Aligbe: Aviation Industry Needs Government’s Intervention

Aviation industry stakeholder and Chief Executive Officer of Belujane Konsult, Chris Aligbe, in this interview speaks on the challenges in the aviation industry, even as he appeals to the federal government to support the parastatals to survive the economic challenges occasioned by the coronavirus. He also calls on the Asset Management Corporation of Nigeria to invite the founders of Aero Contractors and Arik Air and hold talks with them on the future of the airlines. Chinedu Eze brings the excerpts:

For some time now there has been an exchange of words between the Asset Management Corporation of Nigeria (AMCON) and the former management of Arik Air. While AMCON has said it met a hopeless situation when they took over Arik in February 2017; the airline’s former management insists otherwise. So, what do you think?

To tell you the truth, I have never believed in the AMCON take over. I have always said this right from day one; that they are undertakers and that they do not have the competence to run any airline. They should have known that taking over Arik and Aero Contractors would not have helped the situation. At that time they quarreled with us, but today I am sure they have realised their mistake. How can you say you take up an airline with about 13 to 15 operational aircraft, and how many do you have today? Where are some of the aircraft? One or two of them I understand is detained/impounded in Europe by creditors who insist AMCON acted unilaterally outside the laws of receivership; they are leasing equipment from Mongolia. I flew them once and I saw white cabin crew. I wanted to know if it was Arik Air that I was travelling with. They are saying they have floated another airline, which is NG Eagle and that Arik Air is no longer operational; that they are paying Arik debts. That is nonsensical; they will never get it right, even with a new airline. If you are using equipment from one airline to start another airline and expect to pay the debts of the former airline because you cannot use the former airline to pay the so called debts, you are dreaming. You see what I mean when I say it is nonsensical!

I repeat. The way they are going, as at now, one will begin to question their motives. The motives are no longer clear, it is not pointing in any direction. It is now arousing a lot of questions. Who are they giving account of their stewardship? They are not giving anybody account of their stewardship. You took the airline over on behalf of whom? There was a time after the takeover people were saying Arik is now a national airline. Nigeria cannot own two airlines and be floating another. But I told them it is not a national airline, it belongs to private individuals, but look at the sorry state of both airlines, Aero and Arik today. There were attempts made to convince the government that they should use it to float national carrier; that they were now ready for profitability. Well, did they tell the truth? Those are absolute lies. And people were pandering to it, that Arik and Aero should be merged, it is not possible. So, for me, it is sad, whatever challenges Arik had by the time AMCON took it over, I think the assets of Arik then was higher in terms of value. They were by far more than what they owed.

Whatever they owed. I am not saying they do not owe. I cannot put my finger exactly on the quantum (amount owed) but Arik had so many assets by far more than what they owed. It just required a different management approach to be able to meet their obligations. And I think their obligations were not beyond what airlines have as obligations. AMCON rushed into it for one reason or the other but ever since they rushed into it, what have they recovered? What debts have they paid? They took over the debts at the parastatals, but they have not done anything, they have not achieved anything. If they were a private organisation, parastatals will be running after them, to pay up their money. Since you took over assets you should also take over liabilities. Which liability have they been able to deal with? Rather, they have incurred more debts. They said they invested over N300 billion, what is the evidence? Invested it where? where is the evidence? Have they paid the debts? Have they brought the airline to its normal operation? It is sad that we are losing Arik and I do not know why the ownership will not go to court on whatever it is. AMCON has lost; they have lost it.

But what is your review of AMCON’s intervention in the aviation industry?
When people have the penchant to go into areas they do not know, anything but efficiency will be the result. AMCON intervention is one of the critical issues we will be talking about in the industry. We should ask questions, why is this and what is this? Call for accountability and let’s see how accountable you are in managing the airline, but they have not done that. So, as far as I am concerned, the new operation they want to do, I do not know if it will ever be successful, but even if it operates, it can only be limited to domestic operations. Immediately they make mistake to go international, the trouble they will get, they might not be able to handle it. In fact, AMCON should apologise to the aviation industry and the owners of these airlines, and call them back and say sit down, how do we move ahead. That is the truth. AMCON cannot keep beating its chest; it is unnecessary and unhelpful, arrogant, and hollow. If you want to be arrogant you will have to justify it by your achievements. But when you are hollow, you have nothing and you are arrogant. There is no justification for your arrogance.

Anambra state is about to open its new airport. People are talking about the proliferation of airports and some other people are saying that the more airports we have the better. What do you think about the management of these airports? How can they become profitable?

Within that zone where the airport is located you have concentration of air travel passengers. But the challenge they have will still remain Asaba airport. What may give the Anambra airport advantage is if there is continuous traffic gridlock on the Niger Bridge. But that will depend on if the government completes the second Niger Bridge that advantage will be over because you can move faster from Nnewi, from Ontisha into Asaba and then you take off from there than from going to Awka. And you can move faster from Udi or Ugah to Enugu than to Awka. This means the new airport will enjoy temporary benefits. So he must quickly think of what to do to make that airport attractive

If they concentrate on cargo and if they can bring them in directly it will enhance the chances of profitability for the airport?
They should seek an approval for international cargo operation. They should not bother about passengers. Passengers can go to Enugu for major international flights, but they should look at cargo and seek approval for international cargo operation. If they should do that and begin to build on it, the airport will become attractive. For cargo, the airport will be the only in that region, except when Enugu comes up. But if it does well as a cargo airport, it can go a long way.

After concession agreement signed by the Delta State government and a consortium that will manage the airport, there were a lot of criticisms.

What do you make of those attacks in terms of the future of the concession?
The Asaba airport concession went through the normal process. You can see the processes step by step up to the State Assembly. The agreement went through that phase. If you cancel the concession what will you do? You want to run it yourself? It will go down. And again the concessionaire must start working very fast; they don’t have to be laid back. If they get laid back people will come and say two years you have been here you didn’t do anything. And then it becomes an issue of non-performance. So they will be looking for what they will hold on to. You cannot use anything in the agreement now because the agreement passed through all normal processes. People were involved, multi ethnic state and so many groups that the governor set up, he made sure every group was represented. Isoko, Ijaw, Uhrobo, they were all there in that group. And he went to the State Assembly, which endorsed it. So there is nothing you can fault in terms of transparency in that situation. The only they can disrupt the concession is if there is non-performance. But if the concessionaire begins to make his investment and begin to show that he is committed to the project, people won’t just go to cancel it. All that they can do is to try to harass concessionaire to get some chips out of the concessionaire but they will not cancel it.

It is only if the concessionaire doesn’t start work in time that they will have an excuse. So my advice is that the concessionaire should start working. My advice is that the state government must establish a strong oversight agency that will monitor and follow up throughout the period of the concession to make sure that every detail of the concession agreement is implemented. They must make sure that the objective of the concession is realised. The body will monitor it, and guide the concession for the benefit of the entire state. But if that happens it will survive. It is when it doesn’t happen, particularly performance that is when it will not survive. It will face a lot of problems.

It has become every obvious that Nigeria needs a major maintenance facility. Some people have said they are going to build one, like Akwa Ibom and the United Nigeria Airline, the federal government said it will build one, then Air Peace. What impact do you see operating airlines without major maintenance?

It is a major problem because without that you cannot operate effectively. You have to maintain your aircraft and without a standard globally acceptable maintenance organisation here you will still need to take aircraft out. The cost is huge; it is humongous. So it will be best if we have one. But let me tell you what is happening now, there are so many individuals who want to set up an MRO. I heard that of Akwa Ibom, they have gotten equipment and they are working on it. They are trying to bring the maintenance to fruition. But you ask yourself, what will they be maintaining? All these people setting up, they are airlines; they are setting up to maintain their own aircraft. A maintenance organisation survives on third party maintenance.

And you can see that all airlines are virtually beginning to buy the same equipment in Nigeria. Boeing aircraft brand is even leaving Nigeria’s airspace; only a few people now operate Boeing, maybe Air Peace and some others. They are going for Bombardier CRJ 900 and Embraer. That is what is going on in the industry now. So how can a major MRO survive in our country? Will it depend on the market across the West Africa sub region or where are the people going to bring aircraft from for maintenance?

What do you think about the one the federal government is planning to establish?
It depends on what they are looking at. Is it purely engine maintenance? What aircraft type are they looking at? Who will be their initial customers? How many of such aircraft type exist in West Africa sub region? In North Africa and East Africa, you can’t get anything. Ethiopian Airlines, Egypt Air and Royal Air Maroc are there. I am sure South Africa is still maintaining. I am sure Kenya is doing some maintenance for their own equipment.

So who are you looking at to come and patronise you?

The largest MRO in the continent is in South Africa. Ethiopia has a big MRO, South Africa built its own during the Apartheid because they could not go to anywhere; in fact, at a point it was the largest maintenance out fit in Southern hemisphere. It was very large because they used it for the maintenance of all their Boeing 747 and because they were not going out to other maintenance facilities abroad because of Apartheid.

So they built large maintenance factory to handle all their equipment. But I don’t know what it has become now, but even up to the time South African Airway started having problem, they were still maintaining their equipment. That is the situation. So how are you going to attract market when you have a proliferation of these maintenance facilities? There are many airlines building their own MRO and you can’t stop them. I am sure that even investors will look at that because they do their market projections. What can we have there to make sure that we not only breakeven, there should be a return on investment. And if they don’t see that return on investment they will not come. The proliferation of maintenance organisations is focused on managing equipment. It is not focuses on their party. Usually you could see a few airlines doing third party maintenance but that is not the focus. And when every airline starts maintaining its own aircraft, what then will go to the one being built? It will be very hard and that is the fact of the matter.

The airfares have so risen that you cannot even compare it with anything in the past to the extent that about two Sundays ago somebody bought a ticket for N120, 000 one-way flight. What do you think will be the consequence of that?
That is the truth. We have had that experience too. We can’t cope with this, the airlines are suffering very deeply and the way they want to react to it is to recover from their suffering. They hike up fares to reduce the number of travellers. People will put their heads on the road, I am going to my village, I am not flying. I made two attempts to fly; I was so terribly disappointed. The morning we were going to take our flight from Asaba, the airline at night before the flight around 8: 00 pm, they sent us a message that the flight has been rescheduled to take off from Owerri. You know why they did that? They didn’t want to cancel the flight. So if you ask for refund, they will tell you that they had to deduct charges because they didn’t cancel the flight. You expect me to go from Asaba to Owerri to take my flight and you say you didn’t cancel the flight. All that I am trying to say is that we have a major challenge, the industry has gone down and the government is not helping the matter. The CBN and the Minister of Finance did not help the aviation sector. Whatever palliative they got, they just wasted it. They have left the industry to sink. Whether they are waiting for one accident to happen before ever they get jolted to the game I do not know. They have allowed it to sink.

Do you think that government should give airline or the aviation industry a special forex window?
I don’t know. They ought to do that. The foreign airlines are flying here making money and they don’t allow them take out their money generated from the sale of tickets, the foreign airlines will react. And if foreign airlines react, they would begin to do all that things they normally won’t do. Government should give domestic airlines forex window through which they can easily access dollars so that they can buy spares and effectively maintain their equipment. But what they are doing to our domestic airlines is painful. And not only the domestic airlines, they are even doing it to parastatals. In fact the way FAAN is managing to sustain the airports is quite surprising to me. FAAN is working largely with its internally generated revenue; yet it still remits 25 per cent of its revenue to the federal government coffers. Federal government should encourage the parastatals to survive the economic challenges occasioned by the Coronavirus pandemic and should suspend the deductions for now.

Even the handling companies are finding it difficult to buy new equipment?
Yes, they can’t because the dollars is not there. The government does not consider aviation industry as a major economic driver, which is sad. Which is missing the point because CBN or the Ministry of Finance cannot say this is the quantum of contribution of this sector to the nations’ economy.
Airline Operators of Nigeria (AON) have been criticised for not effectively representing the airlines and when necessary negotiate effectively with government on behalf of the operators. What do you think should be done to strengthen the association?

As far as I am concerned AON is no more effective. It is not the AON we used to know before, it is no longer a voice. AON has lost steam many years ago; they lost steam immediately they allowed the Minister to tear them into two. A former Minister tore them into and they brought in new AON where Capt. Nogie Meggison became the chairman. AON was a very serious organisation, an advocacy group and a defender of the industry. So AON lost its steam immediately they allowed a politician to go into them and separate them. Immediately they separated them, the target then was to ensure that they remove Capt. Mohammed Joji, because he was not going to toe their part or be controlled.

That is how that organisation lost steam. And what is happening today is not helpful. How many airlines are operating? Even this palliative that was given, the other airlines were angry about the way the thing was handled. So they have lost, they cannot pull them together. My advice to them is that they should go and join NACCIMA so that NACCIMA can create a voice for them. All other sectors are part and parcel of NACCIMA. And NACCIMA has the image and reputation. They represent the country outside, so they should come under the umbrella of NACCIMA. Let NACCIMA have the aviation sector as part and parcel of it and they can develop a voice from there.