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Air travel industry and a four-year tenure to forget in a hurry

By Wole Oyebade
31 May 2019   |   2:22 am
General Muhammadu Buhari’s reference to the two items threw the campaign arena and some sections of the aviation industry into frenzy.

A section of the new terminal at Port Harcourt International Airport, Omagwa, Rivers State

Many were the promises of the current administration during the 2015 elections that brought Muhammadu Buhari to power. But in the aviation industry, the last four years were more of faux ‘change’ even as stakeholders remain optimistic. WOLE OYEBADE writes.

General Muhammadu Buhari’s reference to the two items threw the campaign arena and some sections of the aviation industry into frenzy. Either watching him live at the Abuja presidential campaign ground or on television sets, they were the best promises any one had ever made to the aviation community.

Clearly stated, Nigeria will have a national carrier in the status of the defunct Nigeria Airways, and ex-workers of the liquidated airlines will get their pensions and gratuities, if Buhari becomes the next president. Indeed, Buhari as the Head of State in the 80s had seen the Nigeria Airways in its heydays. The airline was the pride of Africa, and efficiently run; criss-crossing local, regional and international spaces with about 30 aircraft in its fleet.

About three decades down the lane, it was traumatic seeing the remains of Nigeria Airways in graveyards at major airports nationwide. However, Buhari believed the dry bones could rise again, and many agreed with him. Apparently swayed by the promises and the change agenda, Nigerians voted and President Muhammadu Buhari mounted the saddle. It was Buhari’s turn to keep his promises.

The president’s appointment of an aviator-turned-politician, in person of Hadi Sirika, to head the Ministry of Aviation for State and the latter’s immediate launch of a development master plan appeared to compensate for Buhari’s six months of shopping for a cabinet. Sirika, the first aviator to be so trusted with his familiar turf or playground, soon rallied stakeholders to meetings held in Lagos and Abuja, to sell to them his aviation master plan.

Four key components stand out in the total package. One, a national carrier to restore the nation’s pride in the aviation community. Two, concessioning of the airports to make them efficient but at no cost to the government. Three, Maintenance Repair and Overhaul (MRO) facilities and, lastly, aircraft leasing programme to alleviate the plight of operators.But about four years down the line, very little has changed in the industry.

Sale of presidential fleet assets
It was as clear as daylight in Sirika’s development plan that the government would be giving a lot of roles to the private sector to invest in aviation. Quite unlike previous administrations, this government has very little to plow into high capital intensive sector.

In fact, signs of the times soon dawned on all when the administration put some aircraft in the Presidential Air Fleet (PAF) up for sale in 2016.

Senior Special Assistant on Media and Publicity, Garba Shehu, following a newspaper advert for the sale of a Falcon 7x executive jet and Hawker 4000, said the sale was in line with the President’s directive to cut down on waste.

The fleet was quite expensive. It has one Boeing 737-800 otherwise called Airforce One; one Gulfstream 550; one Gulfstream V (Gulfstream 500); two Falcons 7X; one Hawker Sidley 4000; two Agusta Westland AW 139 helicopters and two Agusta Westland AW 101 helicopters. Their upkeep costs the state as much as N5 billion a year. So, it makes economic sense to shed some excess weights.

Infrastructure upgrades at Port Harcourt, Abuja airports
Another remarkable move by the administration was the continuation of terminal projects left behind by the previous administration. The Federal Government in October 2018 inaugurated the new terminal at Port Harcourt International Airport (PHIA), which was followed by the opening of a similar terminal at the Nnamdi Azikiwe International Airport (NAIA), Abuja.

The projects dated back to 2013 when the Chinese and Nigerian governments struck a loan deal of $600 million to build four new airport terminals in Nigeria.The projects were important, especially to change the narrative at PHIA that has for three consecutive years earned the reputation of the world’s worst airport, according to The Guide at Sleeping in Airports’ international survey.

So, it was a huge sigh of relief to have the new terminals commissioned, while similar projects at Lagos and Kano international airports were still being battled for completion.

Concession of airports
Recall that the Federal Executive Council meeting in 2017 approved the concession of the big four airports – Lagos, Abuja, Port Harcourt and Kano – at least to start with. Notwithstanding the protests by aviation workers’ unions against the idea, other stakeholders agreed with the Federal Government that concession is the way to go to keep the facilities running efficiently and at no burden to public funds. But nothing till date.

Industry expert and consultant, Chris Aligbe, concurred that the administration has done fairly well with the infrastructure upgrades, but “the airports concession should have come faster”.“Really, the improvement has been gradual but not as many of us would have loved it to be. I said that because we should have gone beyond this. We should actually be talking about the concession of our airports by now, but one also knows the challenges of going through all the rules and regulations in the bid to do it properly,” Aligbe said.

But he is not giving up on the airport concession pledge. He said if there is anything this government has to do next, it should execute the concession plan to improve aviation infrastructure. “There has not been much improvement in our airlines sub-sector because flights are still what they are. Again, it is a pity we had glitches in the setting up of a new national carrier. Government has though removed Value Added Tax and Duties, the local airlines need more support to succeed because the industry is grossly at its infancy in Nigeria,” Aligbe said.

Nigeria Air on a false start
Indeed, an albatross before Sirika, and the Buhari’s administration at large, is the unfinished business of creating a new national carrier, already christened Nigeria Air. Besides the valid arguments against a national carrier coming from airline operators, many stakeholders are unanimous that Nigeria Air is the most logical argument, giving the complex nature of the global aeropolitics that is skewed against private airlines.

In effect, the FG had in July 2018 unveiled the name and logo of the proposed national carrier, Nigeria Air, at the Farnborough International Public Air show in London, ahead of the initial take-off in December 24. As contained in the Outline Business Case (OBC) approved by the Infrastructure Concession Regulatory Commission (ICRC), the airline is a Public Private Partnership (PPP), with 95 per cent share pushed to investors while the government will own just five per cent stake.

To get the new national carrier off to a start, the Federal Government will be injecting the sum of N3.168 billion ($8.8 million) as the startup capital of the Nigeria Air. The Guardian gathered that the initial injection of N3.2 billion startup fund is part-payment of the FG’s five per cent equity in the investment, whose take-off fund in the next three years of operation was put at N108 billion ($300 million).

Shortly after the London launch, the airline, however, became a hard sell to quality foreign investors and technical partners, amid smear campaigns coming from the streets. The Guardian learnt that though several bids were received across the board, they were from carriers that are either struggling to earn profit or from its main potential competitions.

The last spanner in the works came from the Federal Executive Council meeting, where about four but “very strong” members voted nay for the December 24 take-off of the new carrier. The preference of the big wigs was a 2019 launch and notwithstanding their number, they carried the day, forcing Sirika to announce an indefinite suspension of the national carrier.

As at the last check, N8.7 billion has been budgeted for the national carrier in recently passed 2019 budget. Aligbe added: “I strongly believe in a national carrier with government’s sovereign cover of 10 to 15 per cent equity, and not five per cent. Efforts should continue towards having a virile national carrier.

“The Federal Airports Authority of Nigeria (FAAN) telling airlines to move to other airports (as reported recently) is happening because we don’t have a national carrier. If we do, that will not happen because a national carrier will naturally distribute traffic. The government should maintain the focus on national carrier and concession the airport, but it should not take forever,” Aligbe said.

Group Captain John Ojikutu (rtd.) concurred with Aligbe, saying no requiem for the national carrier. The plan to establish it must continue but it must be done with foreign technical investors holdings not more than 40 per cent.

Ojikutu reckoned that Nigerian credible investors should own 20 per cent stake; Nigerian IPOs 25 per cent; Federal Government five per cent and state governments 10 per cent. He said the government’s project and programmes to have a national carrier, concession of airports, MRO and aircraft leasing programmes are laudable but the administration cannot do them all alone without involving the private investors.

“We must not fall again into the traps we found ourselves with the Nigeria Airways, which was run more like a government airline than a national carrier. Similarly, the ownership of Virgin Nigeria was not known till it got defunct by succeeding government.

“Without the participation of foreign technical partners and investors, Nigeria investors and the Nigerian public, with government having some shares but not controlling shares, the dreams of credible national carrier and airport concession may end up being just dreams or another disaster in government-owned enterprises,” he said.

Ojikutu, who also doubles as the Secretary General of the Aviation Safety Round Table Initiative (ASRTI), a think tank of the sector, was convinced that in spite of the setbacks in these programmes, government has done well by not abandoning the projects on airports terminal buildings started by the previous administration.

“The repairs of the Abuja runway that had been on the drawing board of the previous administration since 2010, in 2016 was a major achievement. It is hoped that similar attention will be given to the Enugu runway. The certification of some airports is another major achievement over 10 years after the Nigeria Civil Aviation Authority’s (NCAA) Cat-1 rating. This is expected to reduce the insurance premium on airlines operating to those airports.”

But not all grim for aviation business
Sirika, at a recent meeting with the stakeholders in Lagos, said despite the problem of funding, it was not all grim for the industry as it recorded marginal growth of 33 per cent rise in local passenger traffic and 11 per cent in international travels.
Both segments bring the total yearly traffic to 18 million passengers a year. In effect, the industry’s contributions to the Gross Domestic Product (GDP) have improved some notches from 0.4 to 0.6 per cent as at last year.
Sirika said: “It was very difficult achieving all these because we went through very challenging times. The income of government has lessened; so you sometimes see aviation having about 11 per cent fund release. It is only magic that could make you do some of these things (projects).
“The major and number one challenge is the source of funding. I’m sure airlines like Air Peace, Dana and others would want to be the best airline on earth, but they cannot because there is no funding available. Yet, you cannot complete with those that have 120 aircraft fleet, and all their airplanes within the age bracket of five years,” he said.

Sirika added that contrary to claims, work was ongoing on setting up a new national carrier, already christened Nigeria Air. The carrier, just as the establishment of a Maintenance Repair and Overhaul (MRO) centre and an aviation leasing company, are all at the procurement phase.

Similarly, the development of an aerotropolis, cargo and agro allied terminals, also part of the aviation road map launched in 2016, were as well said to be at the development phase of their execution.

Part payment of the ex-workers of the Nigeria Airways
But thankfully, a promise made and partly kept was the government’s eventual payment of ex-workers of the defunct Nigeria Airways Limited last November. About 6000 senior citizens were penciled to receive payment of their salary arrears covering about five years and 30 per cent pay rise.

Buhari in September approved N22.68 billion for the payment of salary and gratuities of about 6000 ex-workers of the then national carrier. The grant was a part-payment of N45 billion the Federal Executive Council (FEC) approved over a year ago.

These achievements notwithstanding, some stakeholders are still worried that the sector has not really improved for reasons not unconnected with the lack of real policy thrust.

Aviation policy first
Statutory provision has it that the Federal Ministry of Transportation (Aviation Sector) shall be responsible to the government of the Federal Republic of Nigeria for all matters concerning civil aviation. The Minister of State (Aviation) is in charge of policy formulation, overall management of the aviation industry and shall ensure review of the Nigerian Civil Aviation Policy (NCAP) at least once every five years or as at when necessary.The last time such a review was done was 2013. Hence, the challenge of identifying the guiding aviation policy of the sector.

The President of the National Association of Nigerian Travel Agencies (NANTA), Bernard Bankole, said it would be difficult to rally aviation stakeholders or mitigate resistance without a clear-cut policy direction. Bankole said it was quite unfortunate that critical stakeholders of the transport sector, like the airlines operators and travel agencies, were often left to second-guess their places in government’s initiatives in the sector, despite effects on existing businesses.

According to him, “Travel agencies are the downstream sector of the aviation, but because government has not deemed it fit to recognise the role they play, they have not formulated policies to protect, guide and structure modalities of the business. As such, our industry has become an all-comers for every Tom Dick and Harry around the world.”

Bankole observed that the current administration disclosed plans to review the Civil Aviation Act, but till date, “no stakeholders’ meeting has been held to look into the act that protects the entire industry.” “Because, the entire industry has to be covered, up to the travel agencies and that is why we need to look into the laws that govern activities, including those of the travel agencies. Guiding policies will solve most of the problems,” Bankole said.

A member of the ASRTI, Olumide Ohunayo, scored the administration low in terms of performance within the air travel industry.“What I saw was a case of putting the cart before the horse, which culminated in poor implementation of good programmes despite the funds made available to the ministry. He (Sirika) had made up his mind on what to do, but he did not look at the processes and procedure that will make these actions a reality,” Ohunayo said.

He acknowledged the performance of aviation agencies in meeting basic security and safety targets that had helped the country to retain its Category 1 status and a dominant force in the international aeropolitics. Going forward, he sought a proper restructuring of an agency like FAAN, describing the repositioning as most critical to industry growth than concessioning of the airports.

“It should be clear by now that the issue with FAAN is not revenue generation or increasing the Passenger Service Charge. No! The problem has to do with management and the core structuring of the organogram. What we have is a political organogram that is subservient to any minister or party in power. “I personally do not want the concession of the airport but of the management of FAAN in its entirety. That will bring more revenue to the government and the development of the industry.

“We also need to revisit the organogram of all the agencies. The ones in place are political; instituted under the People Democratic Party’s (PDP) management and sustained by the All Progressives Congress (APC) that preached the word ‘change’ to us. If the agencies cannot be reviewed to ensure that they become productive, independent and commercialised, then nothing has changed,” Ohunayo said.