It’s another uneventful year as aviation enters grim future
Many were the promises of the current administration during the 2015 electioneering campaigns that brought Muhammadu Buhari to power and reelection in 2019. But in the aviation industry, the last five years were more of motion without movement. WOLE OYEBADE writes.
President Muhammadu Buhari prior to 2015 election promised the aviation community just one item: a new national carrier in the status of the defunct Nigeria Airways. His choice of Capt. Hadi Sirika to drive the aviation ministry suggested Buhari’s readiness to walk the talk and usher in a new dawn in the aviation sector.
Sirika, the first aviator to be so trusted with his familiar turf, soon rallied stakeholders to meetings in Lagos and Abuja, to sell to them aviation master plan agenda that was well received.
Four key components standout in the total package. First, a national carrier to restore the nations pride in the aviation community. Second, the concession of the airports for efficient services, and at no cost to the government. Third, Maintenance Repair and Overhaul (MRO) facilities, and lastly, aircraft leasing programme to alleviate the plight of operators.
But five years down the line, very little has changed in the industry yet nothing in the area of presidential promises. Most worrisome for the stakeholders is the wisdom of expecting a positive turnaround in a rapidly disrupted and changed world.
A rapidly changed world and uncertain future
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 the previous administration, this government has very little to plow into high capital intensive sector. A lot depends on the investors, both local and foreign, in the global aviation business. But the era of coronavirus pandemic may have shattered all those expectations.
The outbreak of coronavirus disease pandemic in the last four months has not only grounded the industry, it has thrown all airlines into debts, and yawning financial distress. None of the carriers, including the big ones, can now survive without a heavy bailout.
The International Air Transport Association (IATA) expects the airlines to see full year passenger revenues fall by $252 billion (-44 per cent) in 2020 compared to 2019. The second quarter is the most critical with demand falling by 70 per cent at its worst point, and airlines burning through $61 billion in cash. Global debt is expected to rise to $550 billion by year-end.
Today, Virgin Australia, just like Air Mauritius, has gone under following the refusal of the Australian government to offer a bailout. South African Airline (SAA) has also gone into administration, throwing about 5000 workers out of jobs, as the government eyes a fresh start, but this time with a new national carrier.
Experts have predicted that things would not return to normal for two to three years. In fact, many companies will follow the path of travel agencies and go out of business too. It took three years for the industry to recover after the 2008 crash, and this crisis may not be different.
Aviation consultant, Chris Aligbe, said the recovery, following the lift on flight restrictions, would be a long haul and most difficult for both operators and agencies to survival without a great deal of support from the government.
Aligbe said no one should expect normalcy to return to air travel in Nigeria until about 18 months. Because, in the absence of vaccines, travellers will still be afraid of infection, there will be restrictions in some countries, and then due of economic recession, the lack of funds will prevent people from travelling like before. “This will have impact on airports and the agencies,” Aligbe said.
So, where is the hope for the ongoing aviation development projects and rudiments of Sirika’s master plan agenda?
Infrastructure upgrades at Lagos, Kano airports.
This administration in 2015 continued with 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 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.
But the Lagos and Kano parts of the project were still being battled for completion. Sirika, last May, disclosed plans to demolish the Murtala Muhammed International Airport (Lagos) in order to reconstruct it. The minister said the reconstruction would gulp N14 billion in order to give the busy airport a befitting facelift.
The reconstruction was scheduled to begin at the end of 2019, with expectation that the new terminal would have been completed to accommodate all operators using the old terminal. To date, the new terminals in Lagos and Kano are yet to see the light of the day.
Concession of airports
Perhaps a golden opportunity missed abound in the plan to concession the airports, especially in the last one year. Recall that the Federal Executive Council meeting in 2017 approved the concession of the big four airports – Lagos, Abuja, Port Harcourt and Kano – to start with.
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 not 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 urged the government to 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 set-up of a new national carrier. Government has though removed Value Added Tax and Duties, the local airlines still need more support to succeed because the industry is grossly at its infancy in Nigeria,” Aligbe said.
Nigeria Air still a promise
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. But the worry is its feasibility amid the current crisis, cash crunch and dearth of good investors.
It will be recalled that 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. Preference of the big wigs was a 2019 launch and notwithstanding their number, they carried the day, forcing Sirika to announced indefinite suspension of the national carrier.
Secretary General of the Aviation Safety Round Table Initiative (ASRTI), Group Captain John Ojikutu (rtd.), said 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 were laudable but government could not 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 ran more like a government airline. 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 disasters in government owned enterprises,” he said.
Aviation policy first
The Chief Executive Officer (CEO) of Finchglow Travels, Bernard Bankole, said it would be difficult to move the forward 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-comer for every tom dick and harry around the world.”
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, which had helped the country to retain its Category-One status and a dominant force in the international aeropolitics.
Going forward, he sought a proper restructuring of an agency like Federal Airport Authority of Nigeria (FAAN), describing the repositioning as most critical to industry’s 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.