A legion of challenges ranging from weak policies, lack of protection of domestic carriers, poor regulatory framework to absence of a national carrier and other factors have combined to stunt the growth of aviation. KELVIN OSA OKUNBOR writes that experts believe that if the government pays attention to suggestions of industry players, the sector may be on the path of recovery
British Airways, Virgin Atlantic, United Airlines and other foreign airlines call the shots in the Nigerian aviation sector. Airlines of Nigerian origin only play the runners-up– no thanks to unfriendly government policies and lopsided bilateral air services agreements, which have created a leeway for foreign carriers to feed fat on the juicy routes.
Besides, domestic operators lament rising costs of running their airlines in an industry where multiple charges by agencies have remained a permanent feature. Domestic operators are crying over increasing costs of offshore maintenance of their aircraft; oscillating price of aviation fuel and other attendant factors that have made returns on investment in domestic aviation ridiculously low .
The Federal Government continues to open the gates wide to foreign carriers to ply international routes which indigenous operators do not have the capacity to fly.
Worried by the lopsided bilateral services agreements, industry experts have called on government to consider urgent review of the air pacts, which have further underdeveloped the domestic aviation market.
Many foreign carriers, including the British Airways , Virgin Atlantic Airways , Air France / KLM , Emirates Airlines, Turkish Airlines, Etihad Airways, South African Airways , Kenya Airways and Ethiopian Airlines, enjoy multiple entry points into Nigeria . But, Nigerian carriers do not enjoy this bilateral privilege in the countries where these foreign carriers are based.
Experts and players in the aviation sector have consistently called on the government to review the 73 bilateral air services agreements it has signed with many countries to protect her carriers, which are grappling to survive in a harsh economic environment.
The president of the Aviation Roundtable, Mr. Gbenga Olowo, Executive Chairman of Airline Operators of Nigeria (AON), Captain Nogie Meggison, the chairman of Air Peace, Mr. Allen Onyema and industry analyst Mr. Olumide Ohunayo believe that a review of air treaties is desirable to protect indigenous carriers . Without this, they argue, many domestic carriers may be on the throes of extinction.
Olowo urged the government to put in place a policy that would encourage joint ownership of domestic airlines by Nigerians and foreigners alike. He said joint ownership of domestic airlines would bring about constant flow of income for troubled carriers, which constantly seek intervention funds from the government through the Asset Management Company of Nigeria (AMCON).
He added that this would discourage one-man ownership of airlines. He also said another option could be the merger of existing domestic airlines into two or three capable of being designated as flag carriers to compete with foreign carriers.
Olowo said AMCON and the Security and Exchange Commission (SEC) could put in place a template for strong flag carriers which would have proper management structure and corporate governance processes, adding that such flag carriers to be mid-wifed by AMCON and SEC must advance a roadmap to develop air transport and set timelines for safety.
He urged the government to put in place a legislation to block all avenues for wastage.
Olowo said:” Joint ownership will act like a check and control and eventually lead to sustainability. Most of the private Airlines are at the whims and caprices of the owner’s who most time divest and divert profits made from the Airlines as an outfit to some other businesses or private uses.
“Government should encourage joint ownership of Airlines by Nigerians and foreigners alike. It is advised that private airline should be encouraged to be listed by the Nigerian Stock Exchange and on the basis of participatory ownership which should involve members of the public, by buying shares in such Airlines and by implication becoming shareholders and stakeholders in the Airline.
“However, government may invest in such airline purely on investment basis. Government should enact sound and good law for the aviation industry and should not interfere in the management of airline. Professionals and entrepreneurs should be encouraged on the basis of these ventures. This will bring about constant flow of funding for the airlines.
“An array of experts will be on board to constantly make sure that the Airline is afloat. It takes burden off government as against our present situation whereby Airlines go cap in hands to approach government through AMCON for intervention funds.
“The present ownership structure of Airlines, which presently is a one man business should be discouraged. Airline as business outfit should be taken as such and all avenues for wastage should be blocked with sound legislations as enshrined in CAMA, Public Enterprises (Privatisation and Commercialisation) Act 1999 and Civil Aviation Act.”
He took a swipe at the Nigerian Civil Aviation Authority (NCAA) for its parlous economic regulation on domestic carriers.
Olowo said: “The civil aviation authority in Nigeria has no spine to do its job. The economic regulation responsibility of the authority is sleeping.”
He said the NCAA should be made sole regulatory body for all air transport matters in the country.
Olowo, who is also the President of Sabre Travel Nigeria and West Africa, noted that if at all “there is the need for Aviation to be in a Ministry, it should be a Directorate under the Ministry of Transport like the Railways, Land and Maritime”.
He said in countries, such as the United States of America and Great Britain, each state has its civil aviation authority and not an aviation ministry.
He added that in Asian countries, especially China, its civil aviation authority is the solely in charge of regulating civil aviation in line with the set standards and procedures of the International Civil Aviation Authority (ICAO).
NCAA as the regulator, according to him, must be given unfettered power to police the operations of service providers, such as the Nigerian Airspace Management Agency (NAMA), the Federal Airports Authority of Nigeria FAAN) and the Nigerian College of Aviation Technology (NCAT) while the Accident Investigation Bureau (AIB) should be made autonomous as an independent and unbiased aircraft accident investigator.
Airline indebtedness
Another major challenge the sector is grappling with is huge debt owed to government agencies, such as NCAA, FAAN and so on.
That is why the Ahmed Joda committee has recommended merger of all debtor airlines into a national carrier capable of serving the West and Central African regions, with Nigeria as the regional aviation hub.
Six of Nigeria’s leading domestic airlines are bogged down by huge debts. Last year, the Ministry of Aviation gave the debt portfolio of five of the airlines with AMCON at over N190 billion. The amount excluded sundry debts to aviation agencies, such as FAAN, the Nigerian Airspace Management Agency (NAMA), suppliers and other institutions.
The ministry said it arrived at the huge figure after a comprehensive audit of the operations of all the domestic airlines.
Details of the audit findings , the ministry said, showed Aero Contractors’ debt stood at over $200 million (N308 billion ) with 60 per- cent of its equity already taken over by AMCON; IRS Airlines, $55 million (N84 billion )’; Chanchangi Airlines, $55 million (N84 billion), and the now bankrupt Air Nigeria, about $225.8 million (N347.billion)
In 2012, some airlines, including Aero, IRS, Bellview, Chanchangi, Afrijet, Albarka, Caverton Helicopters and Air Nigeria, were at the verge of going under when AMCON waded in with a N132 billion lifeline, saving in the process over 7,000 staff from being thrown into the labour market.
Agencies merger /
restructuring.
An aviation security expert, Group Captain John Ojikutu (rtd), identified the Ministry of Aviation as one of the major challenges of the sector.
He said the ministry is manned by personnel who are not aviation professionals and at such cannot provide the needed leadership to drive the growth and development of the industry
He said: “The Ministry of Aviation should be merged with the Ministry of Transportation. Merger of the two ministries will further give a clear focus and direction to the parastatals and departments and as against the present situation where the parastatals are seen as serving two masters. This will bring about uniformity of policies and directional implementation. It will reduce corruption and inefficiency as well as reduce waste in governance.
“If government does that it would have followed the global trend. Parastatals and agencies within the Ministry of Aviation should be strengthened and empowered by the various existing legislations for optimal performance. These six agencies under the supervision of the Ministry of Aviation are independent in their functions. The outstanding six parastatals should be manned by professionals, a case of putting square peg in a square hole.”
He canvassed the privatisation of the FAAN, adding that only security-related areas of the authority’s functions, such as air field lighting, runway and aerodrome fire fighting and rescue unit, should be transferred to the NAMA.
NAMA, he added, should be commercialised, while the Nigerian Meteorological Agency (NIMET) should be transferred to the Ministry of Environment because its services extend beyond aviation to maritime and other environment related activities.
The AIB, he said, should be merged with the Federal Road Safety Commission (FRSC), as it is the practice in the United States.
The head of strategy at Zenith Travels, Mr. Olumide Ohunayo, said government should go beyond scrapping the Ministry of Aviation to overhaul the Nigerian Civil Aviation Authority (NCAA), which he said had failed to carry out economic audit of domestic airlines.
He said if the NCAA were alive to its responsibility, most domestic airlines would not be indebted to the extent of being unable to pay their workers salaries.
He faulted the current licensing structure in which new entrant into domestic scheduled operations were expected to have at least two aircraft.
He urged Nigeria to adopt the Indian model in which domestic carriers are only allowed to operate outside the country after five years of robust operations with at least twenty aircraft in its fleet.
Ohunayo said a fleet of not less seven or five aircraft should be considered as minimum for new entrants.
He said:” We do not need categorisation of airlines. That is not the problem of Nigerian carriers. The problems of the airlines are beyond the need to recapitalise. Cash is not the major problem airlines are grappling with. There is urgent need for airlines to regularise their fleet. A minimum of seven or five aircraft should be ideal for new entrants not the current two aircraft regime.
“We could adopt the Indian model where there airlines are only allowed to huge operated with at least twenty aircraft for five years before they could be designated outside the country.”
Olowo described the categorisation of airlines as another diversionary method plot by some operators to mislead government.
He said:” All of these are diversionary. What we need are just two or three strong carriers that can partner with foreign carriers to rescue the market.”
Former Managing Director of the Nigeria Airways Limited Andrew Okunuga said there was need for route harmonisation and fleet commonality.
Airport security Ojikutu said the FAAN does not have the capacity to handle issues arising from threat to security around the airport.
He canvassed the model adopted by some countries, such as Rwanda where the police and Air Force are saddled with the task of controlling security at airports.
Ojikutu said frequent incidents of stowaway at Nigerian airports have remained a sore point because the relevant security agencies are not doing enough. He said closer collaboration among the agencies and clearly defined duties would improve security at the gateways.
He said: “Because the airport is a border post it should have a central security control. This has become very important because it is part of national security. There is need to set up an autonomous agency in charge of aviation security. Such an agency should be in charge of manning the screening point to the perimeter fence. Since 2006, ICAO has asked Nigeria to build security and perimeter fence, but we are yet to comply. In Rwanda, the police had been mandated as the agency to carry out airport security.”
Multiple entry points /
Open Skies Agreement
On this vexed issue, the former president of Aviation Roundtable, Captain Dele Ore, described it as one of the sore points in aviation which should be immediately addressed by government.
He said government should immediately review all existing agreement and give foreign carriers the option of choosing a single entry point into the country, such that domestic carriers would distribute their passengers within the country.
Onyema agreed with Ore, saying government must protect domestic carriers by abolishing multiple entry points for foreign carriers.
The chairman of Airline Operators of Nigeria (AON), Captain Nogie Meggison, Managing Director of Medview Airlines, Alhaji Muneer Bankole and aviation economist, Mr Taiwo Adenekan, also described multiple entry points as the greatest disservice by government to domestic operators .
They said until government re-examine the lopsided air transport policies and agreements the predatory invasion of foreign carriers through multiple entry arrangement would continuously stunt the growth of indigenous carriers. 27 foreign carriers operating into Nigeria cart away over $ 5 billion annually. This accounts for 50 per cent of the over $ 10 billion taken way from Africa annually by foreign carriers.
Onyema said: “ The Buhari government has to put the aviation sector as one of the priority areas and must focus on how to development the industry. This is because aviation is critical to economic development. The government must think deeply in appointing a very serious person with a sound business background as minister in charge of aviation. This is unfortunate and highly disappointing for government to allow it to continue. It is very unfortunate for any government serious about development of local capacity to continue to allow this multiple entry point to thrive. If it continues it is going to kill the domestic sector of the aviation industry.
“We should do away with such an arrangement. This calls for total review. Even the bilateral air services agreement, it is lopsided against Nigeria. Apart from Nigeria which has thrown its borders open to other carriers, many African countries, including Egypt and Ethiopia, have evolved market protection policies for their airlines.
“Why is government allowing our air borders porous for these foreign carriers to come here and reap the bountiful benefits? This is unjust.
“Any government that is serious about creating of jobs for his people and preservation of its economy must address this policy of multiple entry point. The first thing the Buhari administration should do is to review this policy of multiple entry point granted foreign carriers.”
Multiple taxes and others
Over the years operators have consistently complained about multiple charges by aviation agencies, thereby increasing their costs of operations.
The charges, according to the operators, range from landing and parking fees for aircraft, ground rent, passenger service charge, ticket sales tax , fuel surcharge , value added tax ,service recovery charge , en route navigational charges and others .
Onyema said: “What government should do is to create an enabling environment for private sector airlines to thrive. Government must divest every interest it has in aviation. The only thing government should do is to create an enabling environment for the private sector to drive.
“The way out is for government to design appropriate policies that would create a conducive operating environment. The operating environment for domestic carriers in Nigeria is too harsh. It is not about airlines merger. But, the taxes are too many. With this kind of condition if sustained no airline will survive.
“If there were good policies in place, the type that brings about lowering of airport taxes, and other charges Nigerian airlines would do well. The cost of procuring land from the airport authority to build aircraft maintenance hangar is prohibitive.
“If government wants to support the growth of airlines, it must put in place policies that would enable domestic airlines lease land at lower rates. The wickedness of the government agencies in frustrating domestic carriers seeking to get land around the airport should be looked into. Why should FAAN ask any domestic airline to pay N160 million annually for land lease to build an aircraft maintenance hangar? It is too high. Where do they expect the airline to get such money from? Government should create a conducive atmosphere for domestic airlines to operate.
“It is not about proposal to merge airlines. The operating costs are too high; we want lower taxes, charges and elimination of five per cent ticket sales charged by the NCAA. This is eating deep into our costs of operations. It is beyond merger of airlines. Airlines have capacity to operate. But they need conducive environment. Government should put in place a policy that would enable airlines access single interest rate on banks loans. Government should address the policies that affect aviation, the issue of taxation and the operating environment, government must appoint somebody who has business acumen to run the sector.”
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