Senior Executive of up coming NG Eagle airline and former CEO of Aero Contractors, Captain Ado Sanusi said the recent designation of major airports, as special economic zones will be an incentive to foreign direct investment. Also, he opined that airfares would be too high if airlines reflect the cost of aviation fuel on the tickets. He spoke exclusively to Chinedu Eze. Excerpts”
Recently the federal government designated the major airports in Lagos, Abuja, Kano and Port Harcourt as special economic zones. What do you think will be the benefits for aviation and the country?
Now, this is a very, very good gesture from the federal government. It is again a testimony that this administration is actually trying to reposition aviation industry to its rightful place in the growth of the economy of the country. But let us understand first what a special economic zone means. A special economic zone is an area in a country that is subject to different economic regulation that other regions within that same country don’t enjoy. So, the special economic regulation tends to be conducive to attract foreign direct investment (FDI), and also attracts local investment. So it also promotes foreign direct investment and also local investment because the laws and the regulations governing that particular zone are different from what we get. So what are the things that typically that you get from that? Usually there are tax incentives, lower tariffs. This means that there are many benefits that you can get, which include custom duty waivers and all that stuff. So they are very good things about this economic special zones.
And usually what does it do? It promotes economic growth, it facilitates job creation, it increases production in this country and increases technology transfer. So for us these airports, like Lagos, Port Harcourt, Kano and Abuja designated as special economic zones is a welcome development. We just pray that it would be managed well. You know when you say you have declared Kano or these four airports as special economic zones and we leave it like that without following it up and making sure they perform to the standard of that economy zones the purpose for setting them will be defeated. Then it is going to be another white elephant project. But I believe we should have a very strong governance structure, a very strong performance review structure for these airports when they have been designated as special economic zones so that they would enjoy all the benefits that come to it and there would be some investment if the federal government would be going to invest in these airports.
So we should be reviewing the performance to make sure that we recoup the investment. So that taxpayers’ money will not go to waste. And usually, these special economic zones that you see, the airlines enjoy from it, the entire economy enjoy from it because there will be a lot of development, companies that come around the airport, to ensure that they benefit, especially in the agro allied or agro-industry. In Nigeria we are blessed with a lot of agricultural produce, unfortunately we do not take it all the way to the finish product. So for us to participate in the global value chain for the agro industry, I think it is a good idea to have the special economic zones, so that our agric produce can be processed to a certain level before exports where they will have it finished to be to be given to the consumers. Because I think we don’t have the technology to do that all the way to get to the consumer. So we can now participate in the global value chain. So, these special economic zones is a very, very good thing to have and I pray that the federal government will see through to it, to make sure that it is implemented to the fullest and also monitor the performance.
What do you think would be the contribution in manpower development of the planned Aerospace University that the federal government has kick-started its establishment?
Again, this is another testimony of what this federal government has contributed to the aviation industry. The Aerospace University will contribute a lot to the development of aviation in Nigeria. It is a step in the right direction. If you look at the global trend now, people are longing to go into space. The billionaires are rushing to space. And space is a place where the next frontier for human beings will evolve. This is to make Nigeria to be part of the global trend for us to achieve the desired goal for our future. If you look at the aerospace technology, it cuts across all facets of our lives. You look at banking, it uses satellite; you look at even driving, it uses global positioning system. You look at medicine, it uses a lot of technology and Internet and all these things have space technology.
So aerospace is not only for aviation. It is also going to improve the life of a lot of people, including the common man. It will improve the life of the farmer in the village because there will be accurate environmental condition forecast for him to understand what kind of plants or what kind of crops he is to grow the next harvest season. So this Aerospace University is a very, very good thing to have in the country. And Nigeria is full of young talented individuals that are innovative. We should not be sending them to the United States as they finish and they go to NASA and they become strong and we celebrate them. We should grow them in our country. We should give them the opportunity to be quite innovative and start creating awareness, right from the secondary school so that our young children coming up can have the opportunity to actualize their dreams. It will enable us to have young scientists coming up with a lot of innovative ideas about space technology. I am really excited about the Aerospace University. And again, my prayer is that it should be implemented to its fullest.
A lot of airlines are coming up and there is this fear that there may become overcapacity that will give rise to desperate competition and unprofitable fares. Do you share the same view?
Well, first of all, you know, we will have to look at the total number of aircraft flying in the Nigerian airspace and the total number of passengers that are flying. And if you look at those statistics and those data, you understand that we probably will be bringing averagely between 20 to 30 aircraft flying in the country with a capacity of about a 120 to 140-passenger capacity per aircraft, that will be good for the market or the market will become saturated. Now, I don’t think the number of airlines coming up will saturate the market. I do not think so. I think what will happen is that we will grow the aviation industry, to make sure that the strongest and best airlines will survive and will tend to absorb the weaker ones at the end of the day. Because the era of you opening an airline, manage two or three aircraft for two years is over. You cannot sustain it.
Will the airlines reflect the increase in the cost of aviation fuel by having profitable airfares?
The airlines cannot reflect the actual increase of the prices of aviation fuel on the airfares in a profitable sense because if they do the fares might be too high. Airlines continue to lose money because of sudden increase in aviation fuel costs. They do not announce it to the airline in advance. By the time they increase their prices, airlines had already sold tickets at the old fares and now buy fuel at the increased cost to airlift passengers to their destinations. So the airlines continuous lose money. If the marketers notify the airlines in advance they will adjust their fares, know that they passengers that would be airlifted at certain period in future the cost of aviation fuel will be this or that amount. I believe that with time Nigerian airlines will embrace fuel hedging. And I don’t think also that airlines will make profits from sales of tickets. We don’t just increase airfares. We must get approval before we do so. Our only hope is that when Dangote’s refinery comes on stream it will cushion the effect of the high cost of aviation fuel on airlines. We also hope that government will do something on the problem of dollar by helping the airlines access it as lower exchange rate. Hopefully, government will look into that soon.
What is your view about the improvements of facilities at the Enugu airport?
I believe that one of the greatest achievements of this administration is the improvement of facilities at the Akanu Ibiam International Airport, Enugu. The most important is the resurfacing of the runway. It is one of the most challenging airports in the country because it had undulating runway so airlines didn’t like coming to the airport. Airlines were afraid of FOD (Foreign Object Damage) on their aircraft so they wouldn’t like to operate to the airport more than once a day. This singular act of resurfacing the runway has done so much. I remember when I was flying we used to go to Enugu but with scepticism because for the rough runway. But with the upgrade more airlines now fly to the airport and this has galvanized the economy of the state and more people now travel to the city. One of the greatest achievements of this administration is what it has done in the aviation industry. I think the Buhari administration has achieved more than past administrations in the sector. Enugu airport is a good example of its achievements in the industry.
With the establishment of more rail lines in Nigeria, many believe that it will reduce passenger traffic for air transport. Do you agree to that?
I don’t think so. Aviation will always be part of the economy. Each has its own market. I was on a train to Ibadan recently and I was impressed by what the federal government has done. I commend the Nigerian railway for what they are doing. They system, the coaches and their service elevated the rail transport that it looked as if we were in a flight. That is something to be proud of. But rail transport will not affect aviation. The railway system in Europe is advanced but people still travel by air. We are not even talking about China with those their high speed trains but people still fly.
So even if the rail system is modernized in Nigeria, aviation will still thrive. Their customers are different. In the next two to three years we are going to have three major airlines. Even with rail lines connecting the country air transport will still be growing and domestic passengers will record appreciable increase. This is because there is the growth of the middle class who have disposable income and who can afford to travel by air. There is also tourism, which will spur air travel. There are a lot of places in Nigeria where we have tourism destinations. As more people visit these places they do most of the travel by air. So despite insecurity, which I know is temporary, more people will travel and many more will travel by air, which is safer and faster. Rail transport is safe but air transport is the safest globally and it is also the fastest way to travel.
