Onyema: Foreign Airlines are Depleting Our Reserves

Chairman and CEO of Air Peace, Chief Allen Onyema argues that pent up demand on the foreign exchange market arising from capital flight is one of the reasons for the pressure on the exchange rate, and urged government to encourage indigenous airlines to build capacity and operate international routes. He spoke to Chinedu Eze. Excerpts:

 

What gave you the impetus to embark on international flights, knowing that since the defunct Nigeria Airways, local airlines have not been successful on long haul routes?

Like I have always said , I am a Nigerian nationalist, I believe in this country whole heartedly  and if I find myself in any position that I can use in touching the lives of Nigerians, in helping the economy of my country, in promoting the wellbeing of this country, I will get involved.

It pains me that the foreign airlines are ravaging this country; they are all depleting the resources of this country through capital flight. If you know the amount of money they take out of this country in foreign exchange, you will weep. And over time they have been doing this, they are all enjoying the fact that no one strong Nigerian airline is giving them a challenge. And it has gotten to a level that they try to abort any plan by Nigerian airlines to operate international.

When you said there is a kind of conspiracy to not allow Nigerian airlines to operate long haul, it is true. It is true that the foreign airlines do not ever wish to have one strong Nigerian airline that can comfortably and reliably compete with them. They feel the route from which they make so much money is being threatened.

It is also happening among African airlines. The African airlines do not actually want any Nigerian airline to survive.  The survival and the strengthening and wellbeing of indigenous Nigerian carriers are a huge threat to them. So it pains me that these countries airlines have several frequencies into Nigeria yet they don’t want Nigerian airlines to come into their own cities. These countries are protecting their airlines the way they know best. They do not want competitors.

I will give you an example; Togo’s Asky or whatever it is called comes into this country about four times a day. They come to Abuja; they come to Lagos as many times as they wish, they are being given free access into the country.  And when we applied to fly to Togo, in the spirit of the Bilateral Air Service agreement (BASA) to come into their country, they blocked us.  And they lost their minds and went and put it in writing and sent to us, stopping us from operating to their country.

 I am still going to court to make sure that Asky is stopped from coming into this country. The courts of Nigeria must protect this country, because it is unfair. The BASA spirit says that if you come to my country, I go to your country. If you come to my country five times, I go to your country five times if I want. Why are they stopping Air Peace? So a lot of them are scared of Nigerian airline because they know that we have got the strength to do the right thing.  And they are scared that Air Peace will give them the competition. And a particular airline in Africa is at the forefront of trying to block our airline everywhere. I have gotten that information, so they are using everything possible to stop us. But it is not going to work. They can do it for some time but it can’t last forever.

It is either they allow us to come into their countries or they will not come into Nigeria. And if the government is not going to do anything about it we shall through the judiciary do something about it. This country must be protected.

 

There is relative increase in fares for international destinations like London, US destinations because there is no Nigerian operator apart from Medview that is going to London. How does it result in capital flight from Nigeria?

I have said it time without number; the foreign airlines are constantly depleting our reserves because there is no Nigerian airline to compete with them. Why won’t the fares go up? They are having a field day on Nigerians. Do you know that a Nigerian passenger pays higher fare for a six-hour flight to London more than that of a South African passenger who flies nine hours from Johannesburg to London? Go and Google flight times to different destinations in the world and see what they pay and compare it to our six hours flight to London or 11 hours or 12 hours to United States, Nigerians pay more. And they will tell you the country is so unsafe, why are they coming to the country if it is so unsafe?

Air Peace has come out as a strong Nigerian airline to compete, all we ask is for this government to support the Nigerian airlines. With the plan Air Peace has, we don’t need a national carrier in Nigeria.  This is because we are getting support to increase our fleet to 20 and we target to schedule for international destinations. In Air Peace, we have integrity and that is why many corporate organizations want to do business with us.

So we are going all along. We have bought the Boeing 777s, so we are matching the foreign airlines with beautiful aircraft, triple class configuration, first class, business class and economy. We have the best pilots in the land; all these foreign airlines are poaching Air Peace pilots. They will stop all that because we are matching them, wages for wages. So Air Peace is very strong and we have come out to compete; all we are asking is a level playing field and for our own government to support us. I am not asking the government to gives us money but to support us, if these foreign airlines are blocking us our government should give us full backing and protect our airlines; just as those countries protect their own airlines.

However, if I don’t see that happening I am going to court to stop these airlines and I am going to embarrass Togo. Cote d’Ivoire allowed us to come in and ask us to be paying almost $7000 per landing. So where is that done? Do they pay $7000 per landing here? So they have a way of frustrating you. Cameroon has not even answered us; we have been there for the past one and half years going to Duala almost every month. Senegal is doing the same thing. We have gone to Senegal more than I can remember for the past one and half years; yet nothing.

These people come into Nigeria and go. Air Cote D’Ivoire comes to Lagos. RwandAir is even doing Lagos-Accra, Accra-Lagos, what is in Rwanda for us? So before allowing these countries, we should also think of what is there in their country we can benefit from.  If you apply to go to America, they will tell you that you have to apply to their own airlines. Why are we not carrying our own airlines along in giving these airlines from these countries frequencies? If you look at the Ministry of Transport application form the US, one of the directives is that you must inform US airlines that operate to your country.

You must inform the American airlines, it is part of their application process. They might decide that you won’t come and you won’t come. So in Nigeria the government should also carry indigenous airlines along in giving these frequencies just like it is done all over the world. Why should the foreign airlines be doing Port Harcourt-Abuja before taking off to their countries?  It is not done anywhere in the world. We must save our fragile currency; we must save our fragile economy. If you quantify what the legacy airlines take out of this country in a year, it is one of the greatest ways of depleting our reserves.

Nigerian airlines should be encouraged to get it right. Now Air Peace has stepped out, with Air Peace, Nigeria does not need a national airline because we are going to support our government and we want our government to support us to provide the needed capacity for Nigeria. We are going strongly and we are doing the right things, safety is top notch in Air Peace, the governance structure here is top notch, it knows no tribe or religion, no brother, no sister, it is based on merit. We have the best pilots, we are financially responsible, when we borrow money from the bank; we create an enabling environment for the bank to get their money back.

So the banks are willing to give us money and that is our strength. Our strength lies on our integrity. The banks are out there to support us. Fidelity is bankrolling us because they see that we have integrity to do the right thing.

As I said earlier, Nigeria does not need a national carrier; what Nigeria needs now is a national hangar. Let government facilitate the establishment of Maintenance, Repair and Overhaul (MRO) facility and challenge the indigenous airlines and see what will happen.  I heard that it is one of the major plans of this government, as the Minister of State, Aviation; Senator Hadi Sirika is working hard to see that we can have MRO in this country. He has my full support in that.

 The foreign airlines will advise that we need national carrier; government has no business doing business; except the project is buoyed by the private sector. With Air Peace we don’t need a national carrier; we are ready to provide effective service to the Nigerian citizens. We once requested to build MRO facility but the concerned agency was unwilling to give us land.

And we are always talking about Ethiopia, we don’t need Ethiopian Airlines to come and do anything for Nigeria. It is a shame that we have to run to Ethiopian Airlines to come and run airlines for us.  We had requested for hangar space since the first day we got AOC, two and half years ago. When they wanted to give us they slammed about N650 million for 15 years rent, that means they didn’t want to give it to us. Why should a Nigerian airline be maintaining its aircraft on the ramp? It is not done; they should create the enabling environment for the airlines to thrive.

 

The west Coast and the Africa destinations you plan to do, have you reviewed the market, the movement of passenger from Nigeria to these destinations? What is the density of the passenger traffic?

When we talk about traffic it is relative to the equipment you want to put in there. Most of this traffic originates from Nigeria. These countries do not have Nigeria’s population and Nigerians move a lot more than the citizens of these countries. Most of the African airlines target Nigeria because they know Nigeria does not have strong airlines and they continue to strive to ensure we don’t have one, but they cannot frustrate Air Peace. So we have done our survey, we know where to put which equipment, Air Peace is bringing about 12 Embraer  145 jets, they are undergoing their maintenance checks now. We are ready to bring money into these country, we are ready to create jobs for our people. These other airlines from Africa they are not creating jobs for our people, we are ready to create jobs for our people, so we need encouragement from our government. We are bringing in about 12 ERJ Embraer Jets, 60 seater aircraft.

You see, you start losing out when you put Boeing B737-800 on these routes; how many people are you going to carry? But Embraer 145 is a 60 seat jet, rest assured that you can fill it up to Duala, from Duala you can go to Libreville, and all over the West Coast and Central Africa. And then for our international flight, we want to create a hub for this country. Small African countries shouldn’t be disgracing us. When Nigerians want to go to London, they will first go to Kigali on RwandAir flight before they go to London. Nigerians going to Dubai, they will first go to Ethiopia’s Addis Ababa and Kigali to go to Dubai. These airlines are creating multiple routes into this country.

I am not against them, I am not against open skies, when we talk about open skies there is no unlimited open skies, it must come with some conditions; there is no blanket open skies. That is what those other countries are practicing, they are frustrating us. I am not against open skies but they should also allow us to come into their countries. Our government should also give us rights to go into those countries. And when they gives us this permit to go into these countries, they should also follow it up and make sure that these countries obey the spirit of the BASA. These countries are not obeying it, I think it is a shame and an insult to this nation Nigeria, that Togo’s Civil Aviation Authority wrote us, stopping Air Peace from coming in. Meanwhile they are having a field day into Nigeria through Asky.

By now since I spoke about this I expected that Asky should have been stopped from coming into the country until such a time they allow us to come into their own country. So if that is not going to happen I am going to go to court from May 22^–25^ to stop Asky. And I am going to do the same thing for any other country that stops Air Peace from coming in. so we have done our feasibility, there is market in those countries but it is relative to the kind of equipment you are going to use.

 

Do you have a channel to access government to let them know what Togo did and did they respond?

We have reported to the Nigerian Civil Aviation Authority (NCAA) and the Ministry of Transportation. I am sure the Nigerian government is getting across to them. And do you know that 48 hours after that publication that I was going to sue Togo, they wrote to us apologising that it was administrative hiccups; that they would do something about it soon and they would come and inspect our facilities, but since then they have not come. But I am going to make real my threat; I will pray the Nigerian Customs to ground their own airline so that they will see how it is. We have invested in human resources, infrastructure, in preparation for these flights into Togo and they are stopping us, our planes are parked there; not doing any work. There is this threat of sack hanging on the staff that we have employed for this purpose. Will the Nigerian government watch and allow me sack our staff because of another country that has four frequencies into Nigeria is not allowing us to come into their own country? So this is the issue the court will adjudicate on.

 

Recently NAMA and FG, Minister for State Aviation, said there are plans to procure equipment to upgrade the landing aids so that what happened last December where many flights were canceled because of harmattan haze will not happen again. What is your reaction to that plan?

Well, this is something that should have been done a long time ago even by preceding governments. However, if the government is trying to do this, it is a welcome idea and I don’t think the time is too short for them to do it, even if they start it now and they put in every effort to it they might accomplish it before December. But they need to start because we had a very bad time last year and passengers will not even understand even when they are seeing the weather. Some passengers are unruly and they may not understand and they will take it out the airlines. So it is very welcome information that the government wants to improve the landing aids. I urged them to go on and do it.

You noticed that this year fares are relatively high on domestic routes. Some industry observers attribute to limited equipment or do you think there are more passengers despite the hard times?

I disagree with you; the fares are not high at all. N35, 000 economy is not the basic, N35, 000 is when the aircraft is getting filled up. We still have N20, 000 and some airlines are selling N16, 000. Let me tell you, in this country, Nigerian passengers pay the least compared to any other place in the world. Everything in airlines business is based on the dollar. If you are flying from Miami to Atlanta, that is a one hour flight, if you want to buy your ticket same day you might pay as much as $300 for that trip. $300 times 450, even at 400 it is N120, 000 for economy flight of one hour. You go to other places even Ghana here, our tickets are not high at all.

With the kind of fares we are charging Nigerian airlines will continue to find it difficult to break even. Because when you look at it, you first start from N16, 000 before it gets to N35, 000 that N35, 000 maybe about three seats only that you are buying for N35, 000, so on the average what the airlines are selling might be about N22, 000 and that is very cheap.

There is unhealthy competition among us, so everybody is trying to outwit the other to everybody’s loss, so the Nigerian fares are the cheapest. We pay the cheapest because of the dollar exchange rate; you can say at least they even increase to N35, 000. Arik was charging N39, 000 about three years ago so it is not getting higher; meanwhile, the exchange rate has quadrupled, fuel cost has doubled, everything has doubled. And we are charging the former fares, so it has not gone higher and it is unreasonable and unrealistic.

The fares we pay in Nigeria very unrealistic considering where we are coming from, considering the fact that we are not even in America where you can see your spare parts in the next shop within one hour. So if you put all the cost of running this in Nigeria, the cheapest fare in Nigeria should have been about N70, 000 for economy seat. If you put everything into consideration; yet we are still paying N20,000, N19,000 and N18,000, you can’t break even on those fares.

 

If Nigeria begins to produce aviation fuel locally how will it positively affect your operations?

Of course, if Nigeria is producing aviation fuel locally it will reduce the cost of acquisition of the product. Right now we are buying at times N200 plus, N180 plus, but it has come down a little bit now but it is still very, very high. It used to be N97 but even then we were complaining, all over the world they will tell you that aviation fuel is 40 percent of your operational cost but in Nigerian is about 70 percent because you are paying three times over for the product. But if we are producing it in Nigeria it will help first of all: to conserve our foreign earnings. It will help us to buy this fuel in naira and not in dollars and then change to naira, everything will be fully computed and it is going to be cheaper.  And it is going to also make us reduce the fares we are charging and the availability will even be more, so issues of scarcity will stop. The down time you are going to wait for the product to come from Europe, America or from where ever to Nigeria is a lot but if it is produced in Nigeria, you cut off all those chains and it will impact on our turn around. There won’t be scarcity and the passengers will benefit from it.