The Chairman of Airline Operators of Nigeria, Captain NogieMeggison says the aviation industry is a huge source of revenue to the government, just like oil, but government must put favourable policies in place for this to happen. He spoke to ChineduEze. Excerpts:
With the meeting at ART yesterday (Wednesday August 3) could you say that government is responsible for most of the ills in the aviation industry?
Let me start by congratulating the Aviation Round Table for their continuous interest in the Nigerian aviation sector as a nonprofit organisation, they have not relented in speaking their views either right or wrong. It was obvious and clear from the different people that came to that place and made different contributions as speakers and the audience. A large part of our woes today as a country and in the aviation sector both economically and otherwise has large part of blame on the government of the past administrations.
We are not saying this present administration but we are looking at it holistically and that is what we have experienced constantly, even before this government. There were efforts made from the Chief Olusegun Obasanjo administration to improve the aviation industry, which was followed by the succeeding administrations.
Where is the aviation sector heading? In my 25 years as an aviator in Nigeria I have seen 27 Ministers of Aviation. It shows that there is no stability, it also shows that we don’t have a clear cut policy tailored towards growing our God- given resources, either oil, cotton, tomatoes and our human capital, which include aviation and the movement of persons and goods from one place to another.
We have constantly said the government must look at the Nigerian travelling people as huge capital. We are 180 million people. That is God given blessing and our position in Africa geographically is the pivot for Africa hub and we should use that as a springboard to control and distribute the passengers all through Africa.
Unfortunately the policies of the government have not been clear-cut from time. So we have not been able to take advantage of what God has given us. We have the human resource, the human capital, which is 180 million people. United Nations or UNICEF has said we have not taken advantage of 60 or 65 percent of our educated population who are youths.
We have been blessed by oil; today oil is cheaper to buy aviation gas in any African country than in Nigeria. Today we are buying aviation Jet A1 at N230 a litre and we are still buying that same oil in Accra for almost 40 percent discount. Accra does not have oil; we are importing fuel from Abidjan that does not have oil. Importing Jet A1 from Abidjan shows that we missed it and it adds to the cost of operation today apart from the epileptic nature that has made 50 percent of the flight today either canceled or delayed, which has thrown our projections as airlines, as a business out of balance.
This is because if you have a business and you go to the bank to do a projection and you based it on both utilisation of the aircraft, you are likely not going to realise it. We are still suffering today at most of our national airports because most of them are not opened after 7:00 pm. So we are only operating on daylight service from 7:00 a.m. to 7: 00 p.m., which is 12 hours for an airplane that is built to fly 24 hours a day.
So first of all you have reduced the capacity by 12 hours and by 50 percent. Then you go further down to another difficult challenge, the aviation fuel is not available. You have reduced our delays and cancellations by another 50 percent, so really we are operating with 25 percent utilisation. How do you expect us to be competitive? Apart from that; there is multiple taxations, we have screamed and cried out, there is excessive interferences, there are insurance issues, there is foreign object damage (FOD) and nobody is doing anything about it. The other day my Boeing B737 landed in Katsina, we have picked up a bird (bird strike), we are on our own, we have to look for how to send engineers out there from Lagos to go and sort it out. It is our insurance that will be responsible for that. Somebody should be responsible for all these issue.
These are the things that we are saying. It is not related to aviation alone we must look at it as a top Nigerian problem. It is also happening in the electricity sector of our dear country today. What percentage of electricity do you have in a day? Look at our roads, we are having issues, we have government since 1960 and we are still having problems. Look at our railway, our seaports; the last seaport was built in 1977, so the list goes on and on.
We are believing and praying that this present administration that we have all believed in, the President Muhammadu Buhari administration, that he will come in, we are not expecting him to be the messiah but we have so much trust in him, he should listen to the people, to the private sector because at this time also, like I said, it is clear that the government with the dwindling financial income that the government is receiving from the oil sector, the government cannot do it alone. It is time for the government to begin to look at Public, Private Partnership (PPP) venture where they bring the private participation on board where they have technocrats.
That is what has propelled a lot of Western nations today, where the government takes the back seat and encourages and supports the private sector. The Nigerian aviation today, the domestic carrier is 100 percent driven by the private sector, we have tried even with all the rough edges that we have gone through, where people have gone to the banks on their own without encouragement from the government to borrow money at interest rate of 26 percent, where people cannot find foreign exchange to buy for aircraft parts. We all know that 80 percent of our operation is tied to foreign exchange interference.
Today for example, my company, JedAir has not received one dollar since January, I have bided and I have not been able to access foreign exchange. Whatever I have outside I have been using to spend to buy parts. So we must also pray to the government to also look at us critically to assist us on that.
How do you see the possibility that Ghana will become a regional hub instead of Lagos or Abuja, while the passenger traffic for the sub-region is supplied by Nigeria?
We all know what Ghana is doing. There is a popular saying that when the cat is away the rat will play; you know it is a standard thing. If we have decided to sleep as a country, where we are importing finished petroleum product despite the fact that e are oil-producing country, Abidjan will setup a refinery and sell to us. If Nigeria decides to sleep aviation wise, Ghana is going to wake up and come into the market. A country like Ethiopia now has taken advantage of our docility in the sector and helped to establish Asky that targets our passengers as its major market.
Asky is next door to us. My ex-operational manager, a South African called me the other day and said that they are setting up another company using the same Asky template to attempt to come into the Nigerian market. And the company is already on the drawing board, when I asked him what are your plans, where is your market, he said the same thing Asky is doing is what they plan to do. We as a country need to sit down and wake up, if we do not wake up and we allow people to come into our market they will continue to come into our market for free because there is no law.
Now it is not only Accra that is taking advantage of us, as you know, almost all the countries in Sub Sahara Africa or Africa look at Nigeria as a spring board. We in Nigeria is at the centre, we have the four blessing and the same for catalyst that has made Emirates today or Qatar a success story.
We have the central geographical location, which Emirates has between the West and the Eastern world. We are in the center of Africa; we have not taken advantage to be the hub. We have the oil to produce Jet A1 but we are importing Jet A1 today from Abidjan. We have the human capital, but we are importing foreign pilots, engineers and they have taken over the jobs our indigenes should be doing because we don’t have skilled labour or the know-how. Since Nigerian Airways went down nobody has done a C-check in the country. The cost of renting the land to build a hanger is outrageous. When I applied I was asked to pay about N500 million.
If I pay 500 million on the land rented what will a hanger cost me? How much will I generate from the project? So things like that are very discouraging. Whenever Nigeria coughs economically the whole West Africa or the whole sub-Saharan Africa countries go into an economic shock. Like what is happening in Kenya, where the government had to put $700 million to resuscitate Kenya Airways. But the Nigerian government is yet to put $10 directly into aviation, into the Nigerian airlines.
Beside aviation fuel, aircraft maintenance is major toll on airlines revenue. Nigeria has muted about having Maintenance, Repair and Overhaul (MRO) facility in Nigeria but it has never been realised. What is the possibility of establishing one and how much do you think it will save Nigerian airlines in foreign exchange?
The government needs to come out with a clear policy. As we discussed and as I have mentioned severally; if you acquire four to five airplanes that you do not have MRO facility in your country, you won’t be able to sustain your operations profitably. The government needs to come out with a clear policy to support or to sponsor an MRO. As I said earlier on, I applied for a land and they gave me a bill of almost N500 million to rent the land from the Federal Airports Authority of Nigeria (FAAN) and that land that is 500 million is 20 years lease.
Which bank is going to give you that money? This is because it takes time to built the hangers. By the time you even finished you have about 15 years to pay N500 million. We need to face reality; the government needs to come out with a clear policy to support such project, which should include the tooling, the skilled labour. It is like agriculture, you need to give land free, the government must come out with a clear policy to support it.
If you say you want to be a footballing nation, the government needs to come out to start to build a stadium. We need to build and we need to come out with a clear policy in training schools and subside them to put things on track. Once they come out then we all will jump on the bandwagon, lifted by the policy and start to build on it. It is achievable. And for us to enjoy what God has given us as the hub of Africa; to realise that goal, the policy must be right. The MRO is a must; it is not a maybe situation; it is 100 percent must. It must be on ground for us to survive.
And it is one of the foundations for aviation development in any country. What we have now is like attempting to build a train line without putting tracks. You don’t build a train without tracks on the ground. Or as I said, you don’t import a car and you don’t have the mechanical know-how to maintain and manage it. The car maybe as beautiful as a Rolls Royce in London Street or a Cadillac in America but when it comes to Nigeria if you don’t know the know-how, in one year that car will be an eyesore. The same thing with the aircraft, if you do not have the maintenance know-how in Nigeria after about three years or four years it becomes an issue.
What is the practical action that should be taken to make aviation fuel available in Nigeria?
Aviation fuel is not a stand-alone issue in Nigeria, petrol is an issue, kerosene is an issue. Speaking to the marketers, one of the main issues or two issues if you look at it, government has promised to put the refineries on stream by December. We pray that this is achievable; that they focus on it. We are hoping that once that comes on stream it will kill the scarcity. But before then the government has to look at aviation as one of the pivots for our economy. If we say we will shut down or there is no airline for two days the country will go into a shock. So you need aviation to move the economy and one of the catalysts for us to recover the country from the current economic downturn is aviation; we need aviation as a driving force.
What is the surviving strategy for Nigerian airlines and how can we make it profitable?
It is favourable government policies that will make Nigerian airlines profitable. The market is here; everybody can see that we have the market because we have the population. We have about 23 airports; no West African country has five airports today apart from Nigeria. So this is the place, we have 180 million population; 65 percent of the people in West African stay in Nigeria. So we are West Africa but we need to wake up from it. We need to put the policy right because if we don’t do it nobody will do it for us.
How do you see the open sky for Africa?
The two biggest friendly countries in the world today are America and Western Europe; if America and Western Europe do not have an open sky what business do we have in open sky? The European population is almost the same spread across, the German population is about 55 million, UK 55 million, France 55 million but if you look at Africa, Nigeria is 180, Togo is how many? Maybe 5 million, the other one is two million, the other one is 10 million.
There is no country that really comes close to us in population, and we are the economic power. So before you open sky you have to look at what is the advantage to you as a country. It is about time we stopped playing the big brother while the other people are not playing big brother. For example, one of the main beneficiaries in our economy today is Ethiopia Airlines, they have four airplanes that come to Nigeria everyday, one is going to Kano, one to Enugu, one to Abuja and another one coming to Lagos.
Their subsidiary company, Asky pokes in and out of our country like somebody that is going to its personal bathroom; yet, they have not invested anything in Nigeria. The same Ethiopia with all these frequencies does not have one block in the country. The same Ethiopia in its own country does not permit any local carrier to operate more than 19-seater aircraft.
Nobody can cry more than you as the bereaved, as they say; you can’t cry more than the bereaved. We need to put a policy in place and wake up to address issues; nobody will do it for us. People will come into your country and take advantage of things; the Ethiopian government buys planes on behalf of the airline and sign surety and guarantee for it.
The Nigerian operator borrows money at 26 percent at best from the banks. The Nigerian operator cannot even find foreign exchange, as I speak to you as Chairman of AON I have four different airlines trapped on C-check. I cannot bring aircraft back from maintenance. As a carrier I have not earned one dollar from the government from its foreign exchange system since we have bidden and I have constantly bided since January.
At times it is quite frustrating when you look at the policies, it is only in Nigeria where you have to pay cash and carry to service provider before you take off. It is only in Nigeria that you find your ticket that has 40 percent taxes; 40 percent of any ticket that you pickup today in Nigeria are taxes and levies. What comes to the airline? With is the disposable income of passengers? How far can you push up the fares?
What is the way out of the present lull in aviation?
I want to thank the present administration, when you identify things that are good, the present administration has been relatively new, our Minister, whenever we get to see him, he has taken pain to jump out and go with us to sort out issues whenever we meet him. But apart from meeting him one on one, I believe from what I have seen from the beginning of this administration that if I am to advise the government I will say that it needs to come out with a clear policy on how to drive aviation and improve the industry.
We don’t expect it to do everything, but we need to start somewhere and roll out gradually. Two prominent policies that are very clear. One is that aviation should be used to create jobs. How do you create jobs? How do we make it work to create jobs for our teeming unemployed youths? We can easily create jobs with aviation, I can remember the numbers I called 1500 to 100, 000 jobs.
We can create 10, 000 direct job immediately and 100,000 in those four years. Two, aviation should be looked at as a God given resource, the same way we have looked at oil so that we can harness it and draw out the economic potential from it, so we can contribute to our national GDP and also use it as a catalyst to take us out from this our economic struggle.
Do you think concession of airports will solve the numerous problems about passenger facilitation? And if you concession the terminals how do you deal with the airside of the airports?
The concession that they have been talking about I have not seen the template, whether it is joint venture, a PPP or outright sale of airport facilities.
I think till they come out with a clear policy where the government is going before we can all jump into it. What I believe is it will be good for government to bring in the private sector in airport development.
However, some people are afraid that it will make people lose job, but if it is efficient and it is working properly, Nigeria as a natural hub will boost passenger traffic, people will fly into Nigeria to use the terminal and we will create more jobs out of those concessions; if it is properly done. This is because once it is efficient and profitable the people will come in here and put their aircraft to use.
AON has not been able to get the airlines to speak with one voice and table their demands before government, why?
I believe in AON we are one body, we have met the government severally as one body, we spoke with one voice constantly, but the issue is that the government is facing a lot of challenges right now. Be that as it may, there is no excuse; we need to forge ahead. If countries like Kenya do not have oil, neither does South Africa has oil, or Singapore or Switzerland. Dubai itself does not have oil, they leverage on tourism. They take oil from their sister state and drive their airport. And we have the labour, we have oil, we have the geographic location. The only thing Dubai has is the geographic location.
You have always frowned at the plan to have national carrier?
For me, having a national carrier at this time is a distraction. Secondly, it is archaic idea, it was in 1937 that the world went into a frenzy to establish national carrier. Nobody is doing national carrier today. Those who do national carrier now are the countries that do not have developed domestic routes and they want to be known and to fly or they are using it to create tourism. Emirates objective today is not to profit from the movement of passengers, it is to bring tourists into Dubai, same thing with South African Airways.