The Chief Operating Officer of Dana Air, Obi Mbanuzuo has stressed the need for the upgrade of landing aids so that airlines can operate for more hours and maximise their revenues. Obi also doubted if the government would give equal opportunity to private sector driven airlines when the planned national carrier takes off. He spoke with Chinedu Eze. Excerpts:
The plan to establish a national carrier is putting operators on the edge because they are saying that the national airline will eclipse existing carriers. Are you perplexed about the coming airline?
To be honest with you we are not perplexed. We are on edge because we don’t understand what is going on. We were all told it is going to be private sector-driven, we don’t mind if another airline comes; after all, more privately owned airlines are coming. We know one of the new airline’s aircraft just landed in Kano the other day. So, if more airlines are coming we don’t mind that but because we are hearing the story of this national carrier, we are hearing it will be flying in December. All the current airlines flying now on average took 18 months to prepare their documents, but they are saying it will take 90 days for the new carrier, that is fine. But who is behind the airline? We are hearing Qatar. Is Qatar coming to lose money? Are they coming to make money? Are they coming to be national carrier? Will there be any special benefits that Qatar will get that the other airlines will not get? So those are the questions we all are asking.
The VAT, the five per cent Nigerian Civil Aviation Authority (NCAA) charge that we have been talking about, will Qatar pay all that? So, we don’t know, that is what we are saying. In fact, we don’t mind if they come and make the field level for all of us; such that it will be better for all of us and all those erroneous things that we constantly complain about are done with. The national carrier or the private person coming in if he is strong enough should lobby to get those things removed but it shouldn’t be removed only for them. If that is done then we will be happy.
If airlines are exempted from paying VAT, how would it benefit the airline and the passenger?
Going to those charges, there are two parts we are asking for: VAT and five per cent NCAA charge. I will first of all talk about the five per cent NCAA charge. Historically that came about because of the need to have autonomy for the regulator. If I am the man that pays the piper, then I will control the tune. To avoid that it was agreed that regulatory agencies should be self-financing and that is the standard worldwide, they all have to be self-financing. In those days the airlines were very few, passenger number was very few and so the NCAA was made as the regulator of the industry and airlines were made to pay five per cent of their ticket charge to the authority. The Nigeria Meteorological Agency (NIMET), the College of Aviation Technology (NCAT), Zaria draw from it and the Nigerian Airspace Management Agency (NAMA) draw from it also. NAMA draws 23 per cent from the 5 per cent. Then Accident Investigation Bureau (AIB) has now started drawing from it and of course the NCAA now gets the lion’s share.
So, separately NAMA then went and introduced new charges because previously these charges did not exist. Two separate charges, one is called terminal navigation charge and the other is called over flight charges; that is when you fly from point to another point. So currently, NAMA charges for those services individually and then draws 23 per cent from the five per cent. Historically, maybe the five per cent was right 50 years ago, currently it is no longer the right practice because that distorts the market. How does it distort the market?
We are currently not competing on products or services, we are competing on price. You sell a ticket for N20,000, I will sell a ticket for N20,000, inside the N20,000, five per cent will go to NCAA. If for example, I bring the best airplanes in the world, the best service in the world can I sell that same service for N50,000? Maybe I could but then. I have to pay five per cent of N50,000. My liability in that will suddenly rise. We feel that the NCAA should be self-financing, we agree with that, but per passenger charged is what happens in most places of the world. Even Ghana just two years ago shifted to per passenger charged. So, the airline can now charge more or less without being linked to a percentage. NAMA argues that the percentage takes care of inflation, everywhere else in the world.
Would you say that these two issues are the major problems that are stunting or crippling the growth of domestic airlines?
There are many issues, but it is just that these two are the big ones. Why, because for airlines to grow we have to generate revenue. But that five per cent is actually an over charge, same thing with the NAMA charges. It is too heavy on the airlines. In fact, those charges we pay currently are unduly too heavy on the airlines. If these charges are reviewed downwards along with the removal of VAT, Nigerian airlines would have a good breathing space in terms of finance and will thrive for a long time. These agencies make a lot of money. In those days you would not hear about N6 billion fraud as happened at NAMA few years ago. So, airlines are saying, let us know what is happening in these agencies, let us know how much they made and let us come and sit down together and decide how to finance them.
Why is it that Nigerian airlines don’t interline, partner with foreign airlines and take advantage of the open sky in Africa?
From the airlines’ point of view, we feel that in West Africa and in most of Africa the biggest passenger market is Nigeria. A lot of foreign airlines come in here and we know how important Nigeria is to the market. So maybe we should look for either those other markets, countries to implement whatever has been agreed internationally first or on a reciprocal level before we go and implement. A lot of what Nigeria is doing now it is trying to implement, like the treaty on intra-Africa. They are trying to implement Yamoussoukro Declaration (YD) which was agreed on many years ago. In essence, if you look at the European market Lufthansa, the German airlines, can sit down tomorrow and fly from Paris to Dublin which is not anywhere in Germany. All they have to do is sit down, come to respective airports, agree on slots, space and go and operate; nobody will ask questions.
So Yamoussoukro Declaration was supposed to do the same for West Africa; whereby a Nigerian airline will sit down today and fly from Accra to Dakar. Currently some get the right to do that, but we then have to apply for the permission to do so. When I say fly, I mean carry passengers and actually sell tickets. Nigerian airlines sell tickets to Ghanaians, carry them from Ghana to Senegal, you have to apply for that. Some countries are easier than others but when you go to certain countries, Ghana is a good example. If you apply they will give you the right but the charges are high. Try doing that in Cote d’ voire, they will tell you sorry, no.
They will give that right to their own airline. Meanwhile, Nigerian government gives multiple designations to foreign airlines, thus defeating interlining between local airlines and their foreign partners. For example, Ethiopia Airlines operates to Lagos and requests to go to Kano, Enugu, Abuja, Kaduna, but we cannot go to Ethiopia because there is no market in Ethiopia, so government should simply tell them no, go and partner with our own airlines.
We are well able to interline with the same Ethiopian. If they tell us that for us to interline with them, we have to pass the International Air Transport (IATA) Operational Safety Audit (IOSA), we will go and pass the IOSA. If they tell us that we have to use the same system they are using, which we already have, we will go and use the system. Interline means there is an Ethiopian man somewhere in Ethiopia and says I want to go from Addis to Lagos and after Lagos I want to go to Port Harcourt, the key thing is that he will issue one ticket, which is what interlining means.
So, in general the world is going to a point where people can fly from anywhere, but currently we are opening up and they are not doing the same for us.
The Aviation Round Table (ART) suggested that domestic airlines should have 10 to 20 aircrafts per airline. Is this possible when you look at the infrastructure, market and policies?
Without going against my colleagues, they got it wrong. I will say it straight. Jetblue in America was opened by a man called David Newman, who has opened four airlines. The last one he opened was in Brazil called Azo, currently flying 96 airplanes. He started Jetblue with two aeroplanes.
You start with 20? If they know anything about the economics of running airline, if I have the funds, which is very rare, but if I have the funds to put down 20 aeroplanes today I will need three times those funds just to run them. That is number one. Number two, the other day we were sitting down and talking about Ethiopian getting its 100 aircraft, we were talking about the brand new airport they built in Ethiopia. If we have 100 commercial airplanes in Nigeria today where will you park them?
I will tell you that in Lagos alone domestically the way our airports are built, MMA2 cannot take more than 10 airplanes over night. General Aviation Terminal (GAT) at the Lagos airport equally cannot take more than 10 to 15 airplanes over night, the international terminal is already full. Somebody might say, okay, go and park them in the airports outside Lagos. Uyo airport can only take maximum two and for two to park one has to leave before the second one moves in. Enugu airport can also take two likewise Port Harcourt. Then we now start looking at Abuja, so you see it does not make sense.
Almost no airline in the world started with 20 airplanes; even the ones that have hundreds of airplanes today. I lived and worked in the United Kingdom in 1995 when Easyjet was just starting. Easyjet leased its first two aeroplanes when they started flying. Yes, they now fly almost 300 aeroplanes because the market was conducive. Ryanair had only about three aeroplanes as late as 1996 or 97 currently Ryanair flies 780 planes. But when you say somebody should start with about 20 aircraft, even our regulators cannot regulate 20 aircraft per airline.
The regulator currently which is NCAA may not have the needed personnel. Compare South Africa and Nigeria, South Africa is the most advanced economy but Nigeria is the biggest economy. South Africa is a bigger aviation market, so at least about 70 million people fly in South Africa yearly, in Nigeria only about 10 to 15 million . At a conservative estimate, South Africa has 10 times the number of pilot we have, so the number of licensed pilots and engineers is much. The whole of the South African Civil Aviation Authority is 500 plus staff, for that number of airplanes.
Your passengers expect you to increase your fleet. Why hasn’t that happened over the years?
Dana Air is close to 10 years in the market. What is keeping us going is the passion and support of the people that work for us and the passengers that that travel with us. One thing that we have always mentioned to people is fleet renewal. Our current fleet is made up of MD83 aircraft. They are very reliable. We have what is called dispatch reliability of above 95 per cent. We have mechanics, engineers that are well trained already on the aircraft because we also know where we are going.
As I said, going back 2016 we were advanced in discussions for a fleet renewal and that relied a lot on support from particular Nigerian finance house. But at that point the economy of Nigeria had a big shake up and they pulled back a bit. But right now, we are again back there; because you see the thing is that these airplanes will not fly forever; so fleet renewal is inevitable.
We have been progressing and there is another supplier that will be here next week because now that people have heard that we are in the market they are all looking for the bride. Boeing Director for Africa was here with us also, so we have advanced in talks and we are hoping and putting our heads together. He was preparing a commercial proposal which we hope by September we will sign, which means that delivery will start again after one year. The airplanes we have are currently very good for us and like I said, we need to work towards renewal. Our wish and hope is that this airline will be here in another 10 years when we will celebrate our 20 years in service.
Is the apprehension of lessors concerning Nigerian airlines affecting your organisation?
It does affect because a lot of the discussions we had with manufacturers, you know lessors issues come most of the time when you are buying new airplanes. We are looking at brand new or slightly just new. We don’t want to acquire aircraft in the range of 20 years. I will be honest with you, an airline has just come with 20 years old aircraft, our airplanes are 22 years old and people will think they are older, but they are of similar age. So, a lot of time these discussions have to go, even if you go to the owner or manufacturer or lessor, you also talk of financing.
Sometimes there is an apprehension with Nigeria as a market, but it also sometimes not well founded. What you have to know is that because Nigeria is a signatory to the Cape Town Convention, if you renege on your agreement, all you have to do is to call the NCAA and if the NCAA does well, the NCAA grounds the aircraft and sends for the owner to come and collect it. So, it is not fully founded like I said, after all, we know one or two persons that had reneged, the people came and removed their aircraft, nobody stopped them from removing their aircraft. So that is already a problem with Nigerian airlines. Forget that insurance is going to cost more as well because they believe your airports are not very safe, your navaids are not good. So, they believe the operating environment is not favourable. The perception does affect all these things.
Are you prepared for the weather challenges this December when Harmattan will begin to disrupt flights or is there a respite this time?
We are looking at two things; one thing we keep saying is that we all have to understand the contribution aviation makes to the economy. Aviation is not simply that people are flying up and down, no. If all the airlines in Nigeria shutdown for one day, we know that a percentage of the GDP will be lost because some work that was supposed to have been done will not be done. Some goods supposed to have been moved from maybe one point to another for production will not make it. People that would have gone somewhere to make money will not. After all, what is GDP? It is work. So, aviation contributes a lot to the GDP of Nigeria.
When people understand it like that then we should understand that every year the harmattan comes, flights are cancelled, delayed money is lost. Money is not lost by the airlines; money is lost by the economy, by the country. By people not being able to go places, so why then haven’t we been able to put in place navigational aids, landing aids that can allow us to fly in harmattan? People will fly around the world in worst conditions than harmattan, in zero, zero visibility conditions but in harmmattan you will even see a little bit. But we don’t put those things in place, all our aeroplanes, even the aeroplane that Dana Air is currently saying we want to renew can land itself with the right landing aid. Put the correct aid to landing on the ground and calibrate them and make sure they are working correctly, and the airplanes will fly. Then change the minima in the regulation because it is linked, the regulation currently says you do 1,200 meters visibility. Well with 400 meters visibility and a Category 2 instrument landing aid, I will land and take-off. But now if I have 400 metres visibility, even in harmattan, I can see up there even with 400 metres and can even go but the regulation says I must have 1,200 meters visibility. So once the landing aids are put on round, of course, once the regulator checks and that they are working; then he will change the regulation to allow us to fly, then harmattan becomes a thing of the past. I am a child of the civil war, I was born during the civil war, my father reminded me that in those days planes landed day and night in at Uli airport located in today’s Anambra state. The airplanes landed morning, noon, and night, harmattan or no harmattan. Those 1940 aeroplanes were landing and now we are in the year 2018 and we can’t land. So, what we are forecasting is, we have the equipped airplanes, we have the pilots that are trained to fly those planes, so put the aids on the ground and we will do it.
How do you feel that the domestic market which is most viable beside South Africa, has only 41or 40 aircraft? And how is it affecting airfares?
It is a shame; it is a shame because, like I said, the airlines are weak. Again, go back to the environment, I gave example with airlines that started with two aeroplanes and they were able to fly with those two aeroplanes for 14, 15 and 16 hours a day. What does that mean? The revenue goes up. The cost per hour goes down because those aeroplanes were leased, for example, and it is not wet leased, so it is not dependent on how often you fly or how much you fly. It is a dry lease.
For example, say I pay a $100,000 for example per month to you for your aeroplane. If I fly that aeroplane just once for that month that means I have one flight cost me N100, 000. If I fly that it 100 times that mean each flight cost me only N1000. If I fly it 200 times, each flight cost me 5000. So, the more I can fly an aeroplane the cheaper it comes for the airline. Now we go and buy whatever new fleet we want to buy I can only fly that plane from 7; 00 am till 6:00 pm, which is 11 hours maximum.
Only about five airports in the country out of about 28 allow aircraft to land after 6:00 pm. You have to depart from others by 6:00 pm. When we were growing up we all remember our streets, there was no street lights in Lagos, you will drive in the dark, now in Lagos there are street lights. If your flights lands in the night I can go to my house easily. Royal Air Maroc comes into Lagos at 3:00 am passengers still follow it. So why can’t I fly up to 1:00 am on domestic service? So, we are limited, and we are talking of aircraft numbers, so I am limited because I can’t deploy those planes profitably
So, the airlines are weak for many reasons. I get stronger if I can make more money. I will then put more aircraft down. So there many reasons why airlines in Nigeria are weak. So, when we can utilise what we have we will add more as time goes on.
