INTERVIEW: Why Nigerian Airlines Hardly Survive Beyond 10 Years, What Govt Must Do – Expert

The Nigerian aviation industry has been bedevilled with numerous challenges in recent years, leading to the death of many airlines and, more recently, the acquisition of two major airlines, Arik and Aero contractors, by the Asset Management Corporation of Nigeria, AMCON.

In this interview with PREMIUM TIMES’ Oladeinde Olawoyin, an aviation expert with decades of experience in the industry and Former Military Airport Commandant at the Murtala Muhammed International Airport, MMIA, John Ojikutu, speaks on the challenges in the industry and sundry issues.

PT: At a media parley in Lagos recently, the Director-general of AMCON, whose company has taken over two airlines due to bad debts, said the aviation industry is troubled and needs urgent reform, do you agree?

Ojikutu: The AMCON boss is right in his assessment of the industry and he is not saying anything new about the Nigerian aviation industry being in trouble. The trouble did not start this year or last year; it started about eight years ago and everyone saw it looming around. Unfortunately, the operators themselves, the regulator (Nigerian Civil Aviation Authority, NCAA), policy makers in the ministry and the legislators were very indifferent to the plights of the industry, so long there was an aircraft to fly them. The only solutions they all could proffer was to continue using public money to sustain the private airlines. AMCON too cannot absolve itself completely from the travails of the industry. In over five years before now, it had been involved in the renegotiation and rescheduling several loans owed by some airlines to banks and to the federal government. One wonders how a private airline, not a public enterprise, that is not in the Nigerian stock market be owing as much as N268 billion from about 6 different banks as at 2012, and AMCON was aware and went ahead to allow the airline to further access the federal government aviation intervention funds. You begin to wonder if AMCON and some banks are not part of the industry travails.

PT: What do you suggest as solution?

Ojikutu: The solutions or reforms is to get foreign technical investors that would take and pay for a big chunk of the debts; sell the remaining to the Nigerian public at the NSE market with a view to transforming the airlines to one or two national flag carriers; airline or airlines now flag carriers should immediately be designated on the international BASA (Bilateral Air Service Agreement) and regional routes. No other domestic or private airline operators should be given concession to operate on the BASA routes except it is designated a flag carrier and it is quoted at the NSE market for the Nigerian public to be part of it. Let it be known that BASA is a national Commonwealth and does not belong to any individual or private enterprise but to the Nigerian people.

PT: How can government come in?

Ojikutu: Government should not allow any domestic airline operator to operate less than 5 aircraft and not more than 4 routes. And no airline should be licensed to operate regional routes in addition to the domestic routes with a fleet of aircraft that is less than 10. Airlines should encourage themselves to merge.

PT: As an expert in the industry with decades of experience, what could be the cause of airlines not surviving more than ten years in the industry?

Ojikutu: Most of the Nigerian airlines operators have very little background in commercial aviation. The business plan requirement in the NCAR (National Center for Atmospheric Research) expected to be developed and submitted for the AOC (Air Operator’s Certificate) and AOL (Air Operator’s Licence) were copied from those that were before them and were never made to sustain their operations. The aim of most of the operators therefore in the industry, is to make quick money and not for the love they have for it, but to rape it. The operators are generally, single ownership with poor management structure; bad financial management and a behavioural pattern to divest, divert and reinvest the earnings in the industry to other businesses. Often, they have proxies or partners in government agencies, ministries and in the legislation who provide them safe haven for debts owed on services provided to them by the government operators; open the flood gates of government intervention to them at low interest rate; give them zero duties on aircraft spares; concessional low rate on foreign exchange from the CBN.

PT: The industry has in recent time, particularly in 2016, had an accident-free year. Is this due to some structural/institutional factors or sheer luck?

Ojikutu: People can celebrate an accident free year, but that could not necessarily have been because of any structural or institutional factors. Last year, there were quite significant numbers of flight cancellations due to inclement weather and unserviceable precision navigational aids. There were reduced number in flight frequencies daily due to perceived ‘fuel scarcity’ and debts owed to fuel marketers; scarcity of foreign exchange resulted into reduced airlines fleet. These are the factors that caused reduced local and international air traffic by about 25 to 30 per cent. This could have reduced the stresses the air traffic puts on the systems and invariably, reducing the chances of avoidable accidents.

PT: Many airlines are struggling to break even and the airline business in Nigeria has been said to be largely unprofitable, what could be the cause of this?

Ojikutu: The airline business is a ‘beautiful’ and expensive industry but with marginal profits. Unfortunately, it is not a business for a typical Nigerian trader who invests in naira and wants quick returns in naira or those who invest in dollars and returns in dollars. Aviation is where you invest in naira or dollar and with good management, the profits of kobo and cents over the years could translate to naira and dollars. Those traders who want quick returns in dollars and naira are those who have no love for the beautiful industry; they rape the industry and walk away in 5 to 10 years.

Unfortunately, the regulatory agency had been passive too to the rape on the industry without applying appropriate sanctions on breaches on the NCAR. If the airlines business is unprofitable, the operators could as well take a walk to the rice farm and go plant rice as Dangote is doing.

PT: What structural reforms could be put in place, especially in the area of technology, to position the industry on a sustainable and safe path?

Ojikutu: The problem of the industry is not about searching for modern technology or aeronautical facilities; equipment alone cannot work on its own without skilled manpower. The problem of the industry is also not necessarily about lack of funds. The Nigerian aviation problems (which needed to be fixed) are corruption; lack of periodic maintenance for aeronautical facilities to support airport operations and the sustenance of flight operations.

Others are inadequate skilled manpower, insufficient supervisors and middle managers, and ineffective and inexperienced inspectors.

PT: A new airline, JetWest, is set to join the industry, but already considered troubled by many experts, do you think it has a chance, sir?

Ojikutu: It is hoped that a new airline, JetWest, would learn lessons from the failures of those before it. It must come and love the industry; if it comes like others just to rape the industry, it will end up the same way those before it did.

PremiumTimes