Olayinka: Airline Operators are Tax Collectors

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The country manager of British Airways, Kola Olayinka, in a presentation at the just concluded Aviation Round Table in Lagos, raised controversial issues in the aviation industry. Chinedu Eze brings the excerpts:

Dollar Scarcity

Dollar scarcity as I said earlier is one of the issues I will discuss. I will rather not call it dollar scarcity; I will call it economic realignment. I think Nigerians needed to get to some point that something needed to jar us. We should thank God for this dollar scarcity. We needed to be woken up, not just in aviation, but in every sector of the economy. There have been frivolities; there have been excesses. Even at home, I had to talk with my wife on economic adjustment. This is reality. There are some things we probably should not be doing that we are doing and doing them excessively. So I just broke this down and said dollar scarcity, if you choose to call it that, has given rise to uncertainty, which is affecting business. It is affecting every business, no matter the industry that you are in. it is creating uncertainty. Losses are not strange to businesses.

At the height of dollar scarcity, the International Air Transport Association (IATA) will tell you clearly that all foreign airlines together are approaching $800million worth in Naira, which is sitting in our banks and needed to be transferred but could not be transferred. You remember that we sold ticket at N197 per dollar for months; now when the Central Bank of Nigeria Governor made the announcement and it went to N285 per dollar. That day, there was a loss of N80million on every $1million. Do the mathematics. Now, no airline is a stranger to losses, but those losses something have to happen. Some of our colleagues did not survive it. One of mine didn’t. Iberia was the first to back out. They stopped operation. Next came my friends, United Airlines. This gave rise to a lot of adjustments here and there; even British Airways made adjustments.

In my 28 years in the industry, British Airways had never flown Boeing B777 to Lagos, but it has happened. It is happening now, even last night. We are hoping to be able to change that. Our friends, Virgin Atlantic moved theirs from Airbus A340-600, the longest aircraft ever manufactured, to Airbus A330. This means that you are reducing the seat capacity. Last week we sold at N330 to the dollar; if we sold N330 to the dollar and we used to sell at N165, so a fare of $1000 has not changed. It used to be N165, 000, but suddenly at N330 per dollar, it is now N330, 000. So the airlines are not essentially increasing fares. We didn’t make it more expensive or less expensive; the dollar did. Thank God nobody else is leaving; it is not in our interest for anybody to leave.

Fair Competition

If you bring 10 more airlines in Nigeria, they will fill up. That is our strength. We should be proud of our strength as Nigerians. If you bring 10 more airlines they will fill up, but guess what? They need to fill up at the right price. We need to deliver the right service; we need to compete effectively and in a friendly way. We need to compete in a way that we are not hurting the consumer. It is not in our interest to earn excess money dumped in the Central Bank and it is going nowhere. What is the point of doing that business?

Multiple Unemployment

Many people are not talking about this. Some agencies would have rationalised; even airlines have rationalised; we had sent some people away. This is because when you are not making the money you are supposed to make, what is going to happen? And you consider the multiplier effect; if we start bringing in less people what will happen to hotels; what will happen to taxi drivers? What will even happen to my friends in Immigration? You have all these to deal with. And you know one thing government has forgotten? They also will lose money. All airline operators are tax collectors for government. Let me run through the taxes we collect. They collect $20 for every single passenger that passes through security at that airport. They don’t wait for you to give them; they take it from your account. They collect $50 dollars for every passenger. And wait for the biggest one, five percent of the real fare is a tax that goes to government. So really anything that affects aviation equally affects revenue generation of government.

Nigeria as Giant of Africa

I wish to mention two other points. Nigeria is the giant of Africa, rightly so by location, by size, by attitude, by who we are. We are the giants of Africa. But are we really the giant of Africa. If you are a giant, it should show in everything you do. How is our being a giant in Africa shinning though in our infrastructure? Try next time you travel to South Africa you look at the airports. I was talking to the ART President earlier on. I just came back from Accra and if you see Accra airport. People that may not be up to Lagos state but if you see their airport. It is small, no doubt but it is effective. It is functional; it is clean. It is something you can be proud of. I counted the Immigration desks, they were 50 and they were manned. Now, so are we really the giant in Africa? Go through South Africa: Johannesburg or Cape Town, I counted the check in counters. I was at counter 91 in Cape Town.

So the questions are, we truly the giant and if we are not or if we have not been living through to our name or our calling, what are we doing to get there? I think ART has a voice; you are our leaders in this industry. What you can be accused of is not talking to them. We cannot affect the policy but we can keep telling them until they get tired of us. So I will advise that every quarterly meeting a position paper comes out of ART that goes to government on specific aspect of what we do, telling them the reality. We may not be able to say it because they will say; British Airways, but you can say it.

Cooperation among Nigerian Airlines

Have we fully tapped the opportunities we have even within Africa? If we are the giants of Africa we should naturally be the hub. We don’t need to be talking about it. We should by location, by everything, be the hub, by strength, by size, by population, we should naturally be a hub. But are we? We are not. This is a question that bordered my mind up till now. Why should we be travelling within Nigeria and we are unable to inter-use our tickets? Why should you have one airline which you miss by 7:00 O’clock and you cannot go to them and say, sign this ticket for me I want to travel by 10:00 with the other airline? You cannot get stuck in London or Frankfurt or Paris. It is not possible. Regardless of which airline you bought its ticket as long as you bought the right ticket. If you bought a very cheap ticket then you will have to buy another ticket. I think this will be better for the Nigerian airlines. I think it is good opportunity to cooperate rather than operate individually.

Can domestic airlines focus on real development in the industry and explore our ability to compete rather than waiting for handouts or bailouts and I know this is a very contentious point I have raised. Let us choose Medview as an example, they proved it from their flight to London, as I read in the newspaper, they had 400 passengers on Boeing B747-400 to Gatwick Airport, London. I was proud of that. I am happy because this is a Nigerian airline proving outside the shores of this country.

So can we confidently say that we are creating a better aviation landscape for tomorrow? Are we looking at our infrastructure; are we looking at our airports? Are we really proud, delighted and excited about our airports? Whose fault is it that our airports are in this state or is it nobody’s fault? But can we do something about it and the last question that came to my mind is, I see a lot of lawyers and accountants and I usually see that at least one of their children will become a lawyer or accountant; how many of us have their children in one airline or one travel agency or the other. In fact, if they want to go there you will tell them, don’t go there o. I know that things are hard. That means that we are not preparing the industry for tomorrow. All of us here now will not see the end of this 21st century. What will we be remembered for? When you finally leave what will you be remembered for?

Interline Agreement

In many parts of the world, you will hear things like interline agreement. Why is it not being practiced in Nigeria? When they wanted to introduce Automatic Teller Machine (ATM) I was one of those that were very sceptical. I said they would steal all the money. I said they would remove the machines from the walls and carry all the money, but can we do without ATM now? So if ATM can work, which is an interbank transaction, why can’t interline work in Nigeria. You can take your Zenith Bank card and go to GTB ATM and collect your money. Do you know how they settle, you are taking GTB money, Zenith will reconcile accounts with them. Why can’t we have interline agreements in our airline industry? It is the same simple mechanism.

Cooperation

This lack of cooperation explains why our airlines are very small; small in their own little right. Even airlines that are big are finding it difficult to survive. That is why people come to ask, what are you doing with Iberia? We know what we are doing with Iberia. What are you doing with American Airlines? We are competitors but we are together. So the airline world has become smaller through merger, but if you chose to remain alone and you are small, you will die small. Let me go to even more dangerous one, code-share. There is no one in Nigeria. What is code-share? It is very simple. You cooperate with another airline, put your codes on them. Now, let ne go into even more dangerous one, franchise.

There is no one in Nigeria or near Nigeria. The nearest I can see in Africa is in South Africa where an airline called Comair, which is a franchise of British Airways because; they carry the colour and everything of BA. For example, all these KFC eateries are all franchise. You think it is KFC that own all these shops? No. There are people who paid to use the name. We are not even close. Why is it that everybody is struggling to create small, small names? Lastly, airlines alliances; no Nigerian airline is in any alliance. There are conditions and standard that these people require before you become a part of an alliance. For example, Iberia and British Airways were in One World and when they decided it take it a bit further it worked.

Iberia and BA share efficiency, shared personnel, costs were reduced and operations more effective. Why can’t we do that in Nigeria? Do you know that we even have code shares with rail? We even have code share with coaches. The world has become very complicated and you need to remove your individuality and join something that is bigger, which is here and it is now.

Commendable Strides

I am confident that Nigeria’s economy will bounce back. I want to salute the courage of Alhaji Muneer Bankole, Managing Director of Medview Airline. I want to salute the courage of Nigerian airlines. Elder said something earlier on; that we are always singing discordant tunes. So here this morning I salute with every degree of respect Medview Airlines which I think in the last few days brought in their Boeing B747 and operated into Gatwick Airport. I am proud. I am proud to see the flag of Nigeria on a B747 that is not borrowed. Before now it used to be borrowed. I have some pictures in my office of such borrowed aircraft. This one truly and truly belongs to Nigeria.

I salute Aero Contractors for their doggedness. I salute my friends in Arik. I attended a National Association of Nigeria Travel Agencies (NANTA) event and they gave us an aircraft and I have my own in my office. I have British Airways, I have Arik, I have Iberia and few others. Somebody came and said you have Arik aircraft in your office and I said, why not; have I stopped being a Nigerian? I am a Nigerian. Even when I retire, I will probably have it in my house. Competition does not and should not get to the point that we should not tell the truth. Aviation is aviation, no matter whom you are working for. I used to work for Nigeria Airways many years ago.