‘Local operators got it wrong on Spring Alliance, airfare spike’
Bankole Bernard is the Chairman of the Airlines and Passengers Joint Committee (APJC) of the International Air Transport Association (IATA) and Chief Executive Officer of Finchglow Holdings. In this interview with WOLE OYEBADE, Bernard examines the air transport sector in the post-pandemic era, protracted travel protocols, spike in airfares and absence of the regulatory buffer to protect Nigerian consumers.
In response to market realities, local airlines have raised airfares, with further threats to push rates some notches if aviation fuel continues to sell above N600/litre. You don’t seem to agree with their argument.
Not entirely. Fare increment seems inevitable, but in the sense that the naira keeps depreciating against the major currencies like the dollar. And you and I know that as of today, even Jet-A1 is 100 per cent imported into the country. Instead of us producing locally, we are importing the product. That automatically puts the cost of Jet-A1 on the high side. And who are the users and consumers of this Jet-A1? Airlines.
Fortunately for the domestic carriers, Jet-A1 is still cheaper here than anywhere else. Foreign airlines would prefer to buy fuel here because the price is competitive. But for the local carriers that will have to adjust their prices and fares in naira, it is a bit difficult. And that is why the government continues to subsidise petrol. But they have not been able to subsidise Jet-A1 because they believe only the elites and the rich use air transport. They have forgotten that flying has gone beyond that because it has now become the safest and fastest means of travel, where rail and road are now prone to attacks. But for you to fly, it means you must be willing to pay more.
Be that as it may, the airlines do not have the singular power to review airfare without carrying the Nigerian Civil Aviation Authority (NCAA) along. It has a directorate in charge of fare regulation. The normal process is that as an airline, you will file your fare with the directorate that understands fare composition. And once they see that the fare composition is in line with the realities, then such fare can now go into the markets. But the airlines now saying that they want to increase fares because the costs of fuel and operations have gone up, they are not in any position to even say it. If it was in a situation where IATA is involved, then they would have invoked anti-competition law upon themselves. So, it was a wrong move on the part of the airlines.
Are you worried that consumer rights are not protected?
I am worried. The Federal Competition and Consumer Protection Commission (FCCPC) is saddled with the mandate of protecting consumers. But the term ‘consumer’ is too broad and we need to narrow it down for effectiveness. The truth is that nobody is protecting consumers in aviation because the FCCPC is overwhelmed. Go to their office, they have lots of cases that they cannot even attend to.
I believe that NCAA needs to bring back to life the consumer protection unit that will be responsive under a particular directorate. It is very necessary. The aviation industry is a very peculiar one. You cannot classify the entire consumer needs and leave them under a general department. It will not work. There are rules guiding consumer protection and they are constantly being violated every day. When flights are delayed, nothing happens. They (airlines) get away with it. In Kano recently, staffers of NCAA were delayed for about six to eight hours. Nothing happened thereafter. So, abnormality has now become the norm. Who will take us to where we should be?
There are pending cases in court over consumer rights violations. Should the authorities allow issues to get to that level when aviation matters are being tried in civil courts?
That is exactly the concern because such complaints should not have gone outside in the first place. There is a law protecting the aviation industry and NCAA must have the autonomy to make certain decisions in checkmating these airlines where they have violated the rules. The NCAA needs to be empowered to function in consonance with the laws.
What is happening is that quite a lot of people have seen the weakness of the system that allows everybody to do whatever they like. If the airlines wake up tomorrow again and say that the cost of fuel has gone up, and on that premise, they want to increase the fare, there is absolutely nothing you and I can do. You and I will never go to Abuja by road because it is not safe. We would rather fly. And if we are going to fly, we are left with little or no choice because the airlines have formed an alliance, which should not be allowed. They are allowed to have an association, and the association is not to discuss fare. The earlier the CAA is empowered to carry out its functions to the letters, the better for the survival and the well-being of the industry.
You referred to the Spring Alliance recently formed by local airlines to boost cooperation and tackle flight delays. Is that illegal?
There is what is called an anathema. An anathema is a sin that you must not even think about, not to talk of doing it. They should never have even thought about it much less formed an alliance. When you say you are forming an alliance, you form it as what?
The Spring Alliance is modelled after known arrangements like Oneworld, Star Alliance and SkyTeam.
No! The essence of Oneworld is for codeshare and all those things that will give its members a comparative advantage to stay relevant. And I will give you an instance. A KLM of this world, which is a European carrier, will partner with a Southwest carrier in America. Those places KLM cannot go to in America, Southwest will distribute its passengers on its behalf? That is what codeshare is all about. The (Spring) alliance is not about codeshare. The alliance is about an amalgamation of pricing and that is wrong. It is to the detriment of the consumer.
If the primary purpose is for us to distribute passengers effectively, then the word ‘alliance’ should not come in. It is just an understanding that can be backed by an MoU. That you and I have an MoU that on this particular route, you will pick my passengers for me and I will pick your passengers for you on this route, and that can reduce the cost of our operation. It is different from an alliance because when you now start to do an alliance, it means that you are going into partnership to the detriment of the passengers. That must not be allowed.
Then what is the purpose of the Airline Operators of Nigeria (AON)? AON is the association umbrella. So, you forming an alliance is like causing a division within AON, which should not be allowed. And I thought by now, NCAA would have got involved to let them understand their limits.
The local airlines and some stakeholders have again faulted the Federal Government’s economic decision to grant foreign airlines like Emirates, Ethiopian Airlines and Qatar Airways multiple landing rights, describing it as a rip-off on the local market. Would you agree with the call on government to rescind such approvals?
Well, I will say that you cannot go wrong protecting your own. Every government must learn how to protect its own. If the domestic carriers are complaining about the policy, has the government listened to them, to see how to mitigate the risk of these multiple destinations they have given to the foreign airlines? If that risk has been mitigated, I see no reason why they should be complaining.
In every situation, I think the focus should be more on the opportunities than the threats. I think the government can say, ‘okay, you know what, if you are going to get the additional slots, this and that are what you need to do’. Give the conditions in such a way that you would have protected your own that are active on that particular route. It is just as simple as that. I don’t see anything wrong with it. It is just the manner of approach. And like I said, you can never go wrong protecting your own. So, the government is the one that needs to handle this kind of thing with a lot of care and everybody will be happy at the end of the day.
If we say they should not fly, what about the passenger that is coming from that destination? It would be unfair on them and we need to be fair to everybody including the economy. Because if there is a flight to that destination, that destination too will open up, job creation will happen in that place because they will employ ground handlers, and open airport offices. So, income will come to the government, job opportunities will come to the people working there. How do we now get our local domestic carriers to align with those foreign carriers? If they are talking about an alliance, this is where it should come in. That is the real alliance that we are talking about and that should be promoted.
COVID-19 hysteria seems to have eased with the outbreak of the Russia-Ukrainian war, but Nigeria still sustains some of the travel protocols that are considered exploitative to consumers.
Well, let’s thank God that we have seen the government shift ground in that regard by saying that once you are vaccinated, you do not need to do PCR tests. This is quite commendable because these are protocols that have been reviewed globally. So, why should ours be different? We cannot just allow our citizens to constantly be exploited. Not by foreigners this time around, but by other people within our system that are running this COVID-19 control process. Even before the belated review, the cost of PCR test in Nigeria is high compared to other places. In America, they are doing it for free. When you do a COVID-19 test in Dubai, even home service, or in your hotel, it is 150 Dirham, compared to about $100 here. It just does not make sense.
But at least, we cannot be talking about the past because they have done something about it and we want to see more of things like this to help our industry grow.
And while at this, let me congratulate us on the new terminal that has been opened. The new terminal can now decongest the pressure on travellers. I think the government has done well by opening the new terminal and it will encourage more airlines to say ‘let us come to a destination like Nigeria to see how we can partake in the market’. I think it is a very laudable one.
As chairman of the Association of Aviation Training Organisation of Nigeria (AATON), how much capacity are we building locally in preparation for the projected boom that awaits the aviation industry in the post-pandemic era?
Well, I must say that it is unfortunate, and it is all across the board, the general attitude that we have seen towards knowledge acquisition in this part of the world. I think that the NCAA needs to do more in terms of creating awareness of proper aviation schools in Nigeria and ensuring that the guidelines are well kept because nothing is being done in that regard. I can say to you today, that we only have 20 registered aviation training organisations in the whole of Nigeria. And these include the Nigerian College of Aviation Technology (NCAT). NCAT is one of our members.
The government needs to create more awareness. Some of those training institutes out there are illegal and are not even aware that what they are doing is illegal. So, it starts with the awareness, then the registration. When I was the president of NANTA, I practically made it possible to have travel agencies registered with NCAA. Before I became the president, it wasn’t like that. But today, NCAA can talk about 1,000 travel agencies registered with them, from where they were before that they had less than 100.
It is because somebody pushed for that to happen. NCAA needs to create awareness and training to help these organisations come to the full limelight. So that our graduates that have left school could get jobs. And you see, we have good hands in Nigeria as it were. They are all gaining jobs outside the country now. Employers know that number one, they come cheap; again because our naira is weak. Number two, they have been well-trained. So those that are seeking to have international exposure, go to proper School.
The government needs to strengthen training institutes in aviation. If they are well recognised and awareness is created around this, then you will see the industry boom more than it is.
Do you think the minister of aviation has done well for the industry?
You may not agree with me, but I think he has done very well. Compared to where we were, we have seen a lot of upgrades in most of the airports. It might not be up to expectations. He is equally constrained by the little resources that have been made available to him. And again, when you find yourself in that kind of a dilemma, is it possible to be satisfied across the board? It is difficult. So, when you look at it very well from a different angle, you might say he has not done well. But from my angle, I think he has done very well considering the little resources that they made available to him.