‘Excessive tax on ticket, operations killing air travel business’
Bernard Bankole is the President of the National Association of Nigeria Travel Agencies (NANTA), the umbrella body of the travel agencies and agents otherwise known as the downstream sector of the aviation sector. In this interview with WOLE OYEBADE, Bankole takes a detailed look at the industry, recent review of Rate of Exchange, plan to raise tax on luxury travel and effects on travelling public among other sundry issues. Excerpts:
What is your assessment of the air travel industry in terms of growth?
The travel industry is always a true reflection of the economy. And in our own case, the industry should actually be growing when you look at our population vis-à-vis the travelling public. You will agree with me that Nigeria really needs to grow that industry and government has a role to play in it.
You were here many years ago when we never had flights to Abuja (from Lagos). But today, there are flights to Abuja from Lagos, Abuja to Port Harcourt and back to Lagos. You can actually make that triangular trip in a day. In as much as you want to connect the routes in a day, it has to be cost effective and simple because that is what air travel brings to you.
But what we have today is the opposite because you are not sure if you will make it to Abuja and Abuja to Port Harcourt due to one operational reason or the other that airlines always come up with. You and I know that the issue is not technical, rather of economic implication for airlines having to service those routes.
As at today, the cost that government levies on those tickets is enormous to the point that the local operators can barely survive. Tell me one airline that is in operation for more than 40years. The answer is none and it is a shame. Nigeria has produced a lot of domestic carriers and within a short period they will die naturally.
Yes, we will want to blame it on mismanagement of operators but that is just not all. The economic environment matters a great deal. Government policies matter a great deal for the survival of private businesses.
Government needs to engage stakeholders at a meeting to really understand how to move this industry forward. They need to understand the challenges operators are facing and support them to stay in business by ensuring that right policies are put in place.
There is no time you will be at the Abuja airport that power outage will not occur at least three or four times in two hours. We use airports all around the world, and hardly do they have power failure. Why is ours different?
Do you think the current administration does not have the political will to work the talk on upturning the fortunes of the air travel market?
I think the current government has the political will, financial power and the commitment of the presidency to transform the sector, if the administrators do not have ulterior motives. What we are asking for is not farfetched. They can be done if they (administrators) are willing and have full commitment to getting things done. After all, the Abuja runway was promised and equally delivered within the timeline. What makes it different from others?
Has anyone been able to account for how much Federal Airports Authority of Nigeria (FAAN) is collecting on Passenger Service Charge? For every international traveller, $50 (N15,300) is charged, it is $10 (N3,060) on every local traveller. What are we doing with the money? We are not going to just sit back and allow the government insult our intelligence. If these government agencies are not living up to expectation then let us change the personnel. And if they have a problem, then let us bring in expertise to manage them.
Recently it was announced that Nigeria is officially out of recession. Have you seen any positive impact in the travel market lately?
I haven’t seen changes and it will not happen soon. There are economic indices that show signs that we are out of recession but it does not mean that it will impact the lives of the common man immediately. We’ve just crossed that borderline and back on the path of growth. It does not mean that we are already growing but just back on the path; the arrow has just turned upwards instead of downwards for us.
Perhaps, one of the arrows that have turned upwards is the cost of international air travels that has moved up some notches. How will you explain that from the travellers’ perspective?
Truth is that customers are not finding it easy because it means that their cost of operations too has to go up. Their staffers need to move if the company must generate new businesses. But mind you, moving the Rate of Exchange (RoE) from N306 to N359.5/dollar is not the doing of the International Air Transport Association (IATA). The operating airlines (which IATA represents as their global clearing house) need to move to a reasonable rate. The only way they can get Foreign Exchange (FX) is to go for export proceeds rate and that is N359.5 to a dollar.
If the government really loves the citizen of this country, then they need to start making some provisions that will enable the airlines to have access to official rates, which is still at N306. But at N306, it is not available to the airlines. But at N359.5 that it is available, they will go with that and it means that the cost of ticket will go up because they have to make money to remain in business.
This is not about the international airlines alone. Even the local airlines are affected because everything about airlines is denominated in FX. So, the sector needs some level of intervention. Government need to consider the sector as a critical vehicle to move the economy forward, so official don’t continue to see it as leisure vehicle that it is not. Aviation is one sector that makes it faster and simpler to achieve economic gains. The moment they realize this, then they will start seeing its impact on the economy.
Foreigners are not going to trek to your country; neither would they come by road or by ship. They have to come by air transport, with lookout for infrastructure on ground. It is only in Nigeria and nowhere else in the world that the queue of returning citizens is far longer than that of visitors. Everywhere in the world, the reverse is the case. These are fundamentals that are wrong and should be addressed.
Then does it make any economic sense to increase the tax on business and first class travel tickets as the Federal Government mentioned recently?
It is simply the lack of understanding that informed that idea. And this is what happens to government that does not go into full consultation with the private sector before making economic policies. You are not making these policies for animals. There are pressure groups like ours that should have been engaged on what they are planning and we would brainstorm together to help them take reasonable decision on how to move the industry forward instead of backwards.
However, when you look at it, you will find that the taxes in Nigeria are some of the highest in the world. Let us start to do the tax breakdown, then you will understand that the taxes are high. People will tell you that taxes in other developing countries are also high. But if they are high, you are guaranteed to get value for your money. There are services that come with the fees. Here, you pay but you hardly get the services to accompany the payment you have made. We would not sit back and allow some people to deceive the masses.
There is this sense that foreign airlines are exploiting the local carriers and the industry too. Do you share this sentiment?
I would say that the foreign airlines are not exploiting us. And if for any reason they are, then the government created the windows to be exploited. We have civil aviation authority that is responsible for air traffic and pricing regulations. There is a department in the Nigerian Civil Aviation Authority (NCAA) that mandates all airlines to file their tariffs. So, every airline files their tariff and if there is anything untowards, the NCAA has the power to call them to order. So, British Airways, Air France and others will not just wake up and say this is what I’m going to sell in Nigeria. They have to file it in, which tells us that they are always in the picture. If the authorities feel that we are being exploited, then they created the window for it. The fault is not that of foreign airlines.
Could the problem then be blamed on the inability of local airlines to do international operations successful or other problems in the system?
The problem is in two-fold. We have to learn to separate management from ownership of an airline. It is always a bone of contention when it comes to Nigerian businesses. When you do that, then you will see the business thrive very well. That is one of the problems our airlines are facing.
The second is an indirectly inflicted pains coming from the government. If government can give them some soft landing in some areas, then it will augur well. There is nothing wrong in them paying less for parking fees and tariffs. What do they enjoy as an indigenous company? They need those sorts of supports. That gives them a competitive edge and comparative advantage being a local carrier over international carrier. But they are lacking in this area.
And you don’t think there is a problem with foreign airlines having multiple destinations in Nigeria?
I honestly don’t see a problem with that. We just need to create a level playing ground. They need to learn the way other countries are doing it. Didn’t Ethiopian Airlines open up their airspace and is the airline and Ethiopia not doing well in the aviation world? Didn’t South Africa also open up its airspace? For your information, British Airways has a regional hub in South Africa. We need to create a competitive market. The only way to support yours is to give them an edge for comparative advantage.
No comments yet