that the airlines want to go to.
You will find tout hat revenue will improve. So he should create it, we assist private airlines and then, the new national carrier will come in before things gets out of hand. In the next three, four years things will get out of hand in our country and we will no longer be able to control it. If we don’t have formidable national carrier and the process to grow our private operators into formidable operators, things will get out of hand.
Talking about formidable carrier, the committee that was setup to recommend modalities for national carrier just finished their work, people don’t seem to have so much confidence in that committee, do you share such view?
Well, I will tell you the truth, when I heard the names of the people in the committee, I was taken aback. But the first thing I said to myself, what is this committee setup to do? I made inquiries and I was told that the committee is supposed to gather information from stakeholders as to the effect that whether a national carrier is required and what kind of national carrier is required? That is the extent, it is like a fact finding body, an information gathering committee that is not even an implementation committee.
I said okay fair enough, let’s not write people off without giving them opportunity, at least give them the benefit of the doubt. So the committee invited me and I went there but I entered my reservation. I had two reservations about the pattern of their work and I stated exactly my reservations on what they are doing and how they are doing it. But I gave them my view about the national carrier to the fact that a national carrier is mandatory for us for X, Y, Z reasons.
A national carrier does not require government funding, government should not under all circumstances invest any money on it but government should catalyse the emergence of a national carrier, government must hold a limited equity in that national carrier because we need that equity to give it a sovereign cover. And then the other equities will go to the public, foreign investors. I made them realise that capital market is the place to source money but you can only go to capital market with an existing product.
So the airline must be in operation before you can go to capital market. You cannot go to capital market to start an airline, giving our experiences of what happened in the past, those who went to the airline went down, they went to capital market after how many years of operation. So this time people will be very careful in investing in such an airline, until they see how it is progressing. Even the Securities and Exchange Commission will not admit you until you show three years audited account before.
So I told them these things. I told them that government equity should be based on sweat equity and not funding by government. They now asked me how the funds would come; I said that is the region of consultancy. If you want me now to tell you how to raise this fund, you are no longer gathering information, you are asking to do what a consultant should do, so the day you make me a consultant then we will start talking about it.
So since I made my reservations to them there is no reason for me to start now taking the derivations I made to the public, I will give them benefits of the doubt but I do know that a lot of people in the industry have no confidence in the committee. A lot of friends talked to me, saying look are you going there? I said I will go; I will go in deference to the president who catalysed this process, in deference to the minister, maybe in deference to members of the committee.
Again I went there so that tomorrow if they bring out their report and it is necessary to critic the report, I will have a moral high ground because if they invited me and I didn’t go they will say they invited me and I didn’t come.
Are you aware that beyond the industry ordinary Nigerians are not so optimistic that Nigeria can have a national carrier? What do you think is the reason?
I will tell you the reason for that feeling. It is what is engraved in their minds, which is Nigeria Airways. Nigeria Airways is engraved in their mind and how government ran it down. I agree with those who are fixated in the Nigeria Airways concept, where government will run and control it. If government is going to run and control it, it will never succeed. So that is why the government should not control it, government equity should be limited to a sovereign cover and before going to the stock market, a crack team should be appointed as an interim board.
Interim because it will not be the final board because the final board will be people nominated by those who will invest in that airline in the next three, four years when it goes to the stock exchange, that interim board should be phased out. It must be people who are knowledgeable, people who know where this country wants to go in terms of the airline industry. The management can come from anywhere, all the people who are saying Nigerians are here to manage; we have not managed a world class airline in this country. But somebody who is under four, five years will learn what it takes to manage a world-class airline.
It is not because we are unable to but because we have not been exposed to managing a world-class airline. But we have to learn and that is why I said, we need to look where we should look hard.
Today people talk about Ethiopian Airlines; they don’t know that it was Transworld Airline that setup Ethiopian Airline. People don’t know that South African Airways was setup by World Airways from the US, post- apartheid. During apartheid they couldn’t do it because they knew something was wrong, in spite of the number of aircraft they had. They had to go and get modern managers, those who had been exposed to modern airline management.
These are the things we are going to do, all those who are managing Emirates are not from that country,they are hired management. Ethiad, Qatar those managing them are not from that country. Look at Air Mauritius, it is not being managed by people from Mauritius. Rwandan Air, they have gone to get Girma Wake an Ethiopian to help them grow and Air Rwanda is coming to Nigeria now to carry Nigerians to Dubai via Kigali. It is a shame for us. And then our airlines going to Dubai has stopped going, they are complaining. Government should not own more than 15 or 20 percent sweat equity of the new carrier and they must not fund it.
