Former Managing Director of the Nigerian Aviation Handling Company Plc and CEO of AviaPort Services Limited, Bates Sule, in this interview with Chinedu Eze, reasons that restructuring the aviation industry is the surest way of addressing the infrastructure challenge in the sector. Excerpts:
We have infrastructure challenge in the aviation sector. Many believe that the solution is to encourage the private sector to invest airport development, but many object to outright privatisation of airport facilities and opt for concession. What is your view about this?
Let me start by appreciating the new government of change and the appointment of Senator Hadi Sirika as the Minister of State for Aviation. We are lucky to have him because he has industry knowledge and he was a Senator of the Federal Republic.
The solution to the infrastructure challenges that we are facing today can be found through restructuring of the aviation sector, which has been long overdue. I was delighted to hear last week the pronouncement of the Minister that the Federal Government would review aviation policies and institutions with a view to developing our indigenous aviation industry.
You will recall that ACT CAP F5 of 2004 established the Federal Airports Authority of Nigeria (FAAN). Part 2 of the Act clearly defines FAAN’s functions to include power to discontinue the use of the airport and valuation of the airport where use is discontinued. The Act therefore needs to be amended if we have to achieve our desire to develop and modernise our airport infrastructure. The amendment will be to allow for partial privatisation of the authority along the present FAAN zonal structure, which is made up of Lagos, Abuja, Kano and Port Harcourt and the airports within their respective zones.
They can be named Airports Company of Lagos Plc, Abuja Airports Company Plc, Kano Airports Authority Plc, etc. The process shall be through open bids arising from the necessary framework to be approved by government. This will give rise to five airport authorities including FAAN. The infrastructure to be privatised shall be the landside, which will be limited to the airport access road and car parks, the terminal building and apron where aircraft are parked. FAAN will take charge of the airside which will include the taxiways, runways, perimeter fence, access roads on the airside, airfield lightings including approach lights and the provision of fire services in all the airports in the country that are currently under its jurisdiction.
I will also strongly propose that Aviation Security (AVSEC) be relocated to the Office of the National Security Adviser under a department to be known as Department of Airport Security (DAS). This department with a Commander as its head will compose of the Army, Air Force, Police and FAAN Security. The Army and Air Force will secure the airside, Aviation Security will secure the terminal building while carrying out their statutory function of screening passengers and the Police will secure the landside.
In order to achieve all of these the Federal Government will have to set up a high-powered committee including stakeholders and the aviation unions that will come up with the required framework. Similar to the unbundling of Power Holding Company of Nigeria (PHCN), the staff of FAAN will be transferred to the respective airport companies. The success of this type of exercise is already visible with Bi-Courtney Aviation Services, which currently manage and operate MMA2 terminal.
Of course there are benefits to be derived amongst which are that government spending on airport infrastructure will be reduced and the accrued savings will be used for other critical areas like health, education, etc., contribution to GDP will definitely increase from the present 0.5% to double digit, there will be improved maintenance and modernisation of infrastructure, processes and systems and above all passenger comfort and safety will be enhanced.
What do you think will be the overall solution to the hiccups in the supply of aviation fuel to the airports?
You see you cannot divorce supply of aviation fuel from what is happening in the nation vis a vis the supply of petrol. So long as this issue of subsidy is on the supply of petrol it is indirectly linked to the supply of aviation fuel. So long as the Petroleum Industry Bill (PIB) is not passed we will continue to have this problem of aviation fuel. But on the interim pending the passing of the PIB, I will suggest that one, government rehabilitate the Ejigbo Lagos airport pipeline. Two, we should have enough tank farms in the airport. Three, the bowsers from the tank farms to the aprons should be rehabilitated so that we don’t have to be using mobile bowsers, instead we should use hydrants. So the hydrants that are already available at the apron should be rehabilitated.
Now, if you do this, apart from having sufficient aviation fuel, there will also be seamless supply of aviation fuel. And when you have supply in abundance, of course the law of supply and demand will take its cause and the prices will eventually crash. So, on the interim pending the passage of PIB this is what my candid suggestion will be. Government should as a matter of urgency look at the rehabilitation of Ejigbo Lagos airport underground pipeline.
There is on-going debate over the autonomy of the Nigeria Civil Aviation Authority. Many say the autonomy is merely on paper that the Authority is not autonomous. Recently a Dana Air flight took from Uyo without locking its fuel tank. How can government guaranty the autonomy of the agency?
To enhance the effective regulation of the Nigerian Civil Aviation Authority (NCAA) there is need to revisit the 2006 Nigerian Civil Aviation Act with a view to amending and empowering the Authority more. The Authority’s functions are not just to regulate airlines alone but to carry out oversight functions. In empowering the Authority, it should be allowed to carry out full regulation and oversight on all aviation agencies and companies in the country.
If the Ministry of Aviation will still exist then, with due respect, it should limit itself to issuing out policy guidelines as a Department under the Ministry of Transport as is the case worldwide.
So, to avoid future occurrence of what happened to Dana Air flight from Uyo to Lagos recently, NCAA must as a matter of urgency post its staff to all airlines operating out of the country to ensure that proper procedures are followed before a flight is allowed to depart. Other agencies and companies that will also require close monitoring include the handling companies, self-handlers, operators of hangars, general aviation operators, cargo warehouses and operators within the airport, the Nigerian Airspace Management Agency (NAMA), FAAN, Airport Companies (post partial privatization), Meteorology, Nigerian College of Aviation Technology (NCAT), Zaria, etc. This will require necessary training and retraining of staff of the Authority on the operations of these agencies and companies.
As at 2014 total passenger movement was 15.5million, aircraft movement 289,000 and cargo movement 189million kilos. Hopefully the new international terminals located in Lagos, Abuja, Kano, Port Harcourt will be completed in 2016 and with the remodeled terminals I foresee a 100 per cent increase in traffic within the next 10 years. Therefore the need for the restructuring of the aviation industry in Nigeria has to start now.
Should aviation agencies continue to levy the present high charges on domestic airlines? Or should there be waivers to encourage the airlines in operating without incurring high cost? What will be the alternative revenue source of FAAN as it has not been able to develop the non-aeronautical revenue sources as Bi-Courtney aviation service limited has done with MM2?
Well, the issue of charges on domestic airlines is as a result of the fact that the airport authority itself after exhausting every other area of increasing charges; they now fall back to the airlines. And the airlines will want to make profit and they throw these charges back at their customers vis-à-vis passengers. And so if you have to reduce the cost of flying to enable as many people as possible fly then the charges being charged by the airport authority will have to be reviewed.
Now, in my earlier submission, I proposed that the airport authority should be unbundled. If you go to Bi-Courtney aviation, you will discover that they have more advertisements, outdoor advertisements, indoor advertisements, more than what you have at Murtala Muhammed International airport terminal. And so the terminal managers make more money from adverts then what they charge the airlines. And you see the airlines even struggle to have a space to park at the avio-bridge. I am sure if Bi-Courtney has enough space to build more avio-bridges you won’t see any aeroplane park on the apron.
But you see, at the international terminal if you go there today, how many adverts do you see? Even charges of FAAN for offices are astronomical. Airlines tend to pay for too many things, too many services, some services they don’t even require, they are forced to take such service and they pay for it. This is because the airport authority wants to generate funds for government. So I believe that privatisation is a good thing for this country; there will be a lot of competition, prices will definitely come down, both in terms of tickets and what you pay for at the airports.
Many operators say that as long as customs charges on aircraft parts importation continues the airlines will never break even because they pay hugely to operate in Nigeria, which is described as a very hostile market. Is there a way out?
My reaction to this is that aviation in Nigeria is still growing and in order for us to encourage operators we should be able to introduce waivers. So government should revisit this issue of waiver to operators to bring in aircraft especially aircraft that are for commercial purposes and also bringing in spare parts.
How can airlines we actualise long term financing for airlines and at very low interest rate? What will the government do to facilitate it?
You will recall recently a couple of years ago during the last administration, the airlines were given some bailout funds, not all airlines benefitted but the few that benefitted what was the result? In fact, some of them that benefitted even closed shops after they benefitted. And government was magnanimous enough to even give them the funds at low interest rate. I think what government should do is that government should not because of what happened during the Yar’adua administration close their door to giving out loans to serious airlines. But then government should come up with stringent conditions even if the interest rate is going to be single digit, there should be conditions attached if there is any default. So I will encourage the government or I will suggest that government should support serious-minded individuals, who already have airlines established and who wants to expand.
The success of air transport in Nigeria especially for airlines is for more people to prefer to travel by air, low income and high fare so far has impaired this objective, what are the factors that will enable Nigeria to travel more by air?
Major factor one is pricing, if it is cheap for me to fly I will rather fly because I know it is safer, it is more comfortable. The second factor is infrastructure: let me be able to go to an airport where I can have minimum comfort, an airport that is secured, an airport where the facilities are working. So if you have this running, Nigerian will love to fly. If you have cheap fares, you have comfortable terminals and you have secured environment where you can travel, definitely there will be growth in passenger movement. I can assure you that these new terminals that are coming up you will see a boom within the next few years. So far in 2014 according to the statistics that FAAN has 15.5 million passengers passed through the airports in 2014. Within the next 10 years this is going to be multiplied by 10. And I am happy now that government is establishing or building brand new terminals, which if privatised, will be better operated.
Nigeria is looking at exporting agro-allied produce as alternative source of foreign exchange to oil now that the price of crude is slumping. But the necessary facilities are inadequate and the charges are too high. How can government streamline and eliminate these challenges?
If you privatise the airports business will boom. Cargo operations require a cargo apron and it requires cargo warehouses. If you build modern cargo warehouses and run them efficiently most of these farm produce can pass through seamlessly; that is one. Two, for these farm produce to be acceptable outside this country, one you will look at the quality and two you look at the packaging. Some time ago I was abroad I wanted to buy garri and I saw this garri well packaged, I thought I was buying garri from Nigeria, it turned out to be a Ghanaian garri. Because it was well package and the quality was very good. So quality and packaging will help most of these farm produce to be acceptable for export. But then again we need infrastructure in the airport where these things have to transit to. You need a cargo warehouse where we have cold rooms where agro-allied products can be stored on transit before they are exported. So this is where private sector involvement too will go a long way.
How do you think ground-handling companies can prepare for future export of farm produce? They have a major role to play, in terms of facility, personnel and all that and what is your evaluation of ground handling in Nigeria?
Presently there are two handling companies. It is the handling companies that manage the cargo warehouses even though they are Customs bonded warehouses. If you go to these warehouses today because these two warehouses are under private sector management you will discover that they have modern warehouses. If you go into the warehouse you have areas for dangerous goods, you have an area for farm produce, you have an area for general cargo, machinery and all that. Hitherto these were not there. Now if by extension, if the airports outside Lagos are privatised, these new owners will bring very modern warehouses because they want to compete with one another. And if they do this definitely farmers will be encouraged; in fact, even the owners of the warehouses will even guide the farmers that this is how you are going to package, these are the produce that you can export, they will come to them and there will be synergy.
So, talking about handling companies, the handling companies currently are two. Outside these two, some airlines do self-handling but how much oversight function does NCAA carry out on these two handling company?
Little or nothing. And that is why you have this frequent damage to aircraft. You damage an aircraft it cost millions of naira to carry out repairs. So I will want to encourage NCAA to train its personnel on how to carry out oversight functions on the ground handling companies. Not just carry out oversight functions but also to regulate the companies economically in terms of pricing.
This is because there is a price war going on now between the two major ground handling companies which has led to inefficient delivery of service. And even some airlines are beginning to doubt the kind of pricing they receive from these handling companies. So there is need for NCAA to step in into the pricing structure of the services being rendered by the ground handling companies and to carry out more stringent oversight functions on them.
What is your view of the national carrier project?
In my opinion the National Carrier project will work if not rushed but carefully planned. The present administration hopefully will have eight years to manage this country. I will strongly suggest that within the first four years one or two private airlines should be designated, as Flag Carriers while after careful planning and provision of the required infrastructure the National Carrier should emerge during the second term of this administration. With the planned construction of a second runway in Abuja, government should also plan towards the provision of necessary infrastructure such as hangars, operational and administrative offices, acquisition of the necessary fleet of aircraft and recruitment and training of personnel, etc. Government should constitute a committee that will come up with the necessary framework and requirements for the emergence of the Flag Carrier(s) including transparent opening of bids.
Some government officials in the aviation agencies have recently criticised the volume of petition that circulate daily and say that it undermines activities of the agencies. Should there be regulation to that?
Well, petition writing especially in the aviation industry, I will say is rampant. And the petitioners, I will also add that they are not mainly the unions. These petitioners are individuals or group of individuals who are outside the union and who petition for selfish interest. Some of the interest could be that, look I was a staff, they sacked me, I will petition you. Or I want to take over your seat and I will go ahead and write frivolous petitions against you. And what I have come to observe, because I also was a victim, is that most of these petitions cannot be substantiated. But when these petitions are written the security agencies do not take time to carry out investigation before even inviting the accused. Proper investigation is not carried out and at the end of the day so much noise is made to the extent that the image, the character, the person that is being petitioned against is damaged.
So my suggestion is that if anybody or group of persons are bold enough to write petitions against any individual in the aviation industry, the petitioners should not do it anonymously, they should be ready to substantiate with relevant evidences and documents their petitions, and three, the security agencies should carry out their investigation prior to even inviting the accused. And four there should be media bleeds concerning such petitions when they have not been fully investigated until confirmed. The media will feel you are doing their job by reporting business but then it has not been fully established, the person has not better prosecuted, he has not be taking to the court of law.
I was a victim of this and I can tell you that of all the petitions, over a dozen petitions that was written against me, were frivolous, they could not substantiate them but they were done to damage my person. If these petitions were true I wouldn’t be sitting here, I would have been in jail, I would have lost my job instantly because I was operating under a private sector ownership. And I would have been sacked, in fact I even have evidences to show that one of the petitions, the board took it upon itself to even investigate it, and it turned out that they were frivolous. The so-called petitioner didn’t even show up. There was another one written to a particular security agency, they carried out thorough investigations and at the long run I was giving a clean bill of health in writing that these petitions were made to damage my character.
