Bernard: Blame Govt for High Cost of Airfares

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President of the National Association of Nigerian Travel Agents, Bankole Bernard blames the high cost of air fares on government’s taxes. He spoke to Chinedu Eze. Excerpts:

What is your evaluation of the Nigerian travel market?
The Nigerian travel market has witnessed a downturn and this is a reflection of the economy. It shouldn’t have been like that if the necessary support is given to the industry. As it is, the travel industry should actually be growing when you look at the population of the country vis-à-vis the people travelling. You realise that Nigeria needs to grow that industry and government has a role to play to ensure that the industry grows.

You were there many years ago when we never had flight to Abuja. But today there has been flight from Lagos to Abuja, Abuja to Port Harcourt and Port Harcourt back to Lagos; you can actually make that triangular trip in a day. In as much as you want to do it in a day, it has to be cost effective, and it has to be simple because that is what air travel brings to you. But what we have today is the opposite; you are not sure if you are able to make it to Abuja, that you will be able to make it from Abuja to Port Harcourt. This is because for one reason or the other the airlines will come up with issues of technical problems. You and I know that the problem is not technical problem, but it is the economic implication of them having to service those routes.

As of today the cost that government levies on each of those tickets are enormous to the point that the local operators can barely survive. Tell me one airline that is exists and that has been able to exist for 40 years. The answer is none and it is a shame. Nigeria has produced a lot of domestic carriers and within a short period they will die a natural death. Yes we will want to blame it on mismanagement on the part of the airlines but that is not just it. The economic environment matters a great deal and government policies matters a great deal for the survival of private sector businesses. If we say in other sectors they are surviving and thriving, you and I know that aviation is a delicate one. Delicate in the sense that you cannot compromise otherwise our aircraft will start to dropping from the sky, so it cannot be compromised.

So what are the things that we need to do? The government needs to have a stakeholders’ meeting to really understand how to move this industry forward. After getting to know the challenges that the operators are having, then the next thing to do is to think on how we support them to ensure that they stay in business. We have to ensure that we formulate policies that put proper checks in place.
In discussing issues affecting the industry, you may cite insufficient or lack of aviation fuel. I have been at Abuja airport, not once or twice, there is no time you will be at the airport that they will not take the light about three or four times. We use airports everywhere around the world they have not just their supply from public power supply; they have stand-by generators with a solar powered equipment. They use everything possible to generate electricity to make sure that there is no failure of power whatsoever. But that is not in our case.

Do you have the feeling that the government of this current administration doesn’t have the political will to put action behind its talks about reviving the industry?
I think the current government has the political will, they have the financial power and they have the commitment of the presidency if they do not have ulterior motives. What we are asking for are not far-fetched, they are things that can be done if there is willingness and full commitment to getting those things done. After all, Abuja runway, we said we are going to do it and we did it within the timeline. What makes it different from every other thing? Has anybody been able to account for how much the Federal Airports Authority of Nigeria (FAAN) is collecting on Passenger Service Charge (PSC)? For every international traveller $50 is been charged, and every local traveller $10 is been charged. What are we doing with that money? Who has been able to tell us this is how much they have collected so far? We are not going to just sit back and allow the government to continue to insult our level of intelligence. If these government agencies cannot live up to expectation then let us change the personnel. And if they have a problem let us bring in expertise to manage them.

Just recently, sometime last week, the news broke that we are out of recession, you have been in the travel industry have you seen any difference or changes?
Well, I haven’t seen changes and changes won’t happen so soon. That we are out of recession there are economic indices that show signs that we are out of recession, it does not mean that it will impact on the lives of the common man immediately. We have just crossed that border line that we are no longer in recession, now we are back on the part of growth, it does not mean that we have started growing, we are just on the part of growth. We were declining before, now the arrow has turned up.

How do you explain the increase in fares charges by airlines on international travel and what is the feeling of your clients about the increase?
It hasn’t been convenient for them because what it boils down to is that their cost of operations too will go up in the sense that their staff needs to make those movement in the cause of business. The rate has changed with the exchange rate from N306 to N359.5. It wasn’t the doing of IATA but the airlines needed to come to a reasonable point which is the only way they will be able to get access to FX. So if the government really loves the citizens of the country then the government needs to start making certain provisions that will enable airlines to have access to the official rate which is still at N306. But at 306 it is not available for the airlines, so if it is not available for the airlines and N359.5 is what is available for them they will go with the N359.5. What that means is that the cost of tickets will go up because they have to make money to remain in business; they cannot afford to make losses. And this thing has nothing to do with just the international carriers; even the local carriers too are affected.

This is because everything about the aircraft has to do with FX. Is it purchase of parts? Is it maintenance of those aircraft? Is it training and simulation for the personnel? So when you look at it everything is foreign exchange denominated. So the government needs to put up a level of intervention and if the government is going to intervene the government has to consider air transportation as a critical vehicle to move the economy forward, so that they do not continue to see it as a leisure vehicle because it is not a leisure vehicle. None of us can walk from here to London or to Abuja or Plateau State, but guess what? Air transport will make it faster, simpler for us to achieve good economic gains that are what it does. So the moment the government realises that air transport is a vehicle to grow economy then you will start to see the impact of it.

Foreigners are not going to trek to your country, because every time the government says we want to attract foreign direct investment, they are not going to come by ship neither will they come by road; they are going to come by air transport. When they come by air transport, they are going to look at the infrastructures you have on ground. It is only in Nigeria, that the queue of the citizens every time they come back on trip is far longer than the queue of the visitors. Everywhere in the world the reverse is the case. Where the number of visitors who arrive the county is more than the citizens that also return to the country, but in Nigeria you have the citizens queuing to come back more than the visitors. So there are fundamentals that are wrong and we need to start correcting it.

Do you think it makes any economic sense to plan to increase the taxes on business class?
It is lack of understanding, and this is what happens to government when they don’t go into full consultation with the private sector before making some economic policies. You are not making these policies for animals, we have pressure groups like ours, call them, speak with them, ask them, this is what we are planning and we will brainstorm together and we will arrive at suitable point. We can contribute to help you take reasonable decisions on how to move the industry forward. But they don’t do that, all they just do is sit at the back of house, come up with economic policies and you say to us we are animals we should run with it. No, I am sorry it shouldn’t be like that.

There is this feeling that foreign airlines are exploiting Nigerian. If they are don’t you think government is facilitating it for them to exploit the citizens?
I would say that the foreign airlines are not exploiting us. And if for any reason the foreign airlines are exploiting us the government created the window for us to be exploited. We have civil aviation authority that is responsible for air traffic regulation and pricing regulation. There is a department in NCAA that regulates this, that every airline files their tariff. If the airlines are filing their tariff and you have seen anything wrong in it, you have every right to object it or correct it. So British Airways, Virgin Atlantic, Air France will not just wake up and say that this is what I am going to sell in Nigeria, you file your tariff. So they are in the picture. So if for anything they feel that we have been exploited, they created the room for the citizens of the country to be exploited.

However, when you look at it, you will see that the taxes in Nigeria are higher than anywhere else in the world. Let us start to do the tax breakdown then you will understand that the taxes are high. People will tell you that the taxes in other developed countries are higher; if their taxes are higher you are getting value for money. There are services that come with it but here you pay it and you hardly get services to accompany the payment you have made. We will not sit back and continue to allow some people to deceive the mass and say that the reason the cost of ticket is expensive is because the airlines are exploiting us. In any way what else have we provided? What happens if all the foreign airlines decide to leave, have you thought about it? If they all decided to leave you pay through your nose; this means that you will first fly to Ghana before you board any international flight. Then you will not be talking that it is expensive. You will be too glad to pay whatever is given to you then.

Do you think the inability of Nigerian airlines to operate international destinations is due to encumbering government policies?
The problem is in two folds, you see the Nigerian mentality, we have to learn to separate management from ownership. It is always a bone of contention when it comes to Nigerian business. We must learn to separate ownership from management of businesses. When you separate ownership from ownership from management then you will see the business will thrive, that is part of the challenges our airlines are facing. The second one is an indirect self-inflicting pain coming from the government. If government can give them some soft landing in certain areas, there is nothing absolutely wrong in them paying less as parking fee.
What did they enjoy as an indigenous company? They need all those support. Then that gives them a competitive edge, it is what they call comparative advantage of being a local carrier. So that when foreign airlines come to fly in your airspace they won’t have that advantage because that is not their country of domain. So our domestic carriers are lacking in the area of comparative advantage. They should pay less on parking, they should pay less tariff, they should give them necessary support so that they can compete with their fellow airlines outside the shore.

The authorities are allowing foreign carriers to multiple designations; don’t you think it is injurious to the health of the local carriers?
I honestly don’t think it is; we just need to create a level playing ground. The need to learn from the way others are doing it. After all, didn’t Ethiopian Airlines open up their airspace? But is Ethiopian airlines and Ethiopia as a country not doing well in the aviation world. Didn’t South Africa open up their airspace; as a matter of fact for your information British Airways has a regional hub in South Africa, known as Comair. They have a regional hub. You see we need to create a competitive market; it has nothing to do with foreigner or not, create a level playing ground. The only way you support yours is by giving them comparative advantage? How do you give them comparative advantage? Make them pay less on some of those charges.

Ghana seems to have taken over as West African hub. Do you think what makes Ghana to succeed in aviation is its patriotism, commitment of its government and do you think in the long run Nigeria will be able to get its bearings right?

I will tell you something for a fact; the Ghanaian government they are smart and they are waking up to reality and the business opportunities around them. They have seen that Nigeria is a market they need to tap into and they are doing everything to attract Nigerian market. This is because at the end of the day we are going to be the loser for it. And I will give you an instance, now Ghana just opened up a modern hospital facility that will discourage a lot of Nigerians from flying abroad. They can easily just fly to Ghana and get their treatments knowing full well that our health system has failed. The airport that Ghana has improved upon is not because of their citizens or the status they want to gain for their nation, it is because they have seen the opportunities in Nigeria and they need to attract foreign carriers into their market through passengers that will be running from Nigeria.

And trust me; they will make sure that the price of tickets in Ghana is far cheaper than that of a Nigerian. Our passengers will not have a choice but to just find their way to Ghana and fly from there. So who is losing out? It is going to be an economic loss to Nigeria. We have the population and we have the market but we don’t have the willingness to provide those facilities to support it. I am sure you will agree with me you can go to Ghana airport and use their toilet; can you use our toilet here? You have to brace yourself up for you to be able to use our toilet. So there are a whole lot of things that are wrong and we have to correct them.

Talking about facilities, you know the Minister has always said the solution to our rustic infrastructure at the airports is concession. What is your view about concession?
Well, I will say that it is a step in the right direction. Yes, concession will bail us out if the concession is properly managed. Remember that we have done concession before and it has failed us. So I want to see the framework or the parameters to be used for this new concession. Remember that MM2 (Lagos airport domestic terminal) was a concession and as it is good. The rest of the world are looking at us and looking at our level of foolishness. So if this government comes up with concessioning of some other airports if it is not properly done the world will laugh at us. Concession is good because we are now going to be placing it in the hands of the private sector that will run those airports profitably and create a conducive atmosphere. For instance I prefer flying out of MM2 any day than going to the General Aviation Terminal (GAT). Why? This is because it is privately managed and efficiency is there. Nobody will just do whatever they like.

Partnership with NCAA for registration of your members, how far have you gone?
We have done all that is necessary from us and coming from the private sector, we make sure that the prerequisite for anybody to be our member or for anybody to be able to say they will do travel here in Nigerian airspace, we have done the needful. We wanted to partner with NCAA so that we have proper coverage and enforcement of the rule because if we go all out to do it all by ourselves we might not be achieving the set goal of the essence of what we want to do. Because we are not in the business of regulation, we only want to sanitise and sensitise the entire industry by letting even the general public know that once you can deal with an accredited travel agency from us and NCAA then you are fine. Because we have had issues that are fraud related among travel agencies and by the time we found out, we realised that they were really not our members.

How far have they damaged the reputation of the real travel agents?
They have done quite a lot. There is a woman that went away N65 million, collecting money from different people, and there are so many of them like that. She defrauded them at overseas and here in Nigeria. She will just collect money from them and they never get there ticket or she will issue their ticket and void it, while those ones think they are holding on to their ticket, she has voided them. She is still on the run.

How come the system allows such level of laxity?
Well, that is what happens when you have little or no intervention of the government in the downstream sector of any business. The travel agencies as we are so called, we are actually the downstream sector of the aviation industry. And what level of protection do we get from the government? Who protects our interest? Who guides our operations? Everything is self-regulated. The government gets little or not involved in our affairs, so the government needs to understand that the downstream sector of the aviation industry needs their utmost attention as well. Because we have a workforce of over two million people working in different areas, working as travel agencies or staff of travel agencies or protocol at the airport or ground handling. So the government needs to get involved in the activities of the downstream sector.

How many of the travel agents are registered?
Out of the two million we have about 6,000 of them that are registered and our prayer is that once we start this ID card scheme, which we are working on, everybody will register, so that we can trace everybody within the industry. Once we are able to trace everybody within the industry then we are settled.

How soon will this take effect?
As soon as NCAA gets back to us on the final position they have taken; we are going to launch the product and make the best out of it.

How do we move this travel business forward?
Well, it is very easy to move the travel industry forward if the government can even show a bit of interest, support, like in the oil sector, there is what we call local content. The government protected the indigenous oil companies from the foreign ones which reduced the number of expatriates working in that sector. It gave them a platform for them to grow but we don’t have such in our industry. The government needs to intervene, to even understand what we do. Because there is this nonchalant attitude that travel agencies are just agents. We are consultants, we are not agents.

We are professionals; you cannot just wake up and say you want to sell tickets. If you do that you are just touting. You have to learn the use of the technology. We get IATA certification, so we need the government to live up to their expectation by showing more interest in the downstream sector. That is what they need to do, once they show interest in the downstream sector, they will bring some level regulation, we will work together and we will streamline a whole lot of things. The effort you have seen so far, they are all self-made efforts which is done by the private sector with little or no involvement on the part of the government.