Uko: Poor Policies Stunting Aviation Growth

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Travel expert and organiser of Akwaaba African Travel Market, Ikechi Uko, in this interview with Chinedu Eze, expressed concern over the federal government’s failure to take advantage of Nigeria’s huge market to boost the nation’s economy. Excerpts:

Do you think that Ghana is really a threat to Nigeria’s aviation industry?

I don’t see Ghana actually competing with Nigeria. They don’t have the capacity. It is Nigeria that is failing itself. Nigeria is failing in its ability to perform. Ghana does not have the capacity to compete with Nigeria. Nigeria was naturally given opportunities but she is failing itself. We have airports that have the capacity to convey between five to 10 million passengers per annum; Ghana is at two to 2.5 million per annum. Maximum that Ghana airport can reach is four million, so it is not in any way a threat to Nigeria. It is just that we lack the ability to do what we are supposed to do normally. That is our own problem. We just bungle things.

But do you think foreign airlines may be looking up to Ghana actually?

Where are the passengers? But the success of South Africa Airways from Accra to Washington and Ethiopian Airlines from Lome to New York means that it is easy for them to stay outside Nigeria and carry Nigerian passengers. Ethiopia Airlines is doing it successfully from Lome and South Africa Airways is doing it successfully from Accra. This will continue if we continue bungling our opportunities. I just wrote an article where I observed that African World Airlines (AWA) has beaten all the Nigerian carriers and somebody was angry and said I was insulting Nigeria. Why should an airline that has just about five small aircraft, Embraer 45 crowd out Nigerian airlines with Boeing 737s and 70 percent of the passengers are Nigerians from the Accra-Lagos route? How is that possible if it is not incompetence? That is the problem that Nigeria is facing; that our incompetence is helping others to do very well. And it does not look like we are going to stop.

There is no response to this. Nigeria seems to have gone to sleep. AWA is planning to fly three times a day to Lagos from Accra. This was an airline that could not survive daily flights sometime ago, losing money for more than a year in the route. Now their consistency and good scheduling have made them the winners of the route.

Other African airlines like Rwand Air are making inroads into the Nigerian market. Are you aware that the airline just launched a new Airbus A330-200 on the Nigerian route?

Rwand Air will take that aircraft to as far as Guangzhou and they will have another to New York. They have only nine aircraft at the moment, which means they are smaller than Aero Contractors, smaller than Air Peace, smaller than major Nigerian carriers, but now it is the fourth most powerful carrier in the continent. In the speech I made recently I explained that it is also the power of Ethiopia Airlines to foster. The Chairman of Rwand Air is the former Managing Director of Ethiopia Airlines. It is shameful that a country like Nigeria is not able to get either airport or airline right; the money is there, the capacity is there and the passengers are there but we cannot do it.

Looking at the situation, would you say Nigeria got it wrong from the government angle?

First, the policies that create problems are government induced. In my analysis of five types of airlines, I said the first one is the orphanage type where an airline makes itself an orphan and gets foster parents. Ethiopia Airlines started as orphanage airline. It was TWA that helped to establish it, but now Ethiopia Airline is thriving but TWA has disappeared. Now, Ethiopia Airlines has fostered Asky Airlines and it may be the only profitable airline in West Africa. Ethiopia Airlines has fostered Malawi Air, British Airways has fostered Com Air in South Africa and it is thriving. So there are successful fosters, orphaned airlines have thrived while others have failed. Virgin Nigeria and Virgin Atlantic arrangement was an orphanage type but it failed. Fast Jet and Easy Jet is an orphanage type that is failing. There are orphanage models that failed and there are ones that succeeded but the most successful arrangements have been orphanage models.

There is the sepulcher one whereby an airline dies and they give it another name and launch it back into operation. That is how Ghana Airways became Ghana International Airways, Nigeria Airways became Air Nigeria; you have Air Senegal and Senegal Airlines, you have Cameroon Airline and now Camairco and they are all going exactly the same way. All those sepulcher kind of airlines die.

If the difference between Nigeria and most of the countries in Africa is that Nigeria has the passengers then why are her airlines going under?

It is true that we have the passengers but it is also because those sepulcher airlines have a weak environment that will not allow them to thrive. The third one we can do something to change in Nigeria is the one called the premature type of airlines. We have Overland Airways, which is the most successful Nigerian airline but they have not been able to grow their fleet because of funds so they need to be incubated and helped to grow.
This is where government and policies need to come in. How do we make Overland add to its fleet and grow skills? It is not about giving them money but to help them get more aircraft. With the success they have achieved; successfully operating for over 10 years, they need to have grown better than what they are now. These are known as premature airlines. When you have premature babies you incubate them and help them to grow.
So government needs to help these airlines to grow; Aero, Medview Airline and others that have lasted over five years need a boost. This is because many of them cannot grow in size unless the government comes in.

What do you think Nigerian government should do to ensure that more airlines do not go under?

First, you find out why Nigerian airlines don’t make profit. Once you find out why they don’t make profit and these include high cost of operation, aviation fuels, cost of spares, access to fund and high exchange rate. So is it possible to say, once they are operating in this environment should we declare the sector infant industry as Chris Aligbe had suggested? Government could say, don’t bother to pay us any tax for 10 years, don’t pay us any of these charges; just employ people and grow skills.

This is because once you are employing people it is good for the country. Aero that is dying has 1,300 workers and those people are now going to be unemployed. So if it is possible to employ that number then government should ask itself, how do we enable these airlines to grow skills? These airlines are strategic to our economy so they should not be treated as one-man business.

Yes, they are owned by individuals, but individuals also owned the banks and government is giving banks foreign exchange to sell and the banks do round tripping and make money. Once you have been institutionalised you are supposed to make money. For me, government can do without the money they make from the airlines; instead they should encourage them to employ more people and grow skills.

Most of the time government is nonchalant about Nigerian airlines; it pays more attention to foreign airlines. Why is it that way?

It is because the foreign airlines are impersonal. They don’t know the owners, but they know the people behind the Nigerian airlines and the policy makers in government compare themselves with the airline owners in Nigeria. This is what I have learnt from my own personal experience. People see it as me; not the role I am playing; not the service I am rendering. In Arik, they see Joseph Arumemi-Ikhide, not what the airline is doing for the country. What is in their mind is that Arumemi-Ikhide is making money. So they could actually be envious of the man. That is the daily problem in our country.

Can you conclude that the leadership or those in government do not have vision for the industry, a vision that is detached from personal interests?

Yes. None of them has Chief Obasanjo and Goodluck Jonathan’s kind of mindset that don’t care if you make money, once you are contributing in upgrading Nigeria.

A lot of people are interested whenever the idea of national carrier is raised, but many others feel that it is not workable. But the present administration, which muted the idea of establishing one doesn’t seem to have headway over it beyond its pronunciations?

No. Government does not have a concrete plan because in the past 16 months it has not done anything. But Nigeria needs a national carrier of any kind. I don’t know how they want to arrange it. There are different models they can adopt but Nigeria needs a national carrier. A country of over 170 million cannot rely on one or two airlines. We can actually have up to three major airlines.

If you look at the market now you will notice that Nigeria’s operating aircraft for the domestic routes have depleted. Aero Contractors has gone down with about 10 aircraft in its fleet, so the aircraft available for domestic operations may not be up to 50 presently. When you remove those on maintenance, aircraft on ground (AOG), the country may have about 35 aircraft for 170 million people. What do you think will happen in the long run?

We have had that cycle of boom and burst. When the boom comes there will be surplus passengers but during the burst there will be empty seats and airlines will start introducing very funny pricing. Then there will be scarcity and the scarcity creates a need, the need makes people go to invest. One person invests, another person thinks, oh that person is making money and goes to invest too. So first, there is no entry level. That is the first problem. We keep having the same cyclic thing over and over again until two or three airlines become as strong as Arik. So there is a big crisis in the system.

Nigerian airlines find it difficult to access credit from international financiers. The defunct Afrijet Airlines had access to such funding and Arik Air has support from American Exim Bank, Afrexim Bank, Export Development, Canada (EDC) and others, don’t you think that more Nigerian airlines need such support as it is becoming more difficult to secure credit from local banks?

Arik is able to secure such financiers because it has the necessary infrastructure. They have Lufthansa Technik as their maintenance company and they finance through American Exim and that shows that it is a serious company. Those organisations can look at your books and they can see the movement of your funds. Arik knows that and that is why it does not care about what they think of the airline in Nigeria because they can relocate to Ghana or Togo and still do very well.

It can relocate anywhere. But I insist that Arik and other airlines should be helped by government to survive. Government should do everything possible to ensure that these airlines become stronger. There is nothing wrong in asking them not to pay taxes or any other charges in the next three years. This will enable them reinvigorate financially. Just as Aligbe suggested, Nigeria can designate the airlines as infant industry and give them support and ask them not to pay charges for the next five years to sort themselves out.

Anybody they owe should wait and at the end of the day if they cannot pay the debts they sell them. But it is a shameful thing that people are talking about Ghana taking over from Nigeria. Ghana is far from that, although their airport is way more than our own in terms of functionality, it is still a very small airport. It has no avio bridges; it is not like a modern airport.