Aligbe: AMCON Lacks the Competence to Manage Airlines

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Aviation consultant and CEO of Belujane Konsult, Chris Aligbe said Nigerian airlines are facing a bleak future and berates the Asset Management Corporation of Nigeria for playing an ignoble role in the industry. He spoke to Chinedu Eze. Excerpts:

What is your view about the rising cost of air travel in Nigeria?

Until the economy changes, a whole lot of things will happen in the aviation sector, just as it would happen in other sectors of the economy. All these are a response to the slowing economy; because when you go into economic recession, which we have been thrown into; resolution does not come easy. It takes a while. Usually it is cyclical. It moves and then maybe it begins to recover and that recovery rate will depend on how effectively government’s policy on the diversification of the economy becomes effective.

It no longer depends on oil revenue to revamp because from all indications, oil is not going to bounce back so soon. Many people believe that it would bounce back sooner but I don’t think so; I am not in that sector, but looking at the global economy and global politics, I don’t think that will happen so soon. So it would depend on the effectiveness of diversification. If we can achieve that, then the economy will begin to up again and passenger traffic will grow.

Again, if we can manage our economy in our environment and return security and improve our investment climate, there will be more people coming from outside. This is a business destination, people want to do business but the odds are against us. We have so much challenges that we are not able to resolve. If there are no incentives the domestic airlines will collapse.

The foreign airlines have the right to increase their fares because they are in business; they are not here to help us manage our affairs. That is not their business. Their business is to make money. But now they can no longer make money. That is why they have cut down their operations.

Many of them will cut down on their business. They will either reduce capacity offered, which I think British Airways has done because it is no longer using Boeing B747 to Lagos. This is how they will respond. Immediately they found out that they are not making money, people are not travelling, they will respond to capacity.

They will keep operating because Nigerians still travel, one way or the other. You find out that the area that will be impacted on is overseas students travel. Fewer students will now travel overseas because of the foreign exchange problem. The cost of training children overseas will be so high that parents will now start looking for highbrow universities in Nigeria. These universities will begin to receive enquiries from people who otherwise would have sent their children overseas to study.

The passenger traffic will continue to reduce because many people cannot afford the increasing fares, so the high profile schools in Nigeria will now attract applications from students who would have travelled overseas for studies. This is the time to invest in very excellent universities in Nigeria because this situation you are looking at may linger for another four or five years before it begins to change.

What you are going to find out is that universities in our neighbouring countries that are cheaper will attract more Nigerian students. That is what is going to happen. They are cheaper so students can go there by road, not even by air. So that is what will happen. Honestly speaking I think government should not seat back but take a global look at what is happening. We should look at the aviation industry.

I do not know why up till today there has not been any attempt for special dispensation for the aviation industry. We keep on talking about it until we come to the level we will declare the industry infant industry and put all the pegs to support an infant; otherwise we will not get out of where we are. Government has to take urgent action or the airlines will go under and when they do we will be faced with more challenges. That is what I think but airlines will increase fares. That is the only way to survive.

The increase in fares is ignited by high cost of aviation fuel. Is there nothing that could be done to make fuel supply more efficient and at lower prices?

The truth of it is that in as much as Nigeria is not refining, aviation fuel will remain as high as it is with the foreign exchange challenges that we have. We have to move very fast to begin the refining of aviation fuel locally. This is what we should do to reduce the cost. We should also resuscitate the pipelines that carry aviation fuel to the airports. They can give out the management and development of those pipelines out on Public, Private Partnership (PPP). Rehabilitating the pipelines will remove the extra charge of tankers carrying Jet A1 to the airport and it will also remove the challenges airlines are having in waiting for fuel tankers to bring in the product.

Let’s take example of Arik. It operates over 100 flights a day, including international flights and it requires several tankers to provide between 800, 000 to 1.2 million litres of aviation fuel. How will the airline continue to cope? So government should remove this challenge. Other airlines are also facing similar challenges, so they should resuscitate the pipelines to make it easy for the airlines to lift fuel.

There are so many things we can do. We should not just sit down and bemoan these challenges. They can be resolved if we decide to address them.

What do you think will happen to the Nigerian carriers with the present situation? What do you think will be their future?

The future is bleak for Nigerian carriers. This is because the challenges coming from their operational environment is huge. The airlines have their own internal problems, but the challenges coming from outside their own system are much more than what is coming from their internal challenges. Addressing these external challenges should not be piecemeal. I keep telling the Airline Operators of Nigeria (AON) that it is not coordinated.

The operators are not together and they are not coming together to jointly make demands to government. Today they are asking for waivers for aircraft parts, tomorrow it is charges. These things you cannot ask one after another. They should just get together and push that the sector should be declared as an infant industry. That is what people do in countries where they have infant industries. When they declare it they put all the benefits, which you should derive as an infant and they give time to it and say, this will stay for a period of 10 years. After 10 years if you cannot grow out of infancy, then you can die as an infant.

America has Chapter 11. As big as they are if you as an organisation have challenges you declare bankruptcy and apply for Chapter 11 and nobody will drag you for the debts that you have. There will not be an organisation like Asset Management Cooperation of Nigeria (AMCON) to drag you. Nobody will drag you. They give you that period to re-order yourself and come out of your difficulties. If you cannot come out of your difficulties you can now self off your assets and begin to pay your debts, like Pan Am did. Pan Am entered Chapter 11 it could not come out. It sold everything including its routes to pay up its debts and then wound up.

If you look at even the passenger capacity at the local routes is depleting and even at the best of times not even up to one percent of Nigerians is travelling by air, do you think anything could be done by government to boost increase in passenger movement?

What should be done is for the airlines to sit down and see how they can work together with the objective of seeing the industry survive. They would ask themselves, within this infant industry status, what are we going to put in that will make you keep your fares at the level that Nigerians can still travel. Government cannot call the airlines today and say, reduce your fairs, no.

Government cannot do that because they don’t have that right. But if you now give out something and say, it is quit pro quo, we can give you this so that you will lower your fares for the interest of the Nigerian public. The airlines will do it. The airlines want to survive. Government must focus on the airlines and say, what can we do to make sure you are offering services and you are offering it in a manner Nigerians can still benefit from these services. If this is not done eventually the airlines will collapse and Nigeria will suffer. Foreign airlines cannot do what domestic carriers can do for us. They cannot operate domestic services for us and the roads are not what they should be, the rail lines are not yet there.
So I think that the President should call for major stakeholders’ meeting.

I know that once or twice the President had held meetings with some stakeholders and asked what can we do with what these international airlines are doing? But this one should be a holistic meeting. When in 2005 and 2006 when those crashes came in quick succession, the President then, Chief Olusegun Obasanjo called stakeholders’ meeting and they brainstormed on which way forward.

It was after that stakeholders meeting that there was a change at the Nigerian Civil Aviation Authority and more importantly, the President commissioned Air Vice Marshall Dike Committee and this Committee was asked to look at the problems of the industry and find out what was needed to be done. And that government put in some money for it which led to the establishment of the safe tower project, the Total Radar Coverage of Nigeria (TRACON) and other critical projects needed for the industry.

Talking about the future of Nigerian airlines, Aero is becoming moribund. What do you think should be done to revitalise the airline?

It will be painful to see Aero go down. If that happens, jobs will be lost. People will be thrown out. The capacity offered on domestic route will be reduced and we will go back into the challenges of inadequate capacity again. You know Aero for many years was growing and even started the maintenance of aircraft on their own, A Checks, B Checks. Aero was growing that way. And you can at least trust Aero and rely on Aero.

Now the airline has gone down, down, down, down. The management appointed Captain Fola Akinkuotu, but unfortunately they appointed him into a very difficult situation. They appointed him to manage an airline that was already in coma, so if Aero goes down today it will not be because of Akinkuotu; it will be because the airline was already in coma and needed a whole lot to put it back on track again.

The airline needs refinancing, it needs restructuring and these are decisions that should be made about it in the midst of these economic difficulties. But if Aero goes down the country will suffer. The demise of Nigerian Airways cleaned out a generation of engineers and excellent professionals. If Aero goes down it will also clean up another generation of indigenous engineers and excellent professionals.

Would you say that AMCON aided the degeneration of Aero?

I told you over time that AMCON has no competence in managing airlines. AMCON does not know what it takes to manage an airline and that is the fact of the matter. They cannot pretend about it. One of the problems in this country is that people know that they do not know but they still want to behave as if they know.

And then if you don’t recognise your weakness; your inadequacies, you cannot maximise your strength. AMCON has not recognised its weaknesses and inadequacies in airline operation and management and therefore it cannot strengthen the airline. So AMCON cannot maximise its area of strength.

The Corporation has a lot to do with airline collapses in Nigeria. Look at Virgin Nigeria, it has not told us what it did with the property of Virgin Nigeria it acquired. Look at the new Embraer aircraft that were acquired and they were allowed to rot. This is why many of us are tired of talking about aviation but we have to talk until we lose steam to talk about the industry.

But this country can do better if we are ready to do better; if we are ready to utilise all the resources available to us. There are many of us in the industry who are dancers and drummers. You have to pick people and put them where they can be effective. You cannot ask me today to come and manage airports. I don’t know how to do that. I can tell you about a good airport and how a good airport should be but it is a different thing when you say, come and manage this airport.
We are not doing things right. We are taking round pegs and putting them in square holes.

As it concerns the aviation industry, we have seen the first one year of the Buhari administration, if things continue the way they are now, what do you think will happen by 2019?

It pains me because I voted him. I believe we are going to the time where we needed him. Whether I did that rightly or wrongly is immaterial, but that was what I believed when I went to cast my vote. But the way things are going today we have to do a whole lot of review. I am not praying that things should continue like this. I am also sure that he himself and maybe the people around him; men of goodwill around him who are looking at the country, the way himself is looking at the country because I think he is bordered about this country.

There are also those who are bordered about this country, but there are those who are bothered about their own interest. If he can sort these later people out in order for us to move forward, we will need to move forward. Buhari must leave us a legacy; a legacy of not just fighting corruption. He ought to fight corruption because corruption became endemic in our country that would have killed the country. I wish him and all of us great luck.

I had seen Julius Nyerere of Tanzania fought corruption and I was in that country when he was fighting it and I knew one or two things that happened. So I wish this country great luck that we succeed in fighting corruption. But fighting corruption is not only fighting against money stolen. One of the endemic elements of corruption has to do with employment. Most employment in government agencies is given to those who know one person or another; it is never given on merit.

That is one of the greatest corruption we have in our country. Vacancies that are available are not given to people to apply for them. The National Assembly should make a law on system of employment but unfortunately they are part and parcel of it, but it can make a law that no employment can be done through the backdoor. If such vacancies are not openly advertised the employment will be null and void.

When you do this Nigerians will begin to feel that they are part and parcel of this country. So corruption is endemic in all facets of our lives. It is not only about stealing money. Corruption can be reduced to a good extend but it cannot be fully eliminated. When you look at corruption in the area of employment it is worse. We have a lot of things to do. I don’t pray that the situation remains the way it is.

President Muhammadu Buhari should continue to review his appointees and what he is doing, separating those around him with selfish interest and work with those who are patriotic like himself. He should sort out those who are not going to allow the country to move forward. It is his responsibility to look at the quality of people around him.

Buhari has tremendous goodwill; he has tremendous support, but it does not take a long time to lose goodwill. So Buhari should quickly wake up so that he does not lose this goodwill that he had by the time he was coming. Most of us who went to the poles depended on this and offered our votes free because of what we believe. But the assessment today is impacting on that goodwill. I am sure that he knows. But it is one thing to know and it is another to address the issues. I believe that the country will not continue to be the way it is today because he is doing everything to bring a change. That change will come but probably not as much as we expect it but it will not be a flicker but fundamental changes. To me, I am still looking up with hope.

I don’t think it is too late to do something and I believe he is committed to doing something. So I won’t talk about 2019 because 2019 will depend on all these things we talked about. I am praying the industry should not continue like this because if it continues like this the industry will close down. It will not only be the fault of the industry but also the fault of government. So government should wake up and address the problem holistically. Remember that in 2017 the Yamoussoukro Decision will be implemented. We cannot push Yamoussoukro back. Open skies will start and there is nothing we can do.