Minister of State for Aviation, Senator Hadi Sirika spoke to journalists recently on government’s plan to establish a national carrier, the airport concessions and why the industry did not experience any major incident in 2017. Chinedu Eze brings the excerpts:
Last year was good for aviation in Nigeria. What did the country do right and what is the outlook for this year?
I think what we did right as far as aviation is concerned was that we kept to those standards and recommended practices of the International Civil Aviation Organisation (ICAO). We followed it to the letter and that is why our rating gave us a pass mark that is well above average on security, and safety was also well above the global average. We were scoring from 67 percent to 96.4 percent respectively and I believe that this was because all of those safety critical matters and that of security concerns were addressed progressively.
The thing about aviation and the way we think of it is that we should attend to these issues because they are the issues that matter. What matters is how safe and secure you are when you arrive at an airport, both from the departure airport and that of arrival. And the things that make that happen are the things that passengers don’t see. The passengers are rightly concerned about how beautiful the airport looks like; how very well the air condition is working; how very well revelators, lifts and toilets are working. These are very, very important because they are all about satisfying the passenger. But what are more important are those things that will make you to arrive safely. These are the critical areas we attended to. This is why there are no major incidents within the year under review.
The federal government has just terminated the contract it has with Lufthansa Consulting as transaction adviser on the national carrier. Why did government terminate that contract?
It was not termination of contract per se. What transpired at the Federal Executive Council (FEC), which I explained very clearly, was that we substituted Lufthansa Consulting as part of the consortium to provide transaction advisory services for the establishment of national carrier and the reason is very simple and clear. We believe that Lufthansa Consulting is an arm of Lufthansa Airlines Group and we thought that this would compromise the process because they may become an interested party later in the day for the procurement. So we thought that their becoming an interested party later would compromise the system and the process, which we want to make as open, transparent and as equitable as possible.
Also Lufthansa Consulting was not able to accept the offer or sign the contract in writing. They countered the offer that we gave to them after FEC had approved and after the Bureau of Public Enterprises (BPE) had approved and gave us no objection certificate. After all these had been done, they introduced new terms. For example, they wanted the escrow account to be opened outside the country and all the money deposited there and even pay them excess of 15 percent. They wanted 75 percent to be paid to them ab initio. This is not in line with procurement laws and the contract was in naira, N341, 200, 000, but they wanted to change it to Euros, which was also not acceptable by us. More importantly, they wanted to provide the service only to the limit of outline business case. And this was neither in our proposal nor what the council had approved so it was impossible for us to continue with the procurement with Lufthansa Consulting.
So what we did was to substitute them, because there were many in the consortium. Our decision was fair because the later company is not an appendage to any operating airline or any company that might be interested in procurement in future. So it is a neutral company that has taken over from Lufthansa Consulting.
I think in the next couple of months, two months maximum, we should be able to have our outline business case of this transaction and then the full business case will follow almost immediately after because we are doing it simultaneously and after that we begin the process to establish the airline. So I will say that we are very close to having the national carrier established. Certainly it will be within the first tenure of this administration.
Pensioners of the defunct Nigerian Airways Limited (NAL) are still agitating because their money has not been paid to them?
We have dealt with the issue of pensioners by providing them with their money. The Ministry of Finance is dealing with it, the National Assembly is also playing its role; so I wish to plead with those Nigerian Airways ex-staff that since the airline was liquidated and they had outstanding severance payments nobody cared for them. They have cried for many years but we came in and said that this was unfair; these are people who had put their entire working life to serve this country. So we decided to compassionately support them and we provided them with N45 billion for their severance payment; so they should exercise patience while the process for their payment is on because very soon everyone will get his entitlements.
How do you plan to concession the airports before the end of the current administration?
The transaction advisers for the concession have brought in the outline business case. We are studying it and we are on our way to do our full business case and it will happen soon.
Talking about Lufthansa, there was a time they reached agreement to build a hub in Abuja for West and Central Africa operations, which exempted them from paying certain charges that could run into billions of naira by now. Is that agreement still on?
The issue of Lufthansa Consulting, part of what they required from us for the national carrier was that they shouldn’t be charged any taxes and this is against our laws. Regarding the other matter, I have not reviewed it, so I cannot comment on it for now.
How will Nigeria benefit from the open sky treaty?
Nigeria was among the first 11 countries that went to Yamoussoukro and took a decision to liberalise the air transport sector and open the skies for Africa. The objective of the treaty was growth and development. It also means that more jobs would be created for participating countries, it also means more connectivity in Africa, which would enhance intra African trade and also more comfort from travellers who do not have to travel around the world before getting to their African destination. Nigeria being signatory to this agreement, the Single African Air Transport (SAATM) became the issue and Nigeria also joined to become member of the first 23 countries to make that singular declaration on SAATM.
And I think that Nigeria with the market of over 173 million people, half of the size of West Africa, will be the greatest beneficiary of this treaty. At the time Nigeria was pushing for this, you and I know that we had the Nigeria Airways and we thought we would take advantage of it. Now we don’t national carrier and our airlines, one way or another, have not grown to capacity and this is why government felt that we should set in motion the establishment of a robust carrier to take advantage of the Single Africa Air Transport Market for the benefit of Nigerian people.
So I believe that we are on the right course. I believe that the national carrier, which would be driven by the private sector, once established will become a dominant carrier in Africa. This is because Nigeria is the market. Nigeria’s centrality to Africa by its location is equidistant from the farthest point in Africa and with the population of 173 million people, we have the market in the continent, and this is coupled with the fact that Nigerians are very mobile. We are great travellers. We almost travel for nothing. So Nigeria is in a very vantage position to benefit hugely from SAATM.
When will the implementation of the treaty begin?
It has started, as soon as it was signed. But it will take one to two years to become fully implemented.
Recently the federal government signed Bilateral Air Service Agreement (BASA) with five countries- China, Qatar, Congo, Algeria and Singapore. What are the benefits of this agreement? Over the years, since after the demise of Nigeria Airways, the BASA Nigeria signs with other countries seemed to be skewed against the interest of the country.
Well, first and foremost, there is no Nigeria Airways; secondly, Bilateral Air Service Agreements are good and important for us for where we are now and our life cycle as a nation and I think you need to understand that air transportation connects markets, connects businesses, connects cultures and countries and also connects people. In doing that, it brings tons and tons benefits. To be able to criss-cross the world and go to other cultures, other markets, meet with other people, other trading partners and interact with them and return to your country have unquantifiable benefits.
For me, the way to go is to continue to sign these BASAs up to a point where Nigeria would have the opportunity to take full advantage of the agreements themselves and we cannot sign a BASA that will be skewed against Nigeria. It cannot happen. And mind you, it is not only the Ministry of Transportation that does the signing, it involves the airlines themselves. They participate in the process and the Office of the Attorney General would vet it and the Federal Executive Council would deliberate over it. I don’t think that FEC, led by the President and the Attorney General of the Federation, the airlines operating within the country and other stakeholders, the Federal Ministry of Transport (Aviation), including the regulatory authority, the Nigerian Civil Aviation Authority (NCAA) would all get together and sign something against Nigeria. I don’t think it is correct.
Still on the open sky, Nigerian airlines kicked against Nigeria’s participation in SAATM by the federal government; yet government went ahead to endorse it, but the Nigerian airlines argue that government is not protecting their interest, as other participating countries protect the interest of their own airlines. What is government providing for the local carries to enhance their participation in the open skies treaty?
This question you have asked has made me sad and has made me to start thinking. The Nigerian carriers were at the forefront of the campaign to respect and to implement the Yamoussoukro Decision at the time they felt the treaty would be to their advantage. Today, they are singing another song. Nigerian airlines are heavily indebted. I am not sure if all of them are financially healthy. The NCAA is currently carrying out financial audit of the airlines and I am sure that the result of the audit will not be something the airlines would want to take to the press. Nigerian airlines have refused to grow and their challenges are not caused by government. They are responsible for those challenges. I boldly invite them to come and very soon there will be stakeholders meeting where the airlines will be present. We will dialogue about their situations. My advice to them is to get their acts together to focus, to reorganise, to re-engineer and take advantage of this opportunity offered by SAATM ad be futuristic; rather than to sit here while the train is moving and begin to whine.
Can we know their debts profile?
Look, there is an airline that owes one of the aviation agencies N13 billion. There is an airline that owed a total debt of about N500 billion. It is not only debts to the aviation agencies but the collective debts of that airline. That airline almost went under but it was taken over by government agency. I do feel that if these airlines reorganise themselves, they can do better. Let’s take the example of Aero Contractors, yesterday (February 7, 2018) I was briefing the press after council (FEC meeting); I told them that Aero Contractors has been in existence for over 57 years.
When I was born, I grew up to see the name Aero Contractors. It predated my birth; but today I am the Minister of Aviation. During that time they were getting it right all the way through for about 40 years or more, but suddenly they changed their business model and things started getting wrong. They used to serve in the oil and gas sector to provide shuttle service; they do charter and maintenance and contracts. They began to do schedule passenger service without changing the business model to reflect those changes. What happened? They ran into trouble. The legacy family (original owners of the company) did what they did and the airline went under. Government took over. We put management in place. We told them the direction; we told them to change and go back to their core business. They went back. Just recently they conducted a C-check on Boeing B737 Classic and that B737 is flying successfully. They are saving cost and making money by conducting their own checks. So I think they are getting their priorities right and doing the business that is generating revenues for them.
Everybody wants to run into schedule passenger flight. There are a lot to do in aviation. Before I became a public officer, I was a businessman in the aviation industry. I didn’t have an airline that was airlifting passengers but I was doing business in aviation and there are too many things to make money from without schedule passenger service. You can make more money from those other services than commercial flight operation when you don’t have the capacity; when you don’t have the experience and when you don’t have the right business model. In commercial flight operation catering service is overhead, ticketing is overhead etc.
Recently a Nigerian airline, Medview that is operating international service to the UK alleged that the handing company sabotaged its operations by suddenly suspending its service to the airline with approval from airport authorities. Also recently, Air Peace cried out that the countries it was designated to in West Africa are hostile and they want to discourage their flight to those destinations with outrageous charges. Apart from designating Nigerian carriers to international routes, how is government protecting these airlines and ensuring that they are operating profitably just like other airlines that come to Nigeria do?
Let me assure you that whatever that is within the law that was signed in the Bilateral Air Service Agreement, will be followed by government. We have intervened on behalf of Nigerian airlines on many occasions both within and outside Nigeria. You can confirm from them.
I don’t want to believe that Gatwick (Airport, London) could discriminate against a Nigerian carrier because one of the major shareholders and owners of Gatwick is a Nigerian. I am not sure that Gatwick would discriminate against a Nigerian carrier. I don’t want to believe so. Then regarding Medview going into Dubai, it was government that intervened to make that possible.
You cannot just wake up one and decide to fly into a country without first meeting all the lawful and legal conditions bordering especially on safety of your operation and on security. All those thick boxes must be checked before you get in there. If there is delay before they acknowledge your request to start operation, I am sure that it would be a genuine delay. Nigeria is a sovereign nation, protected by conventions, by laws and by agreements. If there is any country that would renege or do something unlawful against what was provided by conventions, Nigeria will stand up and fight it and I will be in the forefront.
Talking about airlines debts to aviation agencies, why do the agencies allow themselves to be owed until the debts reached that humongous amount of money?
These debts were owed over a long period of time and it was during those years of impunity. In the past, some airlines would owe and use the contacts they have in the Presidency to force the agencies to give them waiver, despite the debts, but in this government such is not going to happen at all. I am not using the word, likely; rather, I am saying that such a thing not going to happen in this administration. We cannot allow them to continue to pile on debts and someone will call the Villa and the debts are either waived or postdated. Nobody in the Village will call on behalf of any airline this time.
The only doors and windows that remain open are that of the Minister of Aviation and those of the regulatory authorities. There is no door or window in the Villa that will encourage an entrepreneur to break a law and expect the Presidency to intervene. Not this time. And you cannot come to the Minister of Aviation with unclean hands and expect to be helped out of it.
In the principle of reciprocity, we expect that when other countries bill Nigerian airlines exorbitant charges, Nigeria is expected to also bill their airlines exorbitant charges but Nigeria is said to be too soft on these foreign carriers, while they use the high charges to discourage Nigerian airlines from operating to their countries?
I have not confirmed that Nigerian airlines pay higher charges in other African countries, but I take it from you to be true. However, it has to be recognised that every country has its own charges. Perhaps Nigeria is putting those charges lower so that the passenger will pay less to make air transportation cheaper. Perhaps this is a policy of our government; perhaps those other countries may feel that they have to operate with high charges. That is their own policy. Here, our policy is to be able to give the traveller some succour by bringing the charges low because air fares reflect the charges. Charges are carried over to the passengers by the airlines.
Be that as it may, the Airline Operators of Nigeria (AON) said that Nigeria is the most expensive country to operate in and here you are saying we are the least expensive to operate in.
How far have you gone with the committee you set up to review the charges paid by domestic airlines?
We have gone very far. The report has been made and I will submit the report to government. One of the things we are considering is the issue of Value Added Tax (VAT). The issue of VAT is not chargeable on transportation. It will not be difficult to convince government to consider removing VAT from airline charges. The report is being prepared now for onward delivery to the government.
What is government’s reaction to the Dana Air incident when one of its flights had its emergency door fallen off on landing?
You called it incident and I think you are right. That experience is traumatising for air travellers; after landing to see an emergency door fall inside the aircraft. It can be very traumatising, very uncomfortable and very scary. We reason with the passengers. We apologise for the mishap. But I want to just explain to those who are not aviators. Because of the way aircraft are built, of that aircraft size and in that kind of commercial passenger operation, the aircraft are pressurised. The pressurising will force those doors closed in flight, at altitudes. That was why the emergency door did not fall off while the aircraft was in the sky. If such had happened, the pressurised cabin would suck passengers with their seats out of the aircraft. So because of that; manufacturers on purpose design those doors to remain locked in flight and by nature, because of pressurisation, they remain so locked.
Now the airplane landed on Abuja runway and during taxiing the door fell inside. It is considered as a minor incident in aviation because that is what the International Civil Aviation Organisation defines it to be. Any incident that involves loss of lives of any serious damage to the aircraft in which injury is incurred will be considered an accident; if it is fatal. But assuming in a normal operation somebody slumped and died, it is not considered as accident; so it is an incident of less degree. If something happens to an airplane but does not damage the structure of the airplane that is considered an incident. That incident is well documented. NCAA is investigating it. The reason why NCAA is investigating it is not only because they are the regulator but because the incident falls under its purview to investigate minor incidents of this nature. If it were a more serious incident or an accident, which is fatal or it damaged the aircraft; it would have been Accident Investigation Bureau (AIB) that will take the lead.
I want to use this opportunity to tell Nigerians that what happened was although very, very scary, although very, very uncomfortable, it is considered a minor accident in aviation and that kind of things will not happen in-flight as to cause an accident. The airline is being investigated; NCAA is doing its job and very soon it will make its report public for Nigerians to know what really happened.