Nigeria Air, the proposed national carrier, got its air
transport licence from the Nigerian Civil Aviation Authority, recently. Do you
think Nigeria needs a national carrier or do you think it’s a misplaced
priority?
It depends from which angle you’re looking. I mean, there
are so many arguments for and against it, but I would stand on the side of
those who don’t see a real need for it. I see the government’s role,
particularly in the current dispensation worldwide, as facilitating trade and
business. If the government took on that role, I would suppose that they should
identify domestic carriers that have the wherewithal to run as flag carriers
and assist them in acquiring the necessary equipment, the same way they would
be doing for Nigeria Air. They can assist them to access cheap funding. They
can assist them to ensure that Nigeria’s flag is carried worldwide and not
necessarily about one carrier.
So, the government’s role should necessarily be one of
facilitating trade and business rather than being the business person.
Government has no business being in business, except, of course, to facilitate.
In America, you do not have any government-owned airline and they’re all
successful. How’s that possible? It’s possible because the environment in which
they operate has been made conducive to allow their businesses to thrive. So, I
would expect the government to do exactly similar things to ensure that our
domestic carriers are able to survive even in the face of all of this.
Do you think the Federal Government has been transparent
enough on the national carrier project?
No, I don’t think so. We are supposed to have been told so
many things every step of the way, but that hasn’t happened. For instance, we
just heard in the news recently that the national carrier has been issued an
air transport license.
The air transport license is actually issued by the
Ministry, more or less. Though, yes, they could have circumvented the required
processes as required by all the airlines to facilitate it. I did not see
anywhere adverts were done by the Ministry on behalf of the national carrier to
indicate that they’re looking for no objection, because you’re supposed to take
out adverts in a newspaper over a period of time so that people can come
forward with their objections and they’d be reviewed.
That didn’t happen. So, what essentially that means for me
is that the government just decided by that to provide the necessary paperwork
to ensure that this airline comes into being. So, obviously, going by what you
said or by your question, it has not been transparent enough to allow people to
see what they’re doing, to be able to decide whether or not it makes sense or
otherwise.
Going by this, would you say Nigeria Air is a national
carrier or a government carrier?
Again, they’ve called it a national carrier, so it’s a
national carrier because the government designates who is who. I mean, to the
extent that the government has said it’s a national carrier, so believe it’s a
national carrier. My position is that if the government believes it needs to do
things properly, then there shouldn’t be any double standards. If the
government is saying it requires X number of days to do certain things for
whatever reasons, they should go by the same standard for everybody.
Nigeria Air shouldn’t be different from any carrier. But we
know that the way things have turned out in this particular case, obviously,
has been different. The national carrier
certification process is different, engaging people has been different. I mean,
a lot of things are different. So, I don’t know how else to say it but I do not
think the standard set by the government has been adhered to.
Even though it is FAAN’s duty to secure the airside, as a
former MD of the Nigerian Airspace Management Agency, why are we having issues
like airside security breaches and collapsing runway lights?
Honestly, I do not have any visibility as to the structure
of the security architecture at the airport at this point in time, so it will
be a little difficult for me to comment. But the fact remains that if there are
breaches, the root cause is what we need to establish. How have these breaches
taken place? If we understand how they took place, then it might be easy to
come up with the why and find a lasting solution to how these things can be
sorted out in the long-term.
I think that whatever it is, we will look at the structure
of the security architecture, which needs to be reviewed. There’s a need to
determine why there have been series of breaches. If we’re able to determine
those things, then it’d be easy to provide a solution that will be a
longer-term solution than what we have currently.
What do you think is really hampering the growth industry in
Nigeria?
Simply put, policies. The policies we’re operating with in
this country are policies that are not consistent with growth, that will not
facilitate airline growth and will not allow profitability of the industry.
And, once you have situations that are not consistent with growth, naturally,
airlines will come and go like we have seen in the industry today.
Most of the policies that are being operated or that exist
are actually policies weighted against airlines. For instance, the airlines
bear the brunt of all the unnecessary overheads being carried by the various
agencies. If and when they need to make payments and they don’t have adequate
funding, the next line of action is to increase charges for the airlines. Now,
when you increase charges for the airlines, they would want to increase fares
to cover their costs.
Now when they increase fares, they suppress demand, which is
a double-edged sword. Airlines are being pushed to increase prices to cover
costs. At the same time, the market is diminishing; the market reduces every
time they’ve done that. Every time they do that, it reduces the size of the
market, so, ultimately, what you end up with is a situation where the airlines
are caught in a catch-22 situation.
They’re not able to increase airfares so they don’t affect
demand. At the same time, they’re not able to cover their costs. Sooner or
later, they’ll go out of business. I mean the airline business is like a
supermarket business, you know. For the time you have stock, you seem to thrive.
When the airlines have airplanes that are serviceable and
are not due for any major maintenance, they’re flying all over the place, but
the moment they become due for maintenance and the airlines don’t have adequate
funds in reserve for maintenance, they park the airplanes. So, sooner or later,
you start finding airlines with 10 aircrafts being reduced to maybe three or
four because there’s no money to cover the cost of maintenance for those
airplanes.
So, the issue that is killing airlines in Nigeria is policy.
By the way, it is something that is fashioned both at the Ministry and the
NCAA. So, if the policies are not consistent with growth, airlines will fail
and they’ll continue to fail.
Why have most Nigerians who own private jets refused to register
them in the country?
That could be for a variety of reasons. Some of these owners
actually leased the airplanes from abroad and one of the requirements may be
that the aircraft is left on the register of the state from which they got the
airplane.
That’s simply because the leasers want to be able to have
control over their aircraft assets. Now, on the other hand, some of these
owners, even though they own the aircraft outrightly, their belief is that if
they put the aircraft on the Nigerian register, it would lose value appreciably
that when they want to sell it, they might not be able to get good value for
it. This is not necessarily the case, but that is the belief. So, you have a
variety of reasons why most of these owners actually leave their aircraft on
the foreign register. In any case, the NCAA is still to blame because if they
want to operate in airspace, you set the rules. If the NCAA does not set rules
that favour the market, they’re, of course, at liberty to do whatever they
please.
If it’s foreign-registered, except you have Nigerians that
carry foreign licenses, they’d most likely be flown by foreigners. So,
essentially, what you’re doing by not having policies to help is to ensure that
jobs are taken out of the country. In terms of foreign exchange, obviously,
there’ll be capital flight. So, when you have all these situations and they are
not addressed at the policy level, then anything goes. I think seriously that
all of these boil down to the rules set by the NCAA. If the NCAA says you can have
your aircraft in this country for X number of months, and if you want to have
continued use you have to register, definitely, all these individuals with
foreign-registered aircraft will have no choice but to comply.
But as long as NCAA allows them for whatever reason, then,
of course, they are not helping the local market because most of these people
end up having foreign pilots and engineers and foreign cabin crew staff. In
this case, what do you expect to happen? Nigerians are thrown into the labour market.
Of course, there are some individuals who use Nigerians but the majority of
them use foreigners.
Recently, local airlines cried to the government over the
skyrocketing price of aviation fuel. The govt intervened but despite this,
aviation fuel still goes for over N600 per liter currently. What does a high JET-A1 price portend for the
domestic airline industry?
Simply put, that would wipe away completely any profit if at
all there is any in the first instance. Ordinary, in the direct operating cost
of an airline, you’d have fuel making up between 30 and 40 per cent. That’s for
most airlines. Now, that depends on the aircrafts in the fleet of the airlines.
Where the airline has eight fleets with very old airplanes,
the cost of fuel may be up to 45 per cent of the direct operating cost. But if
you have a very new fleet, like a modern fleet such as Air Peace and Ibom Air,
then maybe your direct cost of operation will be between 30 and 40 per cent.
Unfortunately, with this price hike, the cost of fuel vis-a-vis the percentage
in terms of direct operating cost is almost about 60 per cent at the present
time. At that level, it is inconceivable to imagine any airline will be
profitable.
So, essentially, what it is doing is systematically killing
airlines. I don’t know for how long airlines will be able to sustain this
pricing but it is very difficult.
Now, the argument will be that the reason for this is the
Ukrainian war and some other factors around the world. Yes, it could be the
case but, if, for instance, our refineries were working, we could actually
produce Jet-A1 fuel locally because we have the capacity to produce at two of
the refineries in the country.
Now, if that is happening and we know that crude is local,
that essentially means all the components required to produce the Jet-A1 fuel,
90 per cent of which is local, you can control those factors to a large extent.
The 10 per cent element that probably will be international
would be the turnaround maintenance and the spares to support the refinery.