Nigerian govt must increase local airlines’ capacity – Ohunayo - PUNCH
NOVEMBER 01, 2022
The Assistant General Secretary of the Aviation Round Table, Olumide Ohunayo, in an interview with Lilian Ukagwu, discusses numerous issues challenging the aviation industry and possible ways they can be addressed
How would you describe the current aviation crises and in what ways can they be tackled?
I don’t know what you call aviation crisis, but I can tell you that the major crises we have in the aviation industry now are the cost of aviation fuel, the depleting and concurrent fall of the naira to the dollar, and the infrastructure. Aviation fuel is deregulated, so there are no subsidies there to be paid by the government. There is an envelope of the sunset airport. These are airports that close by 6 pm and we have had four new airlines after COVID-19. It shows the local investors are strong, tenacious and believe that there is a market for them for operations and also make profits.
The Federal Airports Authority of Nigeria and the Nigerian Airspace Management Agency need to work on how they can extend some of the airport operations from the present 6 pm, maybe to about 9 pm for a start. Though airlines might give commitments that they will operate on these grounds so that there won’t be wastage, I think these are some of the things we need to tackle to get the airlines back in full strength.
Again, the multiple policies are not within the power of the airlines are for the government to tackle using our resource and intellectual strength and I think they are working on policies now with the bills being amended.
They are also redesigning the naira so that people will bring out the naira that has been hoarded. I think they should work on it because as it is depreciating, accessibility at the official rate will be very difficult and almost inaccessible. So, this makes it very difficult for the airlines to buy at the black market rate of N781/$ naira to the dollar. It is painful.
The United Arab Emirates recently issued a visa ban on Nigerians. Do you think it is justified?
What I am looking at is sovereignty and security of the United Arab Emirates within their rights, because the first obligation of any government is the protection of lives and security. I think that is what we should learn from that. They just brought back over 500 Nigerians and the word they used was ‘stranded’. They did not go through any other route. They went there with visas and for them to have gotten into Dubai legally shows that there is a need to tweak the visa processing system for Nigerians and other countries.
Note that it was not just Nigeria that they stopped the visa issuance to. It is also for Ghana and other countries. So, we have abused it, and we have made a mess of their security and their tradition. So, they have the right to restore dignity, security and safety of all inhabitants of the Emirates. And I think that I support whatever measures put in place by the Emirati authorities to restore tranquillity and sanity in their land.
The lesson here for us is that every country must realise that before you can attract, you must first secure your country; you must limit immigration and, most importantly, illegal immigration of those who do not bring in quality service to your country. For the airlines, they will survive. So many airlines go through Dubai. Emirates itself will feel the impact, but they are really not bothered; they want the sanity of that country. The UAE is losing nothing here.
It’s Nigeria that is losing because with what has happened, other Middle-Eastern countries will tighten the visa qualifications and requirements for Nigerians due to the impact of a few Nigerians. Our new airlines that want to start on that route might be having difficulties in getting passengers.
The Aviation Minister, Hadi Sirika, said the national carrier would commence operations in December 2022 after several commencement dates. Does Nigeria need a national carrier and do you think this date will fly?
We do not need a carrier in the domestic market. We have about eight to nine carriers now operating, so we have enough capacity and can still build more based on the people that have applied. What we lack is the power of international flight operations to reciprocate the Bilateral Air Service Agreements we have with the other countries. This is why people clamour for the national carrier because the local carriers have not been able to muster that energy and support from the Ministry of Justice, the Ministry of Foreign Affairs and the Ministry of Aviation when they operate these flights for Nigeria.
Once we designate an airline to leave Nigeria to other countries, that airline becomes your flag carrier on that route and deserves the protection and support of the Ministry of Justice, the Ministry of Foreign Affairs and the Ministry of Aviation. These have been lacking all the while since the time of Nigeria Airways and Virgin Nigeria.
So, it is on that premise that we call for a national carrier and not because our domestic carriers cannot or have not been meeting their obligations on the domestic route.
However, because we know that we have not been participating in the big league, we will continue to push for an increase in our participation on the international route, especially to Europe and America.
The issue of repatriation funds shows that we have a lot of capital flights that should be addressed. If you add more local capacity on these international routes, the fares will drop, and on that basis we are calling for a national carrier or even flag carriers that the government will support.
At this point, it is not for me to doubt them again because they are eager to tick one of the boxes on the roadmap and they will do anything to make this airline take off, despite complaints on partnership with Ethiopian Airlines.
What we should look at is what happens after May 2023 when they are no longer there. Will that same force they have used to push this airline still be there to sustain the airline?
The Federal Government has faulted foreign airlines over trapped funds. Are these airlines to be blamed?
I do not know why they are being faulted. They said they would stop operating if they do not get funds. If they do not get funds and stop operating, there is a repercussion. We signed an agreement and in that bilateral agreement, all foreign airlines are supposed to remit their funds after they have paid all domestic taxes at the official rate, not the black market rate.
Even at the black market, these airlines have no business with the government. They would have gone somewhere else to source the money. But the law says at the official rate. It’s on the agreement and the official rate is agreed with IATA, which is about N444 to a dollar. So, you cannot ask them to go and change dollars at the black market rate of N781. That’s a big loss. The Central Bank of Nigeria has come out to say, “Yes, we have agreed to pay part of it; that shows that it was a genuine request.”
You have agreed to pay 50 per cent, but you paid 12 per cent up front. If you have accepted to pay a percentage of the money, it means this money is being owed. When you owe someone, you don’t begin to threaten. All you need to do is to first make obligations to pay back. The only way to reduce owing more money is to increase your capacity on the international route and this capacity must be through Nigeria airlines. There must be local capacity to operate, so that will reduce capital flight.
Moving forward, what ways can the government explore to forestall more funds being trapped?
The government has started the process; they have given 25 per cent. The other 25 per cent will be at the end of October and thereafter other payments will follow. You said 50 per cent, why not pay it by October and come out again between October and end of the year to clear the outstanding. You can then say you will pay a certain percentage. That is the way people do business and can be creditworthy among partners outside Nigeria.
There is an implication for this when you begin to tighten the noose around foreign airlines. You are reducing your credit rating internationally, which affects your airlines when they go for insurance, spares and aircraft leases. It will be hard for them because they do not trust them based on the rating and keeping to international trade agreements.
Domestic airlines have said the FG partnership with Ethiopian Airlines regarding the national carrier is tantamount to opening the nation’s domestic market to foreigners, a development they said will decimate the local airline industry and lead to capital flight. What are your thoughts on these?
Of all the seven airlines in Africa that Ethiopian Airline has shares, only Asky Airline operates beyond the domestic route. The remaining (Chad, Mozambique, Zambia, Congo, Guinea and Malawi are glorified local carriers). Asky has 12 aircrafts in 12 years, Air peace, Arik have surpassed that number of aircrafts so no big deal. The Part 9 of the Air Operator Certification and Administration (184.108.40.206) states that a new start up airline must have a minimum of three aircrafts. It must be registered in Nigeria, yet we are told they are going to wet lease later, damp lease aircrafts to start. So why breach the ACT from incubation? What happens later?
Virgin Atlantic offered 10 per cent shares to Nigerians as reciprocity for the investment in Virgin Nigeria. What is Ethiopian Airline offering Nigerians and shares in Ethiopia Airlines as reciprocity? Why did ET, Egypt Air, two local airlines and other investors bid for the Ghanaian national carrier and only ET bid for Nigerian Air despite the huge market and potential these airlines ask for more frequencies and entry points?
They announced wet leased aircraft and investment from the Sovereign Wealth Fund which increased government exposure above 5 per cent.
Due to criticisms, it was changed to damp lease and advert placed for Nigerians to apply while the SWF was withdrawn from the list of investors quickly. Virgin Nigeria was stopped from operating into the US because of 49 per cent ownership by Virgin Atlantic. Hope this will not play out again for some countries with ET owning same 49%.
The minister announced preferred bidders for airport concession and all companies are foreign. What are your thoughts?
The minister has announced the preferred bidders for three out of the four airports, which are Lagos, Abuja and Kano. They could not get a bidder for Port Harcourt, but I can tell you there are some international bidders that have Nigerian partners who are that silent in the partnership or who have not raised their head. I know that there are Nigerian partners among the bidders.
For me, I congratulate him. Maybe he can also tick that box in his roadmap. If you ask me, I would rather want a reputable international airport management company to come and manage the entire airports under FAAN’s purview. The company will review the operational procedure and turn it to a profit-oriented organisation. They can make it a PLC that can now invest in other airports within the sub region.