Bankole: Political Transition, Disincentive to Investment in Nigeria’s Aviation Sector

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Muneer Bankole
Managing Director of Medview Airline, Alhaji Muneer Bankole

The Managing Director of Medview Airline, Alhaji Muneer Bankole, in this interview with Chinedu Eze, says the current political situation in the country is discouraging foreign investment

What is your view about foreign investment in the aviation industry. Do you think foreign investors are seeing huge opportunities in the sector that could attract them to partner with local airlines and also do other businesses in the industry?
For any meaningful investment to come into our country there must be stable political environment. We thought we have gone past what we are witnessing now. Investors are apprehensive about the current political transition going on and it is affecting investment and even business negotiations between us and the outside world. This is because they are not confident that things will be okay in the business environment. Whether politicians are changing political parties or whatever they are doing it should be done in a way that it should not leave outsiders with doubt about where we are going in our democracy. So, we should be more transparent so that the whole world can see us the way we see ourselves. What is happening now is giving investors concern and I am aware that some people are pulling their capital away; we should not make political transition an issue. Foreigners are sceptical about our politics and we have read recently that a lot of money is being moved out of the country. There is a threat because our politics is looking unstable and this has made investing in Nigeria a big risk. So many people are not interested in investing in Nigeria and even most of us who have already invested are at a risk too.

Recently there was a report that foreign airlines sold tickets worth $800 million in Nigeria, between January and August 2018. What is your reaction to this?

As a Nigerian operating an airline it is not an achievement to me because over 80 per cent of that money will be repatriated. That is huge amount of money being taken away from Nigeria. We have four major airports in the country in Lagos, Abuja, Kano and Port Harcourt and these foreign airlines are designated to these airports. For local operators like Medview and Air Peace who service international destinations, we need to be encouraged. About 99 per cent of the airlines that earned the money are foreign carriers but the money was paid by Nigerians who are travelling out of the country and almost all the money earned will be taken out of the country so what is the benefit to Nigeria? The domestic airlines are not benefitting in any way from those earnings and the foreign airlines change the monies and take them out of the country.

There is always an argument that Nigerian airlines are responsible for their inability to participate fully in airlifting international passengers while others blame government policies. What do you think is responsible?
Those who blame Nigerian airlines are arm chair critics who do not know what it entails to run an airline. Unless you own and operate your own airlines you may never know or appreciate the challenges that are surmounted everyday by Nigerian airlines. We have to recongise that the environment is tough. We have talked about charges; we have talked about the high cost of aviation fuel, inadequate airport infrastructure and nothing has changed yet. The environment in which we find ourselves is the environment where the aviation agencies are working towards a different direction that may not be in tune to promote domestic airline operation. There is no much reward for the local airlines that labour in the industry and what makes it unbearable is that you are also saddled with heavy taxes. You will pay these heavy taxes, pay your employee, maintain your aircraft, buy fuel and pay for other operational costs. Every of these monies come from passenger fares. The foreign airlines don’t go through what the domestic airlines are going though. The system is created to favour them. The companies that employ people in the aviation industry are the domestic airlines. The foreign carriers have expatriate workers and very few Nigerian workers who they pay peanuts and exploit them as much as they want because of the economic situation in the country.

The International Air Transport Association (IATA) is making a move to introduce interlining among Nigerian airlines. Do you think this will work and what will be the benefits?
There are not many airlines in Nigeria and we are concentrating on for major domestic destinations. Everybody wants to fly to these major destinations in Lagos, Abuja, Kano and Port Harcourt. For example, we fly to Yola, out of the few airlines that are still operating; three want to go to Yola. There is nothing wrong in Medview, for example, to take passengers to Abuja from Lagos and another airline takes them from Abuja to Maiduguri. The same thing with the other routes; another airline can take the passengers to Yola from Abuja and we then open Yola to Sokoto. We have six geographical zones and every region needs an airline to service them. For example, an airline can be designated to serve one region and in partnership with other airlines, passengers going to that destination could be taken from Abuja or Lagos and the designated airline can take them to Calabar, Uyo, Asaba and Osubi in the South South or Enugu and Owerri in the South East. The passengers may be coming from the other airlines but that particular airline designated from that region will distribute them. In the same vein, an airline could be serving the South West, the core north and the north central. So, when we use those geopolitical zones and service at least two standard airports in each zone, we link people to their destinations. This will help to expand the economy; airlift farm produce in the area of cargo from those zones to the major market in Lagos and other places. This will help to create more jobs and also encourage more people to go to farm because whatever is produced can quickly be taken by air to the market. Thank God that this administration is prioritising the train system to connect to different parts of the country. The one linking Ibadan to Lagos will soon be completed and there is another one that will connect Lagos to Kaduna and Kaduna to Jebba.

We need to thank this government for what it is doing in that area and we need to encourage them to do more. So, interlining is the best option for all of us if all the airlines would be willing to abide by the rules that guide it. But for it to succeed, we must curb the present cut-throat competition and submit ourselves to the partnership which will help us to succeed. For you to succeed in this business, you must have open mind and sincerity of purpose. We are already partnering with our colleagues and we know where the challenge is, and we have seen that it can work if we are committed to it. We partnered with Arik and we worked well together. We thank them. When we needed them, they were there for us and when they need us, we will be there for them. This is the way it should be. We benefit more if we work together and that is why interlining is important; because it will work. Presently we are having delays due to unfavourable weather; we still have aviation fuel challenges, which include availability, distribution and cost of the product. So, interlining is the best. We are meeting and talking among ourselves on how it can work effectively. We are reviewing our relationship with aim to improve on it. We need to do better.

How are the airlines in collaboration with the Nigerian Civil Aviation Authority (NCAA) addressing unequal and high charges against Nigerian carriers by ECOWAS countries?
NCAA being a regulator knows the way it can tackle that issue. The West African communities and West African regulatory authorities are one body. NCAA works well with other regulatory authorities in Africa and in West Africa. We are talking about use of common currency in the sub-region. This is expected to encourage sub-regional integration to boost trade among the states in the West Coast. If the objective of sub-regional integration is achieved there won’t be any need for Medview to go to Abidjan (Cote d’Ivoire) or Dakar (Senegal) to seek for permission before I will fly to these West African countries because it ought to be free movement among West African nations. This integration is reinforced by the Single African Air Travel Market (SAATM), so there shouldn’t be any barriers in air movement in the West Coast. When the African Union passed the SAATM treaty, it is expected that it should be fully implemented by those countries that endorsed it. There should be single currency in the sub-region and flight clearance should b seamless and uninterrupted in the West Africa’s airspace for airlines owned by countries in the sub-region. We should harness these opportunities and create one single market in the West Coast. Just like Eurocontrol in Europe, there should be a single clearance in West Africa and in Africa. Since the last four years there have been negotiations about single currency, open the skies for African registered airlines to fly freely in the continent. These will help to create a single market: common currency in West Africa and open sky for Africa airlines across the continent.

What do you think Nigerian airlines will save if they maintain their aircraft locally, as new maintenance facilities are springing up in the country?
The establishment of Maintenance, Repair and Overhaul (MRO) facility in Nigeria is a good development. As I am talking to you now we have been holding talks with Aero. We are giving them a trial. To maintain our aircraft we have been paying too much money overseas ferrying our airplanes to maintenance facilities outside the country. We are buying dollars from the black market and paying for other costs including logistics before paying for the actual cost of maintenance. I am very happy to tell you we are doing business with Aero Contractors in order to encourage ourselves.

What is your view on the planned concession of major airports in the country?
The airports are not supposed to be under government parastatals in order for them to be efficiently managed. This is because the responsibility of service relating to customers is the same thing as the duty of airlines servicing passengers. Concession or whatever name they may want to give it implies that there should be a new drive. The airport management should be ceded to investors that can efficiently run the airports and pay certain amount of revenue to government.
Things cannot work efficiently when government is managing these facilities. The monies generated are not ploughed back to develop the airport infrastructure; so there must be a way out and that is bringing the private sector to management the airports. The officials of the Federal Airports Authority of Nigeria (FAAN) are not in control. Directives come from above and you see the facilities dilapidating and nothing is being done and this robs off negatively on the operations of the airlines.

If you travel overseas you see that airports are run by private concerns and they provide everything. They provide you comfort and other services and you pay for them. They create space for shops, restaurants and others that attend to travellers so you cans stay anywhere and eat and enjoy yourself before your flight leaves.

At the Gatwick in London a Nigerian partly runs the airport and people pay for the services. Such can also be done in Nigeria. People run the business and make money for the owner. This is an investment and should be done efficiently so that there would be a yield on investment. In giving out the airports for concession, airlines should also be contacted so that they can also make their contribution with the investors.

Is there any way flight delays caused by VIP movement can be curbed?
VIP movement is not negotiable. There is only one President and he should be recongised and given all the appurtenances of his position as President. This is not peculiar to Nigeria. It happens in other parts of the world. So Flight 001 should be honoured; after all, it doesn’t happen every day; it is done for security and safety purposes. This is done all over the world. We should educate our people to know that this has to happen because that is the tradition and it is not peculiar to Nigeria. We should be able to accommodate and tolerate the few times the President goes out.

Are the domestic airlines still talking to government to review the multi-designation of foreign airline, which has shrunk the market for local carriers?
We are still talking to government so that they will understand the plight of the domestic airlines. The foreign airlines diminish the local market for indigenous operators. For example, a foreign carrier is allowed to operate from five airports in the country.
If every foreign airline operates from one airport in the country, the local operators will take passengers from other parts of the country to them. That is the way it should be. Government sees local carriers as subordinate to the foreign operators, but we should be given priority because every country first protests its own airlines and creates the market for their benefit. But it is not so in Nigeria.

Nigerian airlines employ Nigerians. The total number of Nigerians employed by all the foreign airlines may not be up to the number of Nigerian employed directly by Medview Airline. We also invest in Nigeria and pay taxes in Nigeria. We do everything in Nigeria, so we expect government to encourage us.

This year you successfully operated hajj service, which is still on-going. What are the future plans for Medview?
We started from hajj, operated successfully, carved out a niche and built enormous goodwill. Over the years it has become our responsibility to serve our people at that level and we are spiritually inspired to continue what we are doing. We have been one airline that has been consistent. When we came into the hajj market we met 14 of our colleagues, but today we are only two. The federal government approved only two: Medview and Max Air.

We pray for God’s guidance so that we continue to wax stronger. We have seen many of our colleagues fold up. We don’t pray for that to happen, but we have to recognise that challenges are there. We encourage partnership among the airlines so that we can progress because the passengers to be airlifted are Nigerians. We believe in God and in Medview, God has been guiding our activities.

We satisfy our pilgrims. We keep to our words. We take them to the Holy Land in time; we bring them back in time. We airlifted about 10, 000 pilgrims and we have already returned 50 per cent and we are close to 80 per cent. Soon we will return all of them. We pray God to see us through to the end successfully.

It worked out so well this year because we didn’t lease aircraft. We were able to save cost because we used our own aircraft. With the support of First Bank we were able to bring one Boeing B777 out of the two we planned to have. We will continue to encourage more Nigerians to fly so that we build capacity. We have the opportunity to have another Boeing B777 in the Nigeria’s airspace, so God is so kind.

What are your plans for the domestic route?
We are repackaging our domestic operations because we want to use our own airplanes. We don’t want to operate with leased aircraft. So, once our aircraft arrive we consolidate on our domestic operations. When we are able to serve our people well in the domestic market, we select one or two routes in the West Coast. This is because Europeans and Middle East airlines have taken the West Coast market; so, we shall carefully select profitable routes.

Why is aircraft leasing so unprofitable in Nigeria?
It is because of the low value of the naira. When you are charged in dollars by the time you exchange the naira earned in Nigeria to dollar, you see one huge amount of money to pay for the leasing. So, it is not profitable. You borrow money from banks; you pay your taxes so after all the expenses you realise that you are not making any profits. If the naira were stable it would have been better. In some countries exchange rate is stable for several years. In Saudi Arabia, dollar is R4.74 and it has been there for about 30 years. This is stability but in Nigeria the value keeps on changing. This is great challenge for us.

Has the supply of aviation fuel improved?
It has not. It is still N257, N275 per litre. Kano is about N260, Yola is about N275, Lagos N240, N245, depending on who is selling it to you. You know that we started a couple of years ago at N110, N150 per litre but now the price has risen so much. It is still the dollar value as against the naira that shut up the prices.

I recommend that there should be a forum where fuel marketers, fuel suppliers, airlines and aviation agencies should sit together and talk. There are many levels before the product gets to the airline and that adds to the prices.

But do you think that local refining will help bring down the prices?
We have been on this before. Cost of aviation fuel is huge on the airlines. Government should designate one of the existing refineries for the refining of aviation fuel so that the product will be available and in that way the prices will come down. Bringing the product from overseas entails huge costs, including cost of freighting, cost of moving the product from the port, storage and payment of other hauling services. But local refining will eliminate all that.