President/Chief Executive of Sabre Network West Africa and current President of the Aviation Round Table, Gbenga Olowo is of the opinion that aviation security should become part of the national security infrastructure. He also spoke on other contentious issues in the sector. Chinedu Eze presents the excerpts:
Looking at the controversy that trailed the last concession that was done in the industry, what do you think should be put in place before government embarks on the concession of four major airports in the country, as recently indicated?
Concession is obviously not the answer. All past experiments have failed with the partners in and out of court frequently and the expected result has not been favorable. Maevis and Bi-Courtney Aviation Services Limited (BASL) are a case in point. One wonders whose interest is being served when government and industry are always at variance and never meet.
Total privatisation of airports is the answer.
There should be three to four Airport Companies of Nigeria (ACN), which is desirable. Government monopoly called the Federal Airports Authority of Nigeria (FAAN) is obsolete and should be dismantled. Necessarily the ACN can be fashioned along regional zones with full capacity to operate intercontinental, regional and domestic operations.
The Federal Airports Authority of Nigeria (FAAN) seems unable to explore non-aeronautical revenue sources and therefore burden airlines with huge charges, just as it is in many African countries, do you think that African governments could be made to understand airlines as vehicle for development and not elite business enterprise?
Should government understand and appreciate the importance of airlines to national economic stimuli and growth then the heavy burden of loading the many user charges on tariff should stop immediately. Airlines are not revenue collectors.
Travel agents, banks or appointed agencies should begin to collect Passenger Service Charge (TSC), Ticket Sales Charge (TSC), VAT, Fuel Charges, etc., deduct commission and remit balance through the International Air Transport Association (IATA) clearing house to the agencies.
The airlines will safe 15 percent user charges presently eroding the tariff yield. Collection on tickets as it is done in other economies has proven unworkable in Nigeria.
Airports should also be compelled to source non-aeronautical revenue just like most modern airports in the world
Recently the Minister of State for Aviation, Senator Hadi Sirika gave conditions to any investor or airline that may want to partner government to establish a national carrier and these include technology transfer and establishment of Maintenance, Repair and Overhaul (MRO) facility. Do you think this is feasible?
Technology transfer and MRO transfer connotes various interpretations.
In todays aviation the need to embrace technology is not negotiable as it determines efficient delivery all the time with bankable results. Prospective investor in airlines and or MRO however, must have a robust business case. Government has no business in business safe for regulation to ensure quality service delivery.
Is there anyway government can establish a national carrier in Nigeria without making huge investment into it?
Which way Nigeria is heading to? Certainly government does not have such funds to float a new airline given our economic status.
However, we need to clearly understand if Nigeria is privatising or revisiting public enterprise. Public enterprise has failed the nation over the years. Nitel, Nipost, Nigeria Airways, electricity companies, the Nigeria National Petroleum Corporation (NNPC), etc.
Historical evidence also has it that the failure of these public enterprises is traceable to its owner (the government and its agencies.)
Arguments for wanting to again tow a failed route remain very unclear. Cloud surrounding the much touted national carrier by government given the poor economic wealth of the state, also require further explanation on ownership and or role of government in initiating the airline for the country?
It is hoped that this will not be hatched in secrecy and fashioned to the detriment of existing flag carriers who have been holding forth.
There are hiccups in aviation fuel supply and distribution. Even when they are available the marketers face challenges in distributing the product. What is the one-off solution to this problem?
Government in its wisdom has privatised the sub-sector. Airlines joint purchase from source to the exclusion of all brokers and middlemen will be the answer. Hopefully competition will improve supply and consequently drive down price sooner than expected.
Even when the airports are given out in concession, government will still be in charge of security. Now that FAAN is finding it difficult to recruit and train security personnel and to build perimeter fencing at the airports, what will happen when major revenue sources of the agency are given out in concession?
Aviation Security (AVSEC) is a serious business too vital to be handled by FAAN. It should go under National Security as it involves so many agencies wielding various powers. US Transportation Security Administration (TSA) should be our case study.
Private Airport Companies of Nigeria (as recommended) will be profitable like other world airports if professionally pursued.
What do you think should be done to further secure the airports?
Heavy deployment of technology centrally managed and coordinated will enhance security better than the many checkpoints by various individual agencies presently.
Presence of security need not be as visible as we currently have it at our airports and this is achievable through technology.
Do you support the suggestion that airlines should have at least five aircraft in their fleet before they start off?
Airline operator that has five to 10 aircraft in its fleet cannot be described as a strong global player. Moving from two aircraft airline to five aircraft airline will be scratching the problem on the surface. If Nigeria is serious about redressing negative balance of trade against all partners and to all routes (UK, US, France, Germany, Emirate, Ethiopia, etc.,) the rule that every airline should have up to 20 aircraft should be established.
That is 20 aircraft fleet at start up, grown by 20 every five years for any scheduled Air Operator Certificate (AOC) operator; failure which such operator can either be in charter or ad hoc business and not scheduled.
This regulation will encourage pooling of aircraft and resources, harmonised schedule, eliminate current unhealthy price war, avail more destinations with enhanced schedule and ample down time for maintenance.
How can government step in to help airlines secure long-term, single digit loans from local banks in order to solve the problem of inadequate funding for Nigerian operators?
Single digit interest rate for airlines by Nigerian banks is doubtful under this dispensation given the present economic reality.
Nevertheless, government guarantees for offshore funding, insurance cover etc. could be an option of government support for airlines with proven capacity and integrity.
How would the aviation industry contribute more to nation’s GDP?
President Muhammad Buhari should task the Ministry of Transportation to deliver at least one percent of the GDP by 2020. It is presently 0.4 percent. A grossly underperforming sector, by implication the sector will be required to grow annually at 25/30 percent and this is achievable. If we apply 5:20 rule to our airlines requesting them to grow fleet by 20 aircrafts every five years, it means three airlines by 2020 will parade a minimum of 60 operational aircrafts each, provide job for 15,000 workers and 30,000 workers with 120 aircraft by 2025 at the rate of 250 workers per aircraft. By this rule only Arik can stand alone at the moment.
Airport, airspace and catalytic activities will also grow simultaneously. This is the only way to rescue market share from foreign airlines, which must repatriate up to 95 percent of their income back to their home country in dollars and continued weakening of the Naira. Truth be told, five to10 aircraft airlines as we have it today cannot be described as strong schedule players. All the existing seven operators should pool their resources together, operate under one AOC, harmonise their schedule and stop the stupid on going competition among themselves. Then we will be having two near strong players.
What is your view about the claim that airlines are insolvent?
Insolvency simply put is when an individual or organisation can no longer meet its financial obligations. Do an x-ray of our airlines today; this is precariously what you find. All the airlines owe huge debts to fuellers, workers, government and trade partners. Arik Air / FAAN indebtedness was celebrated this past week in the face of endless reconciliation and dispute of accounts with huge flight disruptions.