Minister of Aviation, Stella Oduah
By Chinedu Eze
The strident calls for merger as a panacea for the falling fortune of operators in the crisis-ridden aviation industry in Nigeria have been dismissed by airline operators who insisted that business combination as an option cannot salvage the industry because of the individual differences and interests among airline owners.
Responding to THISDAY enquiries last week, Chief Executive Officer, Mish Aviation Services Limited, Captain Ibrahim Mshelia, said mergers would be a disaster in Nigeria because it would never work; just as establishing a national carrier in the country would never work.
“If you merge two or three sick people (airlines), it will only mean that three people who had one different type of decease each are now ending up with three diseases put together. We have a cultural problem that will not give room for merger. It cannot work in Nigeria; otherwise even the epileptic service we have will disappear.”
Speaking in the same vein, Managing Director of IRS Airlines, Mr. Yemi Dada, pointed out the incompatibilities among the present airline operators and said it would be difficult to have mergers among commercial airlines in Nigeria.
“Consolidation should mean bringing strength. We cannot take weakness and add it to weakness and say people should merge. It doesn’t make sense; we need to look at what the real problems are and not to begin to diagnose symptoms. We would not have answered the question; we would not have solved the problem,” he said. In a recent conference on merger in Lagos, the President of Sabre Networks Nigeria, Mr. Gabriel Olowo, suggested that government should put legislation in place that would force airlines to merge as their current strength cannot sustain them in the coming years.
Olowo therefore canvassed for the right policy to be put in place so operators could pull their aircraft together to form a strong carrier and boost their fleet on what he called “Magnet approach”.
He said government could make this happen by introducing a policy that for an airline to operate in Nigeria it must have 30 aircraft. This, he said, would make serious airlines come together under merger and acquisition.
If executed he said this would bring about four strong carriers out of the existing 22 airlines.
He said without merger, Nigerian airlines were heading towards doom, noting that even the very strong airlines with so many aircraft in their fleet are merging because that is the way to go.
Olowo said the Nigerian Civil Aviation Authority (NCAA) has an important role to play to drive the process.
He suggested that the regulatory body could begin by developing regulations that require airlines to have a minimum of five aircraft before getting an air operator certificate (AOC) with a further requirement to meet a scheduled growth level of 10, 15 or 20 aircraft every five years.
Managing Director of Belujane Konzult, Mr. Chris Aligbe, said why the airlines were not considering merger was because of the owner-manager syndrome which has pervaded the industry over the years and which had ensured that the country does not have a big, strong airline as everyone wants to go it alone.
Aligbe suggested that the airlines must be delivered from imminent collapse, noting that the problem of owner-manager syndrome must be removed, because failure by the operators to look inwards has not accelerated the growth and development of the industry.
Over the years many aviation industry observers have canvassed merger and acquisition as the panacea for the myriads of problems faced by Nigeria airlines, which include limited capacity, paucity of operational funds, inadequate manpower and training.
It is believed by financial and aviation experts that merger would provide the airlines economies of scale, make it easy to borrow money from international financial institutions and above all sustain the operations of the airlines and also acquire new generation machines.
The reality today is that the airlines operate on a very lean purse; they don’t have enough aircraft; they are heavily indebted and their existence is ephemeral.
Former Secretary-General of Africa Airlines Association (AFRAA), Christian Folly Kossi, once noted that for Nigerian and other African airlines to take over the African sky from the European mega carriers, they must form big airlines that would command strong presence in the region and the most practical way to achieve this is through mergers and acquisitions.