Onyema: FG Should Urgently Concession Airports to Nigerian Investors

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Allen Onyema

Chairman and CEO of Air Peace, Allen Onyema said that there is urgent need for Nigeria to rebuild its airport facilities, saying the best option is to concession them to indigenous investors. He spoke to Chinedu Eze. Excerpts:

What is your reaction to the announcement of the suspension of the planned national carrier by the federal government?
I commend the federal government for retracing its steps on this particular project. This regime has proved that it has the interest of Nigerians at heart. The president has proved that he does not care about political correctness but the total wellbeing or the future of this country. It is not something you see every day for a government to take a decision and see that, that decision may not work in the best interest of the country and decide to retrace its steps. Not every government will do this maybe one of out of 100 governments. It is something very laudable. That decision has won millions of hearts for Mr. President because between since when the decision was made I have received calls from all over the world. The president’s rating because of this decision has shored up astronomically worldwide not just in Nigeria. Because in the aviation world, people have been calling us that they were surprised that Nigeria is going into something that every other country is running away from. So it is a very, very welcome development and I thank Mr. President and the government for rising up to the occasion and doing that which is right.

The Minister of State, Aviation, Hadi Sirika said that the existing carriers are not able to fill the vacuum which a national carrier would have filled. What are the factors that you think militate against the activities of domestic airlines to fill the kind of gap he is talking about?
Well, I read the minister’s statement in one of the dailies. I want to say that I have reservations on some of the things said there because I do not believe or I find it difficult that the minister may have said some of the things attributed to him. I have my reasons for saying so because I believe that the minister should promote his own, so some of the statements I read there, I don’t believe that he said such things. Especially as it concerns the growth of Air Peace, I don’t want to believe that any government will directly demonise or de-market private investment that provides thousands of jobs and touching millions of lives in a country.

I don’t believe that government official will do that. There is this talk that domestic airlines are not doing well. Why are they not doing well? Why are so many private investors shying away from coming into this business? The owners of this business have succeeded in other businesses. This is not my first business. This is not the second or fourth business. I have done things for this country where many people failed. So why are domestic airlines failing? There must be a reason. And the reasons should be found at the door step of government’s policies which have not been changed over time. So, government’s policies are the reasons why Nigerian airlines are not working well. There is nothing more. It does not necessarily mean it is this government but government’s policies have being the bane of the growth of airlines in this country. We have been crying against excessive taxation. Air Peace is not up to four years old, the tax man has been knocking at my door every minute. In other countries, you are allowed a gestation period because you are providing hundreds of direct jobs, you are touching millions of lives. And airline business is not all that of a profitable venture but over here nobody is listening to us.

Our challenges include unrestrained multiple taxation, lack of support to make domestic airlines competitive and policies that tend to favour airlines outside the country against our own. There is also poor airport infrastructure which is not helpful. Importation of aviation skyrockets the price of the product. Fuel cost supposed to be 40 per cent of airline’s operational cost, but in Nigeria it is about 70 per cent. The price you bought aviation fuel in the morning may not be the price you will buy it in the afternoon. Nigeria is a producer of crude oil yet we import aviation fuel. It is very expensive; it is more expensive in Nigerian than in countries that don’t produce aviation fuel. So these things will have to be looked into.

National carrier is known for job creation. Is it not so?
All Nigerian airlines create jobs. A national carrier cannot just employ pilots. These pilots must go through training. Somebody who has passed out of school cannot be a captain overnight. And Nigerian airlines are trying their best, they should stop demonising us. We are doing what we can do under very, very excruciating circumstances. So when it comes to the issue of filing gap, we are gradually doing that, all we need is the support of government.

There is also the belief that a national carrier will serve all the domestic routes?
I went out of my way to acquire Embraer jets because I noticed that there are some destinations in the northern part of the country that are under served. If you put a Boeing in some of these places you will be flying near empty and that is not commercially viable. So because Air Peace wants to open up this part of the country we decided to go for six Embraer jets. It took almost six months before we got permit to be using our Embraer jets.

Whose problem now is that? We want to plug the gaps. In fact, Air Peace has started announcing our upcoming new routes. Owerri-Yola, Enugu-Kano; we also want to do Yola-Kano, Yola-Kaduna. We want to do all these with our Embraer jets. The moment we start, others will join. Rome was not built in a day. The fact is that Nigerian airlines are trying to get it right but they are not getting the necessary support. On the international scene, it is a lie that Nigerian Airways was doing 1500 destination. And why are we always talking about Nigerian Airways? It was a failed project. Nigerian Airways was not a profitable venture. It was bleeding the government full time. While all these private airlines are buying their planes themselves, Nigerian Airways was buying their plane with government money.

Nigeria Airways was established in August 1958 but until when it was closed down, the highest number of plane they had was about 36 for over four decades. They had only 30 or 40 planes and Nigerians are talking about Nigeria Airways. Arik Air, Air Peace and others have now shown that they can do it if they are given the support. I am proud of the fact that we have acquired over 20 planes, I am very proud of it. And it shouldn’t be the prayer of anybody for us to fail. I expect that government officials should even come to us and look for ways to support us because we are serving the people and government officials exist for the people. Air Peace is not about Allen Onyema. It is about Nigeria; the hundreds of people directly employed by the airline and thousands that are indirectly employed. By that employment, Air Peace has taken many people out of the streets. If we didn’t employ those people, especially youths, you may not know what they will turn out to be in the society as unemployed Nigerians.

So until government officials and civil servants begin to see private investors as partners we will never get it right in this country. We should begin to take decisions that transcend self interest; that is what Air Peace is doing. I wish to state that whatever we are doing today was planned from day one when we decided that we would go into airline business. We had a business plan and the banks will tell you that we are following that business plan. We had a business plan that on our fourth year we will start transiting to new planes. Listen to the speech made by Fidelity Bank Managing Director at the signing of the Boeing B737 MAX 8. He spoke about financial discipline. We planned our movement and we are following our plan to the letter.

We are happy that all the banks in Nigeria are coming to support Air Peace. We are grateful to the bank. What is remaining now is government’s support. Nigerian airlines need government’s support. So when government officials say that Nigerian airlines are not doing well they will be discouraging Nigerian banks that are giving us support. Government statement should not deter our own banks. President Buhari has done so well for us by giving us free import duties, VAT waivers and all others. So we need other workers of government to look at our President and follow him. He has shown that he is a pan- Nigerian and that he loves this country.

We are at the stage that we want to operate international destinations. The government has graciously designated Nigerian airlines. Government has given us China, US, London and others. But what support have we received? When you give airlines destinations to fly, they will now apply to those countries. Those countries do not give you the permit immediately; there are things that are needed. For example, China law says you must have three aircraft with their registration numbers. So it is not about telling them that you have three aircraft, you must produce them and they must see the aircraft. Anything short of three aircraft they will not give you permits to fly into their cities.

Dubai has granted Air Peace rights, China has also granted Air Peace rights to fly into China. God willing we are starting in November. We brought in the first Boeing B777. We couldn’t have started operations with one aircraft. We needed more aircraft so that when we start we will not be stopped by technical challenges. I think that is the bane of Nigerian airlines and we want to avoid that mistake. What we need is encouraging statements from our government officials and from the people of Nigeria. We don’t need anything that will dampen our morale or scare us. We have planned our entry into the foreign scene and we are following it. By the time we start towards the end of this year, Nigerians will enjoy sustainable international flight operations and they will be paying the right prices. We have acquired four Boeing B777, which two of them have arrived Nigeria, the other two will soon arrive. I believe that we planned it well.

We have already signed a firm order for Boeing 737 Max with banks paying for this. Those planes also will be deployed on some international routes too. It shows that Nigerian airlines are getting it right. We should not be compared with what happened in the days of the past, about Okada Air, Chanchangi Airlines or any other airline. We shouldn’t be compared that way; it means they are waiting for us to fail. And by the special grace of God, we are not going to fail. Our safety record is of international standard. We became a member of IATA Operational Safety Audit (IOSA) in the first two years of operation and we retained our IOSA certification, which is the international parameter to show that our operations are safe.

Air Peace is a member of IATA. Government gave us West Coast routes, regional and international routes. We have started operating some of them. We have others we want to start but we are discouraged by high charges. We expect our government to wade into it and stop them from charging us highly because they are not paying the same high charges in Nigeria. But they do this in order to stop us from coming into their country. On the international end, we are discussing with other airlines for interlining and code share. This is because we don’t want to drop Nigerians in Dubai and end it there. We want to take them to their final destination with our code-share partners.

So with Air peace you can fly to about 28 cities in India, Malaysia, and Singapore. Once we drop you in China or Dubai the other airlines pick you up. The same thing we are doing in Europe, we are negotiating with some airlines over there. So what we need is for government to continue advertising our own airlines so that these foreigners will key into them. We don’t need national carrier; government doesn’t need the headache anymore. Nigerian airlines will succeed, what we need is support. Let the government challenge us, let them give us the next three years and see where we will be. I am not speaking for only Air Peace; I am speaking for all the airlines.

People are talking about having the airport given out in concession under Public, Private Partnership (PPP) arrangement and having a national carrier, which one is more urgent and more critical for the growth of the industry?
First and foremost, I will still thank Mr. President for being courageous to suspend the planned national carrier. He has shown that he is a leader. It is not everyone that can do it. For taking this decision he has shown that the wellbeing of this country is his number one priority. He is not after political correctness because of elections. For him to take this kind of decision, when the public has been made to understand that this was the best thing even though countries are running away from it. It shows that he is a nationalist. Having said that, let me also say that you cannot build a house without foundation. Poor airport infrastructure is one of the things causing the underdevelopment of the industry. Airlines can never make ends meet with the state of our airports. It is impossible. Airlines can never also get on time departure 90 per cent of the time with the state of our airport infrastructure. So what government should channel its resources to be developing our airport infrastructure.

However, government may not have the resources to do this. Look at Ghana, in three years Ghana has given itself a world class airport. The pictures of Ghana’ airport has gone viral. And people now start questioning the rationale behind the national carrier project even before now. Even if we have to set up national carrier it needs airports where it can be landing at various cities of the country. That foundation is not there. It will go the way of others except the government will muscle out other airlines by force or frustrate other airlines for it to succeed. That is the only way. And when you frustrate people to succeed you will never succeed too.

So let us develop our airport infrastructure first, government should go into PPP. The airports must be concessioned with immediate effect. I support federal government’s intentions to concession the airports. That is the way to go. Gatwick is not run by the British government, neither Heathrow, so the airports must be concessioned immediately. Anything other than that is an aberration. Civil servants can never run airports well. However, I don’t want people to lose their jobs. It has to be done in such a way that people do not lose their jobs. It has to be done in such a way that whoever is taking the concession will take the staff. Whatever he can take, he takes, others should be posted to other ministries of government where they are needed.

In concessioning our airports, I want government to concession these airports to Nigerians and Nigerians alone. Nigeria is not Mozambique or Malawi neither is Nigeria the Republic of Benin or Burkina Faso or some other small countries, where they will invite foreign countries to concession the airport to them. That will ensure capital flight again. The rest of the future lives of this generation will be mortgaged to paying debts and we are also taking money out of the country. We have people that can do this in Nigeria. If they concession the airports let it be concessioned to only Nigerians citizens and Nigerian firms alone. People will come up, the moment government is going to hands off the airports people will come up, businessmen will team up and come together and pull their resources together, the banks also will come in because they are ready.

Nigerians should be encouraged to take it up the management of the airports. They should not be given to foreigners. Nigerian businessmen and banks are powerful. One Nigerian businessman might even be richer than some of these African countries. Foreign concessionaires will mortgage the future of this country and the future of jobs in the country. What we need is to encourage indigenous participation and Nigerians and their banks will key in and develop these airports. If they doubt me let them give me one airport. Let me tell them the airport they will give me, if they give me I will attract the investment. I don’t have the money but I have the integrity to attract banks to help fund it and we will have a world class airport. I can even now attract foreign financial institutions to support the funding. After singing the firm order for 10 Boeing B737 MAX 8, so many banks and financial institutions all over the world are contacting us. They know Nigerian has the population and they also know that Nigeria is the destination. All we need to do is for government to liberalise these things and hands off then you create millions of jobs and Buhari’s name will be written in gold for eternity because jobs will be everywhere. Forget oil, Nigeria is well positioned to become a hub for Africa. Airlines do not make hubs, good airports attract hubs.

There is always this impression in government circles that without national carrier you cannot have a hub?
It is a lie. Ghana doesn’t even have a good private airline. It is people like us and other airlines that are going there. They don’t have their own indigenous airline, the only one there is AWA (African World Airlines) with about eight aircraft. But everybody wants to use Ghana as a hub. Airlines don’t create hubs, if you have the best airline in the world, bring Delta to operate in Nigeria with the state of our airport infrastructure they will never create a hub here. It is good airports that attract hub, now everybody wants to fly through Ghana. Liberians have already started flying through Ghana to London. Some many countries are trying to fly through Ghana now. So it is not airline that will create hub. Again I still thank government for this relief. Nigerians feel relieved.

You have not made further comments on your firm order of 737 Max, when are the aircraft start coming? And people are feeling that with 10 aircraft you have so many aircraft in your fleet, how are you going to operate them to maximise their utilisation looking at the market?
First of all, I want to thank the American government and Nigerian government for providing also the enabling environment for Boeing to trust us. Our 10 aircraft will start coming very soon, by next year you will start seeing some B737 Max coming in. It is a firm order made with all the banks behind us and the planes will start coming in. The fear of having over 30 aircraft in my fleet should not create anxiety. We have already designated routes for all these planes. The planes are coming with in-flight entertainment. I want to fly Nigerians out of Kano to Dubai. I want to fly Nigerians out of Enugu to China and Dubai. I want to fly Nigerians out of Kano to Saudi Arabia; I want to criss-cross the entire length and breadth of Nigeria. That is what I want to do. And remember, as some of our older fleet are getting older we will be phasing them out. That is our business plan. That in our fourth year we will start acquiring new planes and that is what we are following. It shows a steady growth in Air Peace. We have shown capacity. So we have our plans.

I want us to look at multi designation and how it is affecting domestic operations?
You know that multi-designation is not good for domestic carriers. That is why we are begging government to review it so that domestic airlines can become competitive. Multi designation is a serious “sin” against our country. No country allows what is happening here. Now that the Nigerian airlines are growing, I expect that government should review some of those designations given to foreign airlines when Nigerian airlines were not there to occupy such positions. I do not see the reason or rationale behind a foreign airline doing operation into five destinations daily in Nigeria. It is not good. If they want to do that they should key in and get other Nigerian airlines to partner with them.

That is how it is done. The Gulf States’ airlines were almost taking over America some years in the past. The American airlines cried to their government and their government came up with policies that made it impossible for the Gulf airlines to continue to have frees access to the US market. And that was why Gulf airlines started cutting their routes; they made them to cut the routes. This is because the airlines in America are providing jobs for their people while these ones were making money and taking back to their country.

So the airlines in America refused to allow Gulf airlines to dominate them and their government listened to them and the rest is history. And that is why some of those airlines have packed their planes, downsizing and that’s why airlines like Air Peace were able to buy some planes. No country leaves its flank open in the name of competition. Who are you competing with? The jobs Air Peace alone has provided, we have about 3000 people working in Air Peace. You cannot compare indigenous airline with a foreign airline that has nothing at stake.

These airlines have been coming to Nigeria since 1960, the number of staff they employed since 1960 put together is nowhere near even one 10th of what Air Peace has done in three years. So that is a pointer, we must protect our country. Government should review those destinations and cut them. We should realise that national carrier does not work everywhere. America with its economy and might in aviation does not have a national carrier. Britain does not have a national carrier. All the last vestiges of national carrier are winding up. Even Ethiopia Airlines that is much celebrated in Nigeria more than in their country is today asking for investors. And some of them are heavily indebted, is that what we want? That is why they are all scampering and asking for investors to come and take over most of these airlines. Air India for the past four years has been in the market but nobody wants to buy. South African Airways is seeking for investors.

If there is a strong carrier out of Nigeria, I bet you it will affect adversely the fortunes of these foreign airlines. Even as it is now they are calling for investors, so why do you want to go into it? These foreign airlines should not be allowed to come in here to be doing domestic flights or originating international flights out of Nigeria. It does not in any way help this country. It doesn’t happen anywhere. Even the SAATM we are all talking about, it is not as if the Nigeria airlines are against it, we are not. We want to be part of it, but whatever we are doing here should be reciprocal. A situation where these airlines come to Nigeria and pay almost nothing, and when we land in their countries they slam us with heavy fees, making it impossible for us to continue should be resisted. Why have I not started Abidjan, it is not because I don’t have the aircraft, the aircraft is there but what did they do to us in other to discourage us? They don’t want competition for Air Cote d’lvoire and here we are opening our flanks for every country to come and ravage us. So government’s policy is indirectly encouraging this. So President Buhari should know this too which I know they will look into very soon.