Odika: Domestic Airlines’ Charges Discouraging Passengers

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Herbert Odika

The Chief Operating Officer of the Nigerian Aviation Handling Company Plc, Herbert Odika, in this interview, says high air fares charged by domestic airlines are discouraging travellers. Chinedu Eze brings the excerpts:

How will you describe Nigeria’s domestic airline markets?

I would say they are growing, but their pricing structure is chasing people away from air travel locally. In recent times, there is hike in prices. The airlines seem to be capitalising on the fact that we have security challenges in the country, especially on the roads and many people prefer to travel by air. I think people preferring to travel by air is supposed to be an opportunity to come up with competitive fares to further attract more people to air travel. But air travel has become so expensive as people are flying because they do not have a choice. The consequence is that if security in the country is improved and road becomes relatively safer, many people will go back to travelling by road. Pricing is a determining factor as far as airfares are concerned. Some of the airlines have seriously hiked their prices and obviously reality is coming in.  I have had interviews in the past that I have mentioned this that the use of Boeing 737 as major operating aircraft for our airlines is an issue in terms of operating cost and if they met those costs then the prices have to be right.

 

In terms of passenger traffic on international travel, will you say the traffic has increased in recent times?

If we are looking at passenger traffic, the last time I checked, there was a dip in 2019. Of course, this can be due to economic reasons. People who would have travelled with five families may decide to look at alternate things to do for pleasure within the country. But there was a slight dip in terms of passengers travel in 2019. So far the year has not run out but from what we have seen, the rush was not the usual rush you would get in the peak seasons.

As an aviation handling company, you work with airport facilities, how do you collaborate with the Federal Airports Authority of Nigeria (FAAN)?

You would appreciate that this airport (Lagos) was 40 years old in May and a lot of the avio bridges were built to accommodate airplanes build around that time, like DC 10, MD11 aircraft and others. These were aircraft produced in the late 60s, 70s and the airport was built in the 70s. So, over time we have newer aircraft like the Airbus 330s, 340s, Boeing 777 and there are more modern aircraft coming. The avio bridges, especially at the Murtala Muhammed International Airport (MMIA), Lagos has been a challenge and what that means is that on arrival a toll tug would have to be there, aircraft stops and this even causes a little bit of chaos in the aircraft because once the lights go off in the aircraft that indicates that the plane has arrived and should be pulled to the bridge. But what happens in some cases is that the pilot forgets to inform passengers that they are in Lagos; they have to be pulled by a tow tug or push back to the avio bridge; as the passengers are not informed that the aircraft will be towed, when it is towed it staggers people in the plane.

The challenge is that the avio bridges need to be updated to accommodate the new kind of aircraft that we are bringing in to Nigeria now. That is why the British Airways invested and modernised one of the bridges to ensure that it suits their specifications and they always park at ECO 63 (one of the aviation bridges at MMIA). But other aircraft would still be towed in with a tug to a stand, which eats into arrival time and is a bit of an inconvenience and we would only hope that now that the Minister of Aviation is back, it would be one of things he would look into.

 It is said that the services of aviation handling companies are under-charged in Nigeria in relative terms. This is because of competition between the major handling companies, NAHCO and Skyway Aviation Handling Company Plc. (SAHCO). How does this affect your revenue?

To the contrary, I want to say that nahco aviance and SAHCO see ourselves as partners. Why do I say that? if you are to move from one handling company to another, we have different agreements that we hold, we have meetings that we hold together on issues around our operations. We also look at policies on how we can strengthen our relationship as the two handling companies in Nigeria. So, if you decided to leave one handling company for one reason or the other, you would have to certify all the contractual requirements of that other ground handling company before you move to the next one and vis are vis. We would check and call the other handling company to make sure that all contractual obligations were met before you move. So, the competition is healthy. It enhances your productivity at the end of the day and so NAHCO as handling company is not scared of competition.

What is the segment of market you have now in terms of international carriers?

Well, in terms of providing handling services to international carriers, this would depend on station by station. In Abuja we can say 95 percent, Lagos we can look at between 65 to 70 per cent of the airlines. What I would say is that all European carriers obviously stay with nacho aviance for some reasons for things like our safety records, there is what is called EETD in our export where they make sure that proper checks are done and this is not to say that our competitors are not safety compliant. But some airlines are more comfortable with certain services they have been with for a long time. I can proudly say that airlines that we have handled have sustained over the years. I can give you so many examples, like KLM. This airline has been with us for so many years, Virgin Atlantic since inceptions 2001 that they came; Ethiopia Airline has been with us. So we have been able to sustain a lot of customers and that is because we partner with them we do not just see them as an airline, we want to understand their need and see how best we can work with them to achieve their goals.

In terms of baggage handling, your company used to be constrained by ageing carousel and poor baggage process. Is it still the same situation?

There has been a little improvement. This improvement could be projected to be 15 in the sense that the number of times that the belt has shut down completely has reduced in recent times; however, the belt is very sensitive. You cannot put bags on the belt the way you would normally want the bag to go on the belt. That is why you would come at the check in area you see bags littered around. This should not be the case. But the major challenge is when the bags leave and go down to where we call the makeup area. This is area bags are checked through the scanners by aviation security officials from FAAN and then loaded into the containers that are taken into the aircraft. There is a very cumbersome structure at MMIA; other airports where they have modernised facilities, the staff there finds it easier to manage. You have to take the bags off the belt, take them to another belt and they go through the scanner, and take them off to another belt before they are finally loaded into the aircraft. This makes it very cumbersome for our operations and sometimes eats into the delay process because we have what is called service level agreement, which has tight deadlines that we have to meet. So that is one area that I feel is a challenge in terms of our operations.

You just told me that NAHCO handles all European airlines, how have you been able to sustain this?

Quite a number of them are on our board, so that relationship has been there over the years. In terms of how we facilitate our passengers we have service level agreements where under three minutes you should have processed the passengers and technology has also helped in terms of being able to check in online and is mainly backdrops security questions and maybe frequent fliers information and all that. But what has sustained our business over the years is that our staff goes through very rigorous training before they are allowed to be deployed that is the major reason why.

How do you look at the charges by FAAN and the Nigerian Civil Aviation Authority (NCAA) level on airlines, would you say it is relatively high or low?

We cannot keep looking at those charges in relation to dollar value. We have to look at what is holistic, what is the realistic cost to run with the operations, what the airline would be comfortable with. All the support agencies that work around and the associations would need to wake up and be honest enough to tell us what reality is in terms of operating cost for airlines and I know that when I have spoken about the aircraft types we use, some airlines have looked at and selected other aircraft types and are now reporting some kind of profit in terms of the operating cost and all that.

So if we look at the aviation industry in Nigeria and our population, we have to realise that what will boost the industry now is low coast carriers, I can tell you that now.

How viable are some of these state-owned airports?

You have to draw a thin line between presence and operations. I am a ground handler, so if they open an airport in every street, it is more business for me. But the reality is that you look at what you have on ground when you are opening your airport; you must have plan of what resource you have in the airport. If you are opening a cargo airport what sort of export item do you have or does import come to your geographical location? There is nothing wrong in having state owned airport but the facts of the matter are what is the patronage because it costs money to maintain an airport.

Airport management and maintenance cost a lot. There is a lot of maintenance cost because running an airport involves a lot of certifications, a lot of safety issues that cost money. So, before opening an airport, you have to look at your cost. States are struggling to increase the minimum wage of their workers; would they have the capacity to do that without federal government bailout loans? Where will they get the resources to manage the airports? That is the question. If they can answer those questions; then it is a good thing. The expansion can be justified, but if they do not as we can see clearly in Nigeria now; a lot our airports feed off the major four airports in Nigeria. So building more airports may not be viable.