Given the challenges facing domestic airlines, amidst nonchalant disposition of the Federal Government to their plight, the Chairman, Governing Council of the Nigeria Aviation Safety Initiative (NASI), Captain Dung Rwang Pam, has predicted an imminent takeover of the industry by foreign airlines. He spoke to WOLE OYEBADE on the state of the industry and other sundry issues. Excerpts:
With the challenges facing domestic airlines, there are fears that the sector is on the verge of collapse. Do you share that submission?
It is possible that the local sector will suffer a lot of attrition but it will not collapse completely. What will happen, in a scenario where most of the Nigerian local airlines go bankrupt and are unable to operate, is that you will end up having foreign carriers coming in to operate.
Operate domestic routes?
Of course. Because we have economic groups like the South African Development community, Common Market for Eastern and Southern Africa (COMESA) in East Africa and we have the Banjul Accord Group. And they grant Fifth Freedom Rights, which mean you can actually come into Nigeria, take passengers from Nigeria to other countries that are not even yours.
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That was what happened when Arik had that botched insurance matter. They allowed their insurance to run out, so they could not fly and their passengers were more or less stranded. But we had other airlines based in Ghana or other places coming in to operate. That is one thing with the Economic Community Of West African States (ECOWAS) region with some of those internal agreements; which are good. We may end up having that with other airlines doing great things.
For instance, Rwanda, which is a very small country, is making quite a lot of smart decisions with regards to aviation industry. At the moment they have close to nine airplanes and they have got some more plans as well. Not only do they fly in here, but they have also successfully been able to attract quite a number of our pilots; very experienced ones. I know about eight that have gotten jobs with RwandAir. They left their employments here; some from Arik, some from Air Peace and others from Dana; they have all left to join RwandAir.
The Nigerian industry is, therefore, going to suffer to the benefit of other African carriers. I know South African Airways is in a bit of problem, Kenya Airways is not doing too well, Ethiopian is alright, but when they come here, they look like the golden boys compare to our performance locally. When you look it from regional perspective, we do not impress even our African counterparts not to mention the international ones.
The regulators would argue that the industry is not as bad as often reported given the safety records in the last couple of years.
Yes, most companies have imbibed the culture and understood that safety is paramount because if you are not safe, one day you will not even be able to operate. However, lack of an accident is not a guarantee that safety has been accomplished. There could be lots of incidents going on unreported.
The operators are a bit smart now with regards to safety. We have not had any major accident. But once you start cutting cost, which is what most people are doing now, you may get to that tipping point whereby you impact negatively on safety. The airlines that have not paid their staff for few months is a major safety concern because it affects first the psychology of whoever the crew are. They are worried about meeting their immediate physiological needs – food, cloth and shelter, and at some point would reduce concentration on the job.
How much of the knocks should the regulators take for the situation?
You need to first ask yourself what is the function of the regulator? The regulator has a mandate to first ensure that we have safety, efficient, comfortable and sustainable air transport. And they have got lots of departments to be able to meet that.
I’d dwell a lot more on economic regulation where they have lots of units under economic regulation to ensure financial health. First, Part 9, section 30, sub-section 4b and c of the 2006 Civil Aviation Act mandated them to carry out the evaluation and analysis of operations of all Nigerian registered airlines in order to determine their financial capability to carry out safe operations.
There is also the facilitation unit. Facilitation is getting the passengers from the point they arrive at the aeronautical unit to the point when they are leaving it; from getting their bags and ensuring that the place is safe and comfortable. That is the function of the NCAA. They have the allied services unit that looks after agents of foreign airlines, cargo agents, ground handling, freight forward and insurance unit. It is a huge responsibility and multifaceted. With the autonomy that they have, they are not supposed to suffer any form of political interference as long as they go according to the mandate. If they don’t, they have failed.
The regulator is like a father in the house who has the mandate but his children are unruly. It is difficult to exonerate the regulators from the situation because they can actually monitor financial health of airlines before it gets to a situation where they start cutting corners and endangering flight safety – where they (airlines) are unable to pay staff salaries, they are unable to honour their obligations to fuel and airport service providers.
Regulator is supposed to ensure that such doesn’t happen and when it gets to situations like that, you can actually shut them down. The market is just going to be there. Once an airline shuts down, another takes their place. I’d say that if you look at the functions of the regulator and its duties, then you have to leave a lot of the cleaning up of the foot of the regulator.
What of the airlines?
Airlines themselves are culpable. They are supposed to have business plans to show how they will run the airline profitably. I know some airlines that didn’t really provide a credible business plan. It means that the financial statistical data provided to the NCAA are more or less just simply ignored, because if they take time to look at those statistics, then they would be the ones jumping up and down and not pressure groups and bystanders and organisations like ours saying you have to change your method.
What I have noticed is that the regulator has tried to up their game and they have stepped in a few times to remind the airlines of their obligations. But I expected a lot more from the regulator.
Given the rate at which we are going, with almost no reaction from the government, where do you see the aviation sector in the next five years?
It would be taken over by foreign carriers; that is, the non-Nigerian carriers. I’m surprised it hasn’t quite happened. They will be forced to start partnering with other airlines outside Nigeria, as long as they maintain majority shares. Virgin Nigeria was flying domestically apart from Virgin flying internationally.
Remember when Jimoh Ibrahim took it over, he actually wet-leased aircrafts from Egypt. The Egyptians were the ones doing the London-Lagos route completely. Egyptian aircraft means Egyptian crew. All we were doing was just put passengers in. That is an example of what will happen. Because the airlines don’t have money, as it is now, they will be forced to sell their shares.
Virgin Nigeria had 51 Nigerian equity and 49 British equity. So they can do it. But because a lot of the technical services were offered by the foreign partners, the later would make more money than the local partner. They are the ones that will be enjoying. Our domestic airlines will go into stupid things like this when the chips are down.
What we are encouraging them to do, hoping that the regulator will encourage them too, is to first sign commercial agreements with each other locally. They need to interact so they can sell their tickets. If Arik is not there, passengers use the same ticket on Dana. But these guys are looking at themselves like enemies competing against each other. It is very myopic, detrimental to common sense and will lead to the demise of local industry and local skills.
This is what will happen if you have wet-lease your aircraft to foreigners, they will bring foreign guys while you have Nigerian pilots and engineers and cabin crew jobless. That is what happened when Virgin Nigeria brought Egyptian aircraft. They brought Egyptian crew. The way we are going, it is not going to be in the interest of the country.
Why is it this difficult for the airlines to close ranks and emerge stronger?
Because they are egoistic. We are not so sure of the funding of most of them. But there may be funds from some people that want to build empires. But the idea is that it makes commonsense to work together, where you save cost and increase your reach. When you have that interline arrangement, passengers can buy one ticket and go to two destinations. It also means that we will reduce out expenses; we will also increase our in-house knowledge and processes.
