Top Nigerian government officials and political office holders, who take critical decisions for the country, seem not to show commitment and patriotism beyond the bromides, platitude and clichés they utter in public fora.
Many Nigerians allege that most often, these officials take decisions that would favour their interests and possibly their pockets. It is now over one year that the federal government scrapped the payment of royalties on commercial agreement by foreign airlines that operate into Nigeria, which Nigeria does not have corresponding airlines that operate into their countries.
Commercial agreements are usually offshoot of Bilateral Air Service Agreement (BASA), which Nigeria signed with countries that host these airlines. This is why the royalties is known as BASA fund. Many industry observers say that for many years, Nigeria has been holding the short end of the stick in the bilateral agreement she signed with many of these countries, especially since the demise of Nigeria Airways Limited, the nation’s former national carrier.
Royalties are paid by airlines that operate into Nigeria without corresponding Nigeria carriers that operate to those countries. For example, if Qatar Airways operates seven times a week into Nigeria and no Nigeria operates into Qatar, the airline has to pay Nigeria royalties and it is calculated in a way that an amount is charged on each passenger basis. So if Qatar airlifts 1000 passengers a month from Nigeria and $2 is charged on each passenger, the airline would multiply that amount with the 1000 passengers it airlifted and pay.
But there is no defined arrangement about this. Countries device ways to manage their royalties and besides putting amount of money on each passenger, Nigeria could sign BASA on different conditions for each country. Some are done on the basis of reciprocity, some on commercial basis; some are also done on frequency and some on the weight of the aircraft.
Supporting the allegation of rip off, it is alleged that the airlines bribe those in the Ministry of Aviation responsible for BASA negotiation. Some airlines allegedly give them money; some in addition to money give them first or business class tickets for their family members and host them in their countries. This explains why these officials quickly give out frequencies to foreign airlines at the detriment of Nigeria.
THISDAY learnt that when Emirates wanted additional frequencies from South Africa, the airline had to pay 40 per cent of the cost of each ticket to South Africa Airways, so as Emirates makes money, South Africa Airways makes money on behalf of the country. But in Nigeria these airlines relatively pay nothing. It has to be known that there was an agreement Nigeria signed with Lufthansa that stopped the German airline from paying royalties. That was more than six years ago.
It is believed that the federal government might have lost over N74.4 billion ($240 million) between 2014 and 2015, which would have been funds earned as royalties from the BASA.
The questions many industry observers, including indigenous airline operators are asking is, why was the Ministry of Aviation quick to cancel the payment of royalties, when it knows that Nigerian airlines do not have up to 20 per cent of the international travel market? When it scrapped the payment of royalties, why didn’t it immediately introduce slot allocation?
It was said that the International Air Transport Association (IATA) few years ago demanded the scrap of royalties for its member airlines. But since IATA made that policy, some countries have refused to scrap royalties and others that scrapped replaced it with slot allocation which is found to even be more profitable and that is why many European countries quickly adopted slot allocation.
How can Nigeria’s airlines benefit from the foreign airlines operations into Nigeria? Government can make it possible that every foreign airline should operate from one airport in the country and partner with local carriers to bring passengers from other airports. This is what will give rise to code-share agreements between foreign carriers and Nigerian carriers, which will benefit the Nigerian airlines in many ways.
Or Nigeria can introduce the Fly Nigeria Act which will force foreign airlines to partner local airlines so that passengers who are to fly on government expense will have to use Nigerian airline partners for international destinations Nigerian airlines do not fly and there are too many of such destinations.
Industry insiders said that Nigeria has not benefitted from the potential financial accruals from the operations of foreign airlines in Nigeria because the officials of the Ministry of Aviation allegedly short-change the country.
The former Director General of the Nigerian Civil Aviation Authority (NCAA), Dr. Harold Demuren, said the kind of BASA Nigeria signs with various countries is good for politics but not good for economic growth. In other words, while Nigeria used BASA as diplomatic tool to cement relationship between it and other countries, Nigeria does not gain much from these agreements economically.
Demuren also noted that through BASA Nigeria is giving out its routes to foreign airlines.
“When you give out the routes, you get nothing. When you pay a foreign airline for ticket, they take out the money in dollars. It is your money that is getting out of the country; nothing is coming in,” Demuren said.
But a former International Relations Manager of the defunct Nigeria Airways, Andrew Okunuga, said Nigeria does not have the capacity to transport people to international destinations, so the country needs the foreign airlines. He said in those days when foreign airlines negotiate with the Nigeria Airways the reciprocity was usually equal and any extra frequency had to be paid for.
“To overcome the present disadvantage we have to grow our airlines to be international players. Arik Air and Medview Airline which presently operate international destinations should participate in BASA negotiation and not the Ministry of Aviation. We have to groom our airlines,” Okunuga said.
The federal government should urgently address the current rip off in BASA negotiations for Nigeria to earn huge revenue from the air transport sector.