Aviation: One Year After
It is a year and some days today since we have been under the leadership of President Muhammadu Buhari.
His promises to the industry remain a dream and hopefully will be a reality before 2019 elections. The President and his party, in their campaign manifesto promised us a new national carrier that will fly the flag as a refreshing replacement to the liquidated Nigeria Airways Limited.
He promised to reduce the number of aircraft in the Presidential Fleet to save cost and to redress all lopsided agreements signed to the detriment of Nigeria, and Nigerians in particular.
Presently, the industry is badly hit by the freefall of the Naira and the unstable high exchange rate, which has driven a huge blade in the finances of local and foreign operators. Local operators cannot increase gauge, or negotiate new leases, and foreign carriers are either pulling out of routes, or reducing frequencies.
To the consternation of industry stakeholders, Government that promised to redress lopsided agreements, went ahead to sign an expanded agreement with Qatar. Qatar has only one point of entry and is a strong airline that is heavily subsidised and supported by its government.
In a bid to cut the cost of public travel, government abolished First Class tickets for officials, but the much awaited and needed restructuring of aviation agencies has not happened. We have taken note of the tailored visit of the Economic and Financial Crimes Commission (EFCC) to some agencies and this is applauded.
Government rolled out a new set of promises: the National Carrier Project that was earlier jettisoned as not being a priority; concessioning of choice airports; establishment of a National Maintenance Hangar; setting up of an aircraft leasing company; and an advanced Aviation School in Abuja.
The Ministry of Budget and Planning has also included some of our projects in the national planning programme which is a good development. I strongly advise that they engage stakeholders before implementation.
From the foregoing, it is evident that government is tilting towards productivity hence the emphasis on commercialisation and efficiency with a subtle acceptance that the previous government bequeathed a good safety and security template that must be sustained in the interim or better still moved to excellent.
The change process is slow and the players are hurting, therefore government must rev the engine and move.
In moving forward: the following should be considered: after a year, the resource guzzling Presidential Fleet is still the same size. To our surprise, the President has also been very silent on this issue. Why the sudden change in position? Mr President, the civil aircraft in the Presidential Fleet, excluding 001 and a good backup aircraft using range and sitting capacity as an advantage, should be discarded without hesitation.
On the Aircraft Leasing Company being proposed, it should take off as a PPP, which will metamorphose into a Commercial Aircraft Finance Enterprise (CAFE). This company is a needed tonic to provide safe, efficient and affordable air transport for intra Africa travel. The CAFE idea will allow airlines access to aircraft with minimal cash, compared to outright purchase or leasing from companies outside the continent.
The company should only deal with commercially viable carriers, hence the need for our airlines to consolidate fragmented routes and begin to develop strong regional cooperation.
The agencies in the sector need urgent manpower and administrative surgery. They are tilted politically to the detriment of professionalism, therefore to restore efficiency and reduce cost, Government should not only dig into the past rot, but ensure that the books are combed to ascertain purported expenses and liabilities.
On public travel, government should go further and warehouse all public travel. This will involve inviting foreign airlines, who have shown interest to submit offers, which will be heavily discounted and renegotiated on bi-annual basis. The Australian Government just renegotiated public travel costs with foreign airlines flying into Australia, despite having strong carriers.
Unfortunately, 97% of our public travel is on foreign airlines. With the introduction of single till account, our public travel can be warehoused to reduce costs.
The process of stabilising the naira has started and it must be sustained to bring the economy back to its feet, boost investors’ confidence and increase enplanement. The official window should be opened for all schedule operators only, corporate and private aircraft owners should source for their forex.
Also, scheduled flights should be seen as essential services, not residual, hence the need to address taxes and charges built into the system and passenger tickets.
The purported deregulation of aviation fuel should be revisited, not reversed. The supply mode is tactically regulated, while passengers pay fuel surcharge on each ticket till date, despite the fall in oil prices. There is something wrong here.
On the concession of choice airports, government should please go through all the different options on the table, while also using our peculiar socio economic barometer before closing the door. Taking only the four viable airports alone and leaving the unviable ones will create more problems for the industry.
There should be fairness and transparency from the beginning to prevent future problems, while an independent, robust and strong regulatory body must come on stream to protect the public. It is the norm and we cannot be different.
Government has committed to African Single Sky which will commence sometime next year. Before its commencement, Nigeria should spearhead the immediate implementation of the ECOWAS Single Sky. The Ghanaians have opened their skies and non ECOWAS members are feasting to our detriment.
Our carriers in their present state can flex their muscles on the West Coast, but will be unable to key into the imminent African Single Sky project due to poor corporate structure, systems and processes that have made them leprous outside the Nigerian airspace. How do you explain this?
ASKY, a young Togolese carrier and Air Rwanda, which belongs to a country still recovering from genocide and without CAT 1 certification have numerous code shares and interline with foreign carriers, which account for about 30% of their revenue; while our carriers can boast of none with our CAT 1 and numerous IOSA certifications. These airlines cannot blame government for commercial failures but themselves, hence the repeated agitation for a national carrier.
If government says the new national carrier will be privately driven, then it is a national airline not a national carrier. Will these new investors be given more protection, support and exclusivity up and above other investors in the industry? That will not be fair. What is fair is a new regulatory consolidation process that will remove the ridiculous two aircraft get an AOC to 10 aircraft get an AOC.
Also, the Presidential Inter-Agency Committee set up to assist Asset Management Corporation of Nigeria (AMCON), which incidentally includes our Minister of State, should do whatever is needed to save publicly owned banks, rather than airlines owned by individuals due to the impact on our economy. We need at least two national airlines. Sadly, we do not have any in the Nigerian skies, therefore let us consolidate their liabilities and get a technical partner to buy government equity.
It is pertinent to point out that the ghost of the liquidated national carrier is still hanging with non-payment of staff and this must be taken into consideration as plans are made.
The Maintenance Repair and Overhaul (MRO) project being mooted is also a good idea. It will reduce operational cost and strengthen our operational prowess. Efforts by investors to key into this project were frustrated by a minister in the previous administration, who requested for $30 million from the $100 million loan granted the investor to start the project. How callous! Government can recall this investor with an apology, or send out a new set of bids.
The Minister of State, Aviation, Alhaji Hadi Sirika should, as a matter of urgency, convene a stakeholders’ conference that will draft and present a National Civil Aviation Policy (NCAP). What he called last month was ministerial briefing and not a stakeholders’ conference. We need the policy to tackle common bottlenecks to propel Nigerian aviation.
The new policy must reflect liberalisation and be pro growth. Some countries have done it. India’s new NCAP is designed to empower carriers to: bypass regulators and negotiate commercial partnerships; improve facilitations by using fast travel technology systems and self handling will be allowed to boost competition with ground handlers. Taxes on maintenance will also be reviewed downwards. These and many more can be looked into to bolster our industry.
Finally, Mr President, tourism drives aviation and vice versa. For us to stop dreaming and achieve the much cherished hub status, we need a strong national airline to do it, not a foreign carrier. To improve tourism and attract traffic to our airports from neighbouring countries, we need to stop the embarrassing and corrupt behaviour of our Immigration, Customs and other officials by removing the numerous checking posts aka toll gates created on the routes leading into our country and restrict them to our borders.
These officials are corrupt and have fantastically corrupted our neighbours. We need people from neighbouring countries to come here to fly, rather than go to Ghana. It is a challenge we must overcome.
Olumide Ohunayo, who is the Director, Strategy, Zenith Travels writes from Lagos.