As the global oil price continues to fall and the naira nose diving against the dollar and other major currencies, the Chairman of Airline Operators of Nigeria (AON), Capt. Noggie Meggison has said that this is the time for Nigeria to look inward, as these challenges are affecting not only the aviation sector but also other industries such as agriculture, mining among others. He also spoke on other challenges bedeviling the aviation sector, the AON‘s efforts at reaching out to the Central Bank of Nigeria, the Federal Government to cushion the effects on the airline operators. Meggison stated that no foreign airlines operating into the country has a cement block as investment despite the huge capital flight they repatriate to the various countries yearly and having operated into the country for years. AbelNews was at the briefing. Excerpts.
Give an Overview of Nigerian Aviation
We all know and as I say, the most important point to me is that apart from being an aviator, I am an airline operator and presently, I am the chairman of Airline Operators of Nigeria (AON). I am also the grand patron of Nigerian Pilots Association. The most important thing to me is that I look at myself as a Nigerian and I try and tackle things from my own perspective to move aviation industry forward. We are Nigerians and we know what is happening in the Nigeria oil sector and oil today is at $26 per barrel and our present budget is at $38 per barrel. Today, government is already having the idea from the newspapers reports that the Minister of State for Petroleum, Dr Ibe Kachukwu saying that at $20 per barrel, Nigeria will survive, so we already putting $20 in view .The prospect buyers by hedging is in the world today are already hedging at $15 per barrel, so we are in for a rough ride. There is really no need to play the ostrich system and put your head in the sand and your body outside. We need to look at the realities on ground. There is a met down on the foreign exchange and meltdown in the economy. Whichever way we want to look at it, we need to tackle aviation without being political about it and we need to tackle our future as a country seriously. To do this all hands must be on deck be you in the mining, transportation, oil, aviation, agriculture or any sector. From my own small position as the chairman of AON, we in the aviation sector are trying to come on stream, make our own contributions and to make Nigeria not to feel the pinch that much and to move the country forward. As I said, to us Nigeria is paramount. We have sat down and we have agreed to also sacrifice at this time and we have also agreed to be a team player and put Nigeria topmost in whatever decisions we take to move the country forward. If you noticed from one of the few things that has happened even from the exchange rate in the parallel market is going as high as N305 per a dollar and even higher.
As we all know foreign exchange is very difficult to access now. We met the Central Bank of Nigeria (CBN) in November 2015 and the CBN Governor has also promised us that he would look into it and give us priority on this. Like I tell people the cost of aviation, 80 per cent is directly affected by foreign exchange from aviation fuel that we buy although in naira but edged against the dollars because they have to import it in dollars and it goes with whatever the rate is, to the spare parts, insurance, to as minimum as even the simulator training by pilots .We are asking are appealing to the government because it is pretty difficult at this time because cost is high. I don’t want to go into the nitty-gritty but it is very high for us ,so we have met the federal government to see how it can come in to grant aviation because really the catalyst for any economy is aviation .As they say if you conquer the sky ,you have conquer the ground .We are looking at how the Federal Government will partner with us; airlines and cushion the effect of the devaluation because as we say to land one tyre on aircraft today is about $4,000and if we have to go to the parallel market to access funds $4,000 for one tyre at best. We now pay duty for tyre .We are the only transport sector in Nigeria that is paying Value Added Tax (VAT). We are the only airline sector in the world that is paying VAT even the British Airways and the international carriers flying into Nigeria do not pay VAT. That is the reason we want to meet the government to see how we can rub minds and reduce the pressure on us. I said a main tyre cost about $4,000. If you take roughly the average fare in Nigeria today ,it is N23,000, N24,000 by the time you take the taxes out and then the multiple taxations and the levies and everything, what finally gets to the airline would be about N15,000 or N16,000 out of the N24,000 at best. If you take N15, 000 that comes to the airline today and divide it by N1.2million which is the cost of one tyre you need 80 passengers to buy one tyre and we change six tyres weekly at best. Some airlines are doing five days depending on the number of landings you are doing. It is not magical to find out that you have to pay 80 passengers to buy one tyre. With this calculation, you can see how many passengers you need to carry to buy six tyres a week; 480 passengers. So, going to the parallel market to source for foreign exchange is obviously is not a good idea. That is why we are dialoging with the government to create that window for aviation because really if we are going to be charging that same rate that we have been charging, eventually it is insolvent we are going to be facing. We are negotiating with the government and the government is listening and we want to see how we can make this thing come to us. We are not asking for rebate or are we asking for intervention but we are just asking that unnecessary taxations, double billings and multiple billings to be taken away so that we can face the real charges because trying to pay 5 per cent and other charges, end up being passed on the passengers .We all need to think about Nigeria and that is why we as airline operators are thinking more for Nigeria.
Some of the charges are Custom duties, the Federal Airports Authority of Nigeria (FAAN) charges; landing, parking navigational charges, Terminal Service Charge (TSC) among others. We need to really look at them. If for example I pay you Terminal Service Charge (TSC) and meanwhile you are not even providing any service to the passengers and I need to still pay to transport my passengers on the airside. Or pay you N250 to pass fuel through the hydro system and we know there has not been any hydro system in this airport for the past 10 year’s .All these things need to be taken out if you are not providing these services. Right now everybody need to tighten up their belts and we need to sit and stay focused to be able to keep the whole system afloat .We cannot afford to ground the system and we are appealing to the government ,sacrificing with Nigerians and whatever decisions we take today ,we are taken decisions as Nigeria.
The Nigerian Civil Aviation Authority (NCAA) I know came out to say that it read in the papers of fuel hike. No airline has hiked fuel so far although the dollar current exchange rate has risen to N305 to $1. No airline in Nigeria has hiked fares because we are feeling for Nigeria. It is a free market and there is no law that restrict us from doing that or not to do that .But because we feel for Nigerians we are sacrificing .There is no caveat or decree that that says we cannot charges N50, 000, N40,000, N30,000 as air fare but we are feeling for Nigerians. Hiking fare is not the issue right now but we are looking at how to maximise whatever we have and give proper service is what we are looking at now.
Air fares have still not changed on the domestic market because we are trying to feel the pulse of the people and also bend backwards as much as possible to provide a safe, comfortable and international standard transportation airline service system and logistics for the Nigerian market and the Nigerian populace.
Bilateral Air Service Agreement (BASA)
BASA as we always say at this time when our economy is experiencing some challenges should be reviewed.It is only necessary and obvious that we as Nigerians need to sit down and start to look inwards. We cannot continue to feed other people’s children at the expense of your children in-house .Your children are suffering from mal-nutrition (kwashiorkor in local parlance) you are given food to somebody’s else that is been subsidised by another government. It is only clear at this time that Nigerian government must review all BASA’s .BASA must be mutually benefitting between two sovereign countries.
Signing BASA is not about being a big brother .We need to help ourselves right now .As they say if the canoe is leaking, you concentrate on the canoe to block the leakages, they are putting people on board the canoe because if not the canoe, the people that you are bringing and those inside it, everybody will sink. So, BASA’s must be reviewed to make it mutually benefiting. I don’t want to weep a dead issue up again, where we said that when people are called to sign BASA, they come with aviation technocrats with 20, 30 years experience on the other side of the table and on the Nigerian side not one aviator is sitting down there. Many instances can be mentioned. There are instances where people have tried to sign sixth freedom right .there is nobody that has a sixth freedom. There is no even fifth freedom between the two closest allies in the world; the British and the American government do not even have a fifth freedom right. Why are we in our small home not having oil trying to throw away aviation? With our geographical positioning today given by god and the human resources that we have, there is really no reason as keep on saying that Nigeria aviation should not contribute for the first two years 12 per cent to our Gross Domestic Product (GDP).With the target of 20 per cent. For example 27 per cent of United Arab GDP is contributed by aviation. When I say aviation, I am not talking about airlines. There are many services in aviation .We should look at the aviation industry and try and harness the potential. This is not the time to play big brother and say come a do five landings at the expense of your local airlines .we have international airlines today flying into our country to do five landings intercity hubs .These same airlines do not allow commercial operations in their own countries. Commercial operations above 19 passengers do not happen in their own country .I am not talking about you as a foreigner to come in, their own country don’t even allow it because they are protecting the market to grow their own potential. Nigeria needs to begin to look at aviation as one industry that will contribute to our economy. It is painful and shameful that 50 years after our independence, 60 years after African airlines association, our aviation is still in the teething-crawling stage. This is the time and the time is now, the time is today for Nigeria aviation industry to wake up to contribute. Nigerians are travelling .An airline did a turnover of $2 billion .Another one made over $2 million profit .Their most profitable route is Nigeria and Nigeria has the highest seat per mile rate anywhere in the world but what is the mutual benefit of the BASAs that have been signed back to the Nigerian economy. Financially, skills, employment of our teeming youths is zero. We don’t have to be a space astronaut to know that an airline (name withheld) for example has been coming into Nigeria for the past 40, 50 years using the same type of airplane and not one Nigerian has been trained to release it on weekly A—Check. Where is the transfer of technology? I don’t need to talk about the fact that 80 per cent of these airlines that are coming here that we signed BASA’s with without looking at the BASA conditions are coming into this country with flying spanners in their business class seat to come and check their tyre gauges and oil before the aircraft goes back. 170 million Nigerians, World Bank and statistics put it that 60 per cent of this figure are below 27 years. We have youths looking for jobs and this is the time for Nigeria to come to reality and make aviation to contribute. The world has said that they know the potential of Nigeria but what is Nigeria’s problem? Put in perspective; is it the regulator, is it the government, is it the airlines? If you put things right in the aviation industry investors will come .The government does not need to spend $1 dollar to get things working because Nigeria is matured enough, it is ripe and with the drop in oil prices and rising dollar rate against the naira, Nigeria will have to focus critically ,honestly ,seriously with sincerity into different areas. Aviation is a gold mine that can be tapped the same way oil was tapped when we went into Joint Ventures (JVs) with oil companies and Nigeria had the controlling share 60 — 40 per cent .If we take aviation the same way, if you make N2 billion in a month and 60 per cent of your passenger load is coming out of Nigeria, please come and let see how we can harness some. We have numbers to show. Last year, I gave to the minister early last year what people will call capital flight. I don’t call it capital flight but I call it out flow from two countries of $1.7 billion a year from ticket sales .I don’t call it capital flight because there is a law to restrict it from going out. If you open your door and say come and chop and go and you sign BASA’s why blame the man? We need go back to the BASA’s that doors and the collapse the fence .Alot of BASA’s have been signed and we know the situation of these BASAs.
Is Aviation Standing Alone?
Aviation does not stand alone; it is part of the Nigerian system where corruption is the order of the day, where people have signed out our future generation. I think it is matter of time it will stop. Enough is enough .As matter of fact you cannot take out $1.7 billion of this country or operate six flights into this country a day. I mean three flights a day full load no Nigerian cabin crew, no Nigerian meal, no Nigerian pilot, no transfer of technology and you sell ticket in naira and want to take in foreign exchange, how? I there say that aviation 60 years after West African airlines, no foreign carriers with the millions and billions of dollars taken out of this country own one cement block on in this country .I am not talking about a room, a building, a hotel. I am talking about one block on the ground .It is time to look into it and start to restrict these flows. We can even re-negotiate these BASA’s using experts .We can start to reposition ourselves gradually.
Collapse of Airlines
No airline is collapsing now .The terrain is rough worldwide and it is not peculiar to Nigeria. Nigeria is not standing alone. So, the Nigeria is not standing in isolation. The American Government is pulling out funds .The fall in global oil prices is what is causing this. Everybody is adjusting and looking inwards.