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“All the existing 7 operators should pool their resources together, operate under one AOC, harmonize their schedule and stop the stupid on going competition among themselves. Then we will be having two near strong players”.
Mr. Gbenga Olowo is the President/Chief Executive of the Sabre Network West Africa and the current President of the Aviation Round Table, the body that drives Aviation safety and professionalism in Nigeria. In this interview, he speaks on the challenges facing Nigeria’s domestic carriers and government’s policy inconsistency, lack of direction or focus and absolute lack of support among others.
Excerpts
For now, how many domestic carriers do we have in Nigeria?
The domestic airlines we have presently in the country are eight in number and they are: Arik Air, Aero Contractors, Dana Air, First Nation, Medview Airlines, Air Peace, Azman Air and Overland Airways.
It is noticed that there is decrease in the number of carriers since 2013, can you please tell us the reason behind the reduction of the carriers?
Airline mortality rate in Africa especially Nigeria is relatively high usually 10-15 years but often less for so many reasons. Very difficult operating environment resulting from government policy inconsistency and lack of direction or focus to absolute lack of support from what the Bible described as dull hearing. The airlines are faced with so many operational issues without government attention. That is not all. There is no corporate governance in most of the airlines. One man owner calls all the shots and takes a lot of unwholesome decisions. The airlines are relatively small, weak and vulnerable to competition.
What has government done to curb the reduction?
Government is yet to take holistic decision to address the situation. The debate on whether to float a national carrier like Nigeria Airways is still on going. We strongly believe however, that given the prevailing operating condition no new airline can change the face of aviation in Nigeria. Early years will be glamorous but about 5 years after; same story of woes will follow. The necessary and sufficient condition for strong carriers in Nigeria is through collaboration and cooperation that should be midwifed through policy by NCAA that will result to the emergence of 3-4 mega operators through pooling of resources.
On the lecture you delivered in Ghana in 2015, you listed the variation of decrease in fleet between 2010 and 2013 to less than 28 percent, that is, in the 2010 the number of fleet was 54 while in 2013 it was 39, can you explain the rationale or reason behind this result?
With declining fleet size, route expansion will be limited and robust schedule very difficult. Down time for maintenance will impact negatively on schedule.
What is your take on airlines’ insolvency?
Insolvency simply put is when an individual or organisation can no longer meet its financial obligations. Do an x-ray of our airlines today; this is precariously what you find. All the airlines are owing huge debts to fuellers, workers, government and trade partners. Arik Air / FAAN indebtedness was celebrated this past week in the face of endless reconciliation and dispute of accounts with huge flight disruptions. Government should set up revenue collection agent either individual firms or banks to collect user charges of TSC, PSC, VAT, among others being collected on tickets and eroding airline revenue with several debt burden and conflict with government agencies.
In some other part of the world, aviation industry contributes a large part of nations’ Gross Domestic Product GDP, but in Nigeria the reverse is the case, Can you narrate in brief the major challenges of Nigeria airlines?
President Muhammad Buhari should task Transport / Aviation ministry to deliver at least 1percent of the GDP by 2020. It is presently 0.4 percent. A grossly under performing sector, by implication the sector will be required to grow annually at 25/30percent and this is achievable. If we apply 5:20 rule to our airlines requesting them to grow fleet by 20 aircraft every five years, it means three airlines by 2020 will parade a minimum of 60 operational aircraft each, provide job for 15,000 workers and 30,000 workers with 120 aircraft by 2025 at the rate of 250 workers per aircraft. By this rule only Arik can stand alone at the moment. Airport, Airspace and catalytic activities will also grow simultaneously. This is the only way to rescue market share from foreign airlines who must repatriate up to 95percent of their income back to their home country in US Dollars and continued weakening of the Naira. Truth be told, 5-10 aircraft airlines as we have it today cannot be described as strong schedule players. All the existing 7 operators should pool their resources together, operate under one AOC, harmonize their schedule and stop the stupid on going competition among themselves. Then we will be having two near strong players.
Some experts and stakeholders have also attributed the problems of the nation’s aviation sector to government, in the area multiple taxation, political intolerance. As a stakeholder, do you also support their claims?
Nigeria airlines problems are duo in nature. Firstly, Government lack of policy focus & hostile operating environment. Airline user charges for example is as high as 15 percent.User charges are revenue collected for other organisations factored into the fare ( without commission ) whereas airlines are not revenue collectors. Hence International Air Transport Association, IATA director general described airlines as Cash Cows.
High cost of Fuel, High cost of Funds, Exorbitant Airport Rent , Airspace movement charges at home require government serious attention. On the other hand, Poor management decisions and corporate governance by the airlines owners have resulted to high mortality rate in the industry.
In building a strong carriers, some analyst have recommended consolidation, do you subscribe to this?
Stand-alone operation cannot stand the test of time. We have seen these in the past three decades that mortality rate of our airlines is 5-10 years. A very poor rate.
They are usually weak, limited and unable to compete.
What is the role of IATA and other international governing bodies in building a strong carriers in the country?
IATA / IOSA member airlines operate under standard and recommended practices that are measurable and guarantee good quality service every time and all the time. A lot of benefits are also derived through interlining, code sharing and price hedging. The domestic airlines will benefit immensely if they can plug into these programs to further strengthen their operations. Some are already members such as First Nation, Arik and Aero. Others should follow suit.
