Liberalising Aviation through Legislation

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Government’s lean resources have forced it to fully adopt Public, Private Partnership (PPP) to develop and manage critical facilities in the aviation industry. Over the years that the strategy was introduced there has not been any legislation to back it, so the decision is always at the whim of the ministers appointed by government to oversea the sector.

The problem, however, is that there is high frequency of ministerial changes. The Chairman of Airline Operators of Nigeria (AON), Captain Nogie Meggison noted that in his 24 years in the sector he had witnessed the appointment of 28 ministers. So without proper guide and legislation, the minister has inelastic decisions to make: whether to jettison what his or her predecessors did and whether to incorporate outrageous ideas to suit his or her whims.

Government has experimented with all kinds of concession and partnership but they never worked and the only one that seemed to succeed (the concession of the Lagos airport domestic terminal to Bi-Courtney Aviation Services Limited) was mired in controversy.

Industry observers said that it is possible to bring in private investors in all aspects of the industry, except, perhaps, security. So the pipeline that runs from Mosimi to the airport in Lagos could be given to the private sector to rehabilitate and manage it for effective supply of aviation fuel to the airport. This would safe time, eliminate the cumbersome and risk-ridden movement of tankers from Apapa to the airport with the attendant traffic gridlock. It will also save money expended on logistics by marketers.

The Deputy Managing Director of Arik Air, Captain Ado Sanusi said that one of the problems of aviation fuel distribution is the trucking of the product from Apapa to the airport. This makes it cumbersome and also adds to the price of the product and suggested better ways to move the product.

“Part of the problem of aviation fuel (Jet A1) has to do with distribution of the product or bringing the product to the airports. So it is not that enough Jet A1 is not imported but there is a problem of infrastructure. If you are coming into Lagos you will see about 400 trucks with Jet A1, coming into the airport to drop 33, 000 litres. One aircraft of ours can take four or five of those trucks for a trip. So if we were going to continue to be bringing this Jet A1 in trickles, of course we would definitely have shortfall.

“So as we are addressing the challenge of availability of the product, we should also address the problem of infrastructure, storage and transportation. We should address all those issues together and also the pricing. And if you look at it, if you address the problem of distributing the product through the pipelines to the hydrants at the ramp, the price will come down because the more you truck this product the more you incur more costs,” Sanusi said.

The Head of Strategy, Zenith Travels, Olu Fidel Ohunayo said in a recent presentation that government should draft and present a national civil aviation policy that among other things should reflect the liberalization of the sector, which he believes would be pro-growth as government is now giving incentives to investors.

The new policy -National Civil Aviation Policy( NCAP)- should reflect liberalisation and be pro-growth. Some countries have done it. India’s new NCAP is designed to empower carriers to negotiate commercial partnerships with little or no interference from the regulator, improve facilitations by using fast travel technology systems; and self-handling will be allowed to boost competition with ground handlers. Taxes on maintenance will also be reviewed downwards. These and many more can be looked into to bolster our industry,” Ohunayo said.

He suggested that the “purported deregulation of aviation fuel should be revisited, not reversed. The supply mode is regulated by the oligopolistic suppliers while our passengers still pay fuel surcharge on each ticket till date, the price is increasing and sometimes not available, paradoxically the fall in oil prices in the international market and airlines increased profitability is completely absent in our airspace. There is something wrong here.”

Industry experts believe that with proper legislation and legal framework imbedded in the civil aviation policy, investors would be encouraged to risk the funds and would not fear that tomorrow such agreement could be upturned.

But Ohunayo warned that in concession, care should be taken to ensure that a well-written agreement should be done to ensure that government is not shortchanged.

“On the concession of choice airports, the United Kingdom experience of privatising worked well in a matured political society after being a regulated environment for decades.

In less developed countries like ours, governments should be tilting towards building and enhancing the transport system rather than just offloading the assets. This is to avoid a situation whereby we move from ugly state-owned airports to even uglier privately owned airports.

It is noteworthy that most reputable private sector investors would not consider buying an airport with fewer than one million passengers. That is why airports have often been sold as a package – good and bad, small and large, domestic and international terminals.

Thy should invite reputable international airport management companies, who will often achieve what governments can no longer take care of – improvements in capacity, efficiency and safety,” Ohunayo also said.

Stakeholders in the sector said for meaningful concession to take place, government must include management of safety critical equipment, including runways and landing aids in the concession; otherwise, airlines would continue to experience hindrances in flight operation due to inadequate and obsolete infrastructure.