Chinedu Eze writes on how government can promote indigenous carriers
Airline operations is seen as an integral part of every country’s economic system and scheduled flight service play significant role in the diplomacy of many countries. This is why air transport is invaluable and industry experts say that any country that wants to develop and grow cannot ignore the development of aviation.
In fact, travel expert, Ikechi Uko, described airlines as diplomats because they carry the flag of nations to the farthest destination, hence it is critical for nations to have viable and profitable airlines that engage in international service.
For Nigeria, which has high population of international travellers, having strong airlines that operate international destinations is critical.
But over the years, Nigeria has relied on foreign airlines that seem to rip off the country with outrageous fares, taking advantage of lack-lustre attitude of government and its pliable policies that arguably tend to favour international airlines than local carriers.
Industry stakeholders have canvassed ways government can support and partner with airline investors to grow indigenous carriers.
Stakeholders have recommended that the Nigerian Civil Aviation Authority (NCAA) should make Nigerian airlines survive by coming up with policies that are consistent, deliberate and focused.
They have also stressed the need for government to be supportive and get the right people in place to manage the aviation agencies.
In working together.
The experts noted that there should be synergy among aviation agencies and that any situation that is inimical to the industry’s growth should be collectively resisted by industry players, remarking that in that way unfavourable policies would be resisted and government would be guided to implement policies that would lead to the growth of the sector.
Harsh Operational Environment
In one of the recent meetings of Aviation Round Table (art), the Chairman of the Resort Group and the operator of the Murtala Muhammed Airport domestic terminal, known as MMA2, Wale Babalakin, traced the short lifespan of Nigerian airlines to harsh operational environment and inconsistent policies of government, which he said also affect other sectors of the nation’s economy.
Babalakin, said that the failure of government to abide by its agreements and the inability of government officials to follow through laudable policies to improve the industry have been the bane of economic development in Nigeria.
“Aviation can be a catalyst for economic growth, but I am concerned about whether we are keen to see this happen. I am concerned whether we have the skills to achieve it.
“I have seen so many airlines come and go and I have researched thoroughly the reasons why these airlines collapse. There have been so many promises made by succeeding ministers of aviation on the revamping of airport infrastructure but none came to pass.
“They promised maintenance hangar and other infrastructure but what we have is the carcass. There is nothing in the aircraft that is made in Nigeria; even the fuel we have in abundance is imported. This is the product of melancholic decadence of great intellect.
“This is the product of mediocre who does not have the intellect to know whether you are wrong or right,” Babalakin said.
Fly Nigeria Act
Industry observers said for Nigerian airlines to grow, government must show commitment to their growth. One of the factors recommended for government to ensure the growth of Nigerian carriers is the introduction of Fly Nigeria Act.
Industry experts called on the federal government to introduce the Fly Nigeria Act as a policy to support local airlines. This, they noted would make it compulsory that anyone travelling on government expense must fly the local airline or its partners.
Recently in one of the meetings under the aegis of Aviation Safety Round Table Initiative (ASRTI), the stakeholders noted that Nigerian airlines and the industry as whole do not benefit from the many foreign airlines that airlift passengers out of the country and repatriate over 75 per cent of their revenues, noting that if the Fly Nigeria Act was introduced, foreign carriers would partner with local airlines in code-share and other arrangements and the indigenous carriers would earn some revenue from the partnership.
“There is need to sign the Fly-Nigeria-Act legislation to help protect the Nigeria travel market for both local airlines and travel agents,” the experts said.
The Director of Research and Strategy of Zenith Travels and member of Aviation Round Table (ART), Olu Ohunayo, said governments that care for the interest of indigenous carriers must ensure that the interest of their home airlines are protected first but in Nigeria government officials sign agreements that are tilted against the interest of Nigerian operators.
Ohunayo, recently told THISDAY that government must tinker with its Bilateral Air Service Agreement (BASA) in order to create opportunities for Nigerian airlines to compete with their foreign counterparts by introducing Fly Nigeria Act, which would make it compulsory for foreign airlines to partner indigenous carriers and share revenues from ticket sales.
According to him, Fly Nigeria Act would make it compulsory for anyone travelling on government expenses to patronise Nigerian airlines or their partners.
Ohunayo said by so doing, the local airlines benefit from revenues earned on ticket sales by international carriers.
He said the government can also back indigenous carriers and supports them to operate international destinations by playing the inevitable aero politics on their behalf. This he said would also redress the huge amount of money repatriated out of the country every year by foreign airlines.
Single Digit Interest Loans
Similarly, aviation experts have said that one of the factors that stifle the growth of the aviation industry in Nigeria is the failure of the banking sector to extend special lending facilities to the aviation sector. The experts noted that investment in air transport comes with little returns on investment but need huge capital outlay. They explained that therefore to fund such business, banks must adopt a long term, single digit interest loans that would support the industry.
But banks cannot on their own initiate such move unless prompted and backed by government policy.
Former Director General of the Nigerian Civil Aviation Authority (NCAA) and the founder of Evergreen Apple Hangar, Lagos, Dr. Harold Demuren, in a recent aviation forum in Lagos, had said the present interest regime makes it difficult for Nigerian airlines to borrow money and this has affected the acquisition and leasing of commercial aircraft in Nigeria.
He said the present interest rate regime in Nigeria is not good for aviation.
“Take the 20 something per cent interest, you can’t do any business with that. So we need to do something about that. And it is very interesting for me when I learnt about zero interest on money (Sukuk), that’s a good one.
“I think the other people should copy it, we don’t need to quarrel, and we should also do our own, form another bank that would be zero interest, at least single digit interest. Then when you do that the big banks will lower their interest rate and that is good for Nigeria and SME companies can progress. I think that is what we should,” Demuren had said.
The CEO of Aero Contractors, Captain Ado Sanusi, suggested that government should see to the reduction of high interest rate by banks in their credit facility to airlines, noting that airlines make marginal profit so they need long-term loans with minimum interest rate.
He also suggested that government should help the airlines by cleaning out the old debts that had accumulated over the year and with clean bill of health ensure that current airlines do not owe aviation agencies.
Maintenance & Infrastructure
Industry consultant and former Managing Director of Capital Airlines, Amos Akpan, outlined ways government could support Nigerian airlines to grow. Akpan, said government should provide sizeable facilities for investors to establish and operate aircraft maintenance facility, provide suitable modern airports comparable to what is in Dubai, Johannesburg, or Heathrow.
“Government should provide navigational facilities that would enable aircraft land in our airports even in unfriendly weather conditions like it is done in other countries. Government should refine aviation fuel in Nigeria in sufficient quantities for airlines to use all year round.
“Government should make more airports 24 hours in Nigeria. Currently we have too many 12-hour airports.
“Our airlines are ready to check in passenger departing Dubai through Lagos to Sokoto. The passenger would be issued two boarding cards: Dubai – Lagos (international); and Lagos – Sokoto (domestic). From the way MMIA (Murtala Muhammed International Airport, Lagos) is currently structured, there is a 95 per cent chance the passenger will not catch the domestic flight same day. There is need to have transit facilitation between our international terminal and the domestic terminals,” Akpan said.
He stated that government needs to monitor the implementation of all current bilateral air services agreements.
“My reason is that I feel Nigerian airlines are short-changed whenever they are ready to reciprocate. Why do the foreign governments designate Nigerian airlines to non-commercially vibrant airports in their country?
“Heathrow has so much flight connections worldwide and that attracts more passengers. Gatwick should not be the airport given to the only Nigerian airline designated to Britain. Nigerian airlines should not carry alone the burden of ill prepared entry of the country into the open skies arrangement,” he said.
Also recently in a forum organised by Aviation Correspondents in Lagos, the President of Aviation Round Table, Dr Gabriel Olowo, said the Nigerian Civil Aviation Authority should be the focal point of aviation development and not the Ministry of Aviation.
This is because NCAA knows the problem of the airlines and how to guide them to grow, using the civil aviation regulatory policies.
“I have always been advocating that the (N) CAA is the authority for aviation. I want the power of the ministry reduced to the very minimum because most of the time people in the ministry are political appointments.
“They are politicians who represent the face of aviation to government but they don’t understand. Somebody is from women affairs as the permanent secretary in aviation, how can she understand aero politics? So we need to reduce that ministry to the barest minimum and allow CAA to be in charge,” Olowo said.