(Excerpts of an interview with Leadership magazine in 2013)
Can you give a general overview of the Aviation Sector in Africa?
It will be difficult to give a general overview of aviation in Africa without introducing four important organisations. They are the International Civil Aviation Organisation (ICAO), the African Civil Aviation Commission (AFCAC), the African Airlines Association (AFRAA) and International Air Transport Association (IATA).
The International Civil aviation Organisation (ICAO) is an arm of the United Nations (UN) that sets global standards and recorded practices for cilvil aviation
It prescribes certain basic requirements which are required of air travel. In order of priority they are safety, reliability, efficiency, comfort, and environmental sustainability. ICAO’s role in Africa is technical and nonpolitical. Therefore in order to determine the state of civil aviation in Africa, it will be prudent to benchmark its performance against these criteria. Simply defined, safety is the management of risk to an acceptable level that will prevent harm to persons or damage to property. It is not the absence of accidents, but the presence of practices and processes that prevent incidents from escalating and becoming accidents. Human error and mechanical failure are inevitable flaws that will accompany all human interaction with machines. Therefore achieving a zero accident rate is extremely difficult if not highly improbable. Historically, the public assumes developed economies such as USA and the UK are safe while Nigeria and most of Africa are inherently unsafe. It is this public perception that we have to correct. Not by denying and ignoring our shortcomings but by identifying and correcting them.
The global average performance for aviation safety for western-built commercial jet aircraft in 20121 was 0.20 accidents for every 1 million flights. Which means that statistically, you’ll need to fly 5 million sectors before you encounter one accident that results in total hull loss. However, Africa’s performance is 3.71 accident per million sectors. Making it 18 times the global average. The performance for 2011 and 2010 were 9 and 12 times respectively. However, when you consider all aircraft accident involving jets and propeller driven, western and eastern built, Africa experienced less accidents in 2012 than, Europe, North America and Asia Pacific. So the devil is in the detail. It may surprise you to know that within a period of just three weeks; 22nd July 2012 to 12th August 2012, the UK and the USA together experienced over 84 aircraft accidents with 15 fatalities. This did not make any headlines at least in Africa. Those interested in the statistics of all reported accidents you can find them on this Flight Safety Foundation (FSF) website at this link2. So accidents still happen even in developed economies. Most of the aircraft involved were small privately owned propeller driven aircrafts but these are still accidents nonetheless.
On the issue of reliability, the short life expectancy of most African airlines speaks for itself.
Before closing shop, some symptoms indicative of impending failure are poor despatch and operational reliability, schedule integrity, customer satisfaction, etc. You can easily infer how the travelling public rate African airlines by how they exercise their right to choose which airlines they patronise. That explains why over 70% of international traffic in Africa is carried by non- African airlines. African airlines can make better use of their resources by consolidating and cooperating with each other. This will enable them to acquire modern, comfortable and more efficient aeroplanes, as well as reduce their impact on the environment.
The African civil aviation commission (AFCAC) is the specialised Agency of the African Union (AU) responsible for civil aviation matters on the continent
Empowered by a revised constitution that came into force on 13th May 2010. It is expected to coordinate civil aviation matters in Africa and cooperate with ICAO and other relevant organisations/bodies that are involved in the promotion and development of civil aviation. It is rather surprising that it took the continent 41 years to put into practice what was agreed in 1969, i.e. the formation of a common African civil aviation policy.
AFCAC must be desperate to show both resolve and results considering that over 110 airlines from 10 of its member Countries were on the EU airlines blacklist (April 2011). Their liaison with ICAO must be commended but it appears they are not getting the full attention of the African governments. As at February 2010, only 7 member States had signed the African and Indian Ocean Cooperative Inspectorate Scheme (AFI-CIS) Memoranda Of Understanding (MOU). Its strategic objectives for the period 2011-2016 is to foster a safe, secure, efficient, cost effective, sustainable and environmentally friendly civil aviation industry in Africa. AFCAC’s role in Africa is both political and technical.
AFRAA was established as a trade organisation to protect the common interest of the newly independent State owned airlines on April of 1968 in Accra, Ghana
It naturally emerged as the frontline organisation for African airlines in Africa. It currently has 34 member airlines. The organisation became necessary after most African Countries secured their independence and realised they needed to establish a working partnership with each other whilst navigating the path to nation building. The vision and primary objectives of this association include the desire to be the leader and catalyst for the growth of a globally competitive and integrated African airline industry.4 It has also been instrumental in sensitising African Governments through AFCAC and other regional and sub-regional organisations on the actions to be taken for the development of an efficient air transport system. Although AFRAA has only 34 members it is has maintained its pivotal role as a catalyst for most major policy decisions in the Continent. To attain critical mass, AFRAA needs to encourage the remaining over 170 airlines in the region to join its fold.
The international air transport association (IATA) is a successfully run non-governmental, profit seeking organisation
IATA initially incepted with 57 members in 1945, now has a membership of over 240 airlines across 115 countries around the globe. Its members account for 84% of global aviation traffic and corresponding earnings. It’s African membership is composed of only 29 airlines; 9 in the North Africa and Middle East (MENA) group and 20 in the rest of Africa. It is note worthy that the African continent seems to be stratified along various social and economic lines of interest. With the bulk of North Africa countries preferring to be associated with the Middle East rather than with the rest of the continent. IATA’s main focus is the interest of its member airlines, travel and cargo agents. It accomplishes this by effectively liaising with governments, their agencies, airports, etc. Although IATA appears to generously donate and initiate projects that require extensive capital, it is still a profit-oriented organisation funded by its member airlines that are intent on maintaining profitability. We have to accept that it is one of most active organisations in aviation development on the continent.
NASI has been involved in canvassing for improved aviation safety for a very long time now. What has been your achievements and challenges?
It will be conceited to ascribe any successes in the aviation sector to NASI’s campaign alone.
NASI’s role as a watchdog for the aviation industry is a rather unenviable but an indispensable one. Our policy has always been to applaud and commend achievements, constructively criticise failings and always proffer alternative solutions and strategies from our point of view. It will be conceited to ascribe any successes in the aviation sector to NASI’s campaign alone. We have always worked in concert with other NGOs, professional bodies and civil liberty organisations such as National Association of airline pilots and engineers (NAAPE), the aviation roundtable (ART), Air Transport Service Senior Staff Association (ATSSSAN),and the National Union of Air Transport Employees (NUATE) to mention a few. We have received a lot of support and encouragement from the brave men and women of the press without which our efforts would have been at best marginal. Since inception we have witnessed a lot of pragmatic changes within the aviation industry. In February 2004 we published an overview of the Nigerian aviation industry including our future expectations in a brief document title ‘drifting in turbulent waters’ (http://www.scribd.com/doc/24010869/Nigeria-Aviation-industry-drifting-in-turbulent-waters). Considering the content of that document our successes have been modest. Top on the list is the autonomy of the Nigeria civil aviation authority (NCAA) and the emergence of an independent accident investigation Bureau (AIB). I’ll have to say that we are greatly encouraged by the Freedom of information act (FOI) which has engendered increased in public awareness in aviation safety. Much of the credit for that success goes to the brave members of the free press and media who have been instrumental in projecting and presenting our input to the public. As a result we have noticed that our system managers pay more attention to our input as they are aware that the public will hold them accountable.
The major obstacle to the attainment of the goals within the sector still remains lack of transparency, probity and accountability within the polity.
The result is a loss of group synergy. However, we remain resolute and optimistic that the spate of successes will be sustained.
Most Nigerian airline operators and service providers are paying lip service to safety and quality management
On the side of the airline operators and service providers, there is very little evidence to demonstrate management commitment and responsibility to safety policies and objectives. There is no evidence of practical risk management within line management personnel. This involves the identification, analysis and elimination or mitigation of the risks that pose a significant threat to the reputation of the organisation. It has to do with balancing the allocation of resources and making positive changes. The result might be a review of the operating and or maintenance procedures to achieve a segregation of exposure or the building of redundancies to protect against perceived risks. The tools used to achieve this are usually regulations, training and technology.
The regulator needs to provide evidence that a safety culture is in place
One of the key elements of a safety culture is safety reporting and dissemination of relevant information. If a safety culture was in place, the NCAA would have received confidential or anonymous reports from professionals working in Dana about the safety violations/concerns before and not after the accident. This would have triggered corrective actions and mitigating measures which could have prevented the accident from happening. Obviously people knew there were violations but we’re afraid to report them. Perhaps they had no confidence in the NCAA’s ability to address their concerns. The findings of in-house audits carried out by company safety managers should be able to reveal the gaps in the safety chain, as well as the remedial actions required to close these gaps within a specified time frame. An external audit by the regulator should be able to show continuous improvement towards safety which is the true test that a safety culture is in place.
Nigeria needs an Aviation Advisory Council (AAC)
In order for the industry to obtain maximum benefit from it’s stakeholders, we still strongly advocate for the formation of an Aviation Advisory Council (AAC). This is a forum composed of all relevant stakeholders that will discuss policy, strategies, programs, projects, investment opportunities and all issues that relate to aviation business in an open transparent manner that will benefit both the travelling public and the decision makers.
The African Aviation Sector may not have attained its full potential but there is hope. Your take on this.
Africa currently houses 6 of the worlds 10 fastest growing economies
The aviation sector in Africa has immense potential for growth and is being viewed as virgin territory by foreign established airlines. Africa’s Revenue Passenger Kilometres (RPK) is set to more than double in the 19 year period from 250 billion RPK in 2011 to 720 billion RPK in 2030. While Europe and America are on the throes of a double dip recession, Africa’s growth is expected to be an average of 4 to 5%, all eyes are set on the continent. Traffic between Africa and the EU has consistently accounted for over 60% of all aviation activity on the African continent. The Africa-Asia route is showing the highest growth rate due to increased activity of Middle East and Chinese carriers. The operating environment is getting very competitive and the biggest threat to African airlines is from overseas carriers.
Foreign carriers with foresight are focussing their expansion and investment into Africa.
In 2012 alone, British Airways dedicated USD $5 billion as investment for route expansion and service upgrade in the African aviation market. Currently Nigeria is the second largest aviation market on the continent. The World bank estimates that Nigeria will overtake south Africa and become Africa’s largest economy by 2018. The revised forecast for Nigeria indicates an average GDP growth of 5.6% for the next 20 years. The new strategy adopted by the Middle Eastern carriers is to buy equity in struggling African carriers. Etihad which currently owns 40% stake in Air Seychelles has just won daily frequencies into Lagos. Turkish and Emirates who currently fly daily into Lagos have asked for daily frequencies into Kano and Abuja airports. Lufthansa is asking for more frequencies as well. The general trend is that foreign airlines are looking for increased activity into all the major African markets.
The implication of this development for African airlines
The travelling public will see this as more opportunities for connections and choice of flights. However to industry watchers, African Airlines are subjected to increased competition from foreign carriers while the EU blacklist denies them access to the European market.
Dearth of skilled and experienced man-power due to emigration and neglect of training and manpower development.
For the past 7 years a major obstacle in Africa's inability to meet its safety oversight functions is the lack of requisite competent manpower. According to the World Bank, tertiary enrolment for developing Countries stands at 10% of the population compared to 56% for Organisation for Economic Co-operation and Development (OECD) Countries. It is evident that Africa will find it challenging to produce the number of development professionals needed to sustain economic growth in the aviation sector without a serious change in her educational and labour policies.
Note that a conservative estimate from Boeing in 2012 dictates that Africa needs to provide and additional 725 pilots and 810 aircraft engineers every year for the next 20 years to be able to man it's aviation sector planned capacity. Nigeria's' population is 18% of Africa's hence we are expected to provide the appropriate 18% of the manpower. This comes to precisely 130 additional pilots and 146 new engineers every year. Failing to meet this target means Africa will have to mitigate the shortfall by employing expatriates. These will eventually repatriated both the acquired skills and revenue back to their home countries to the detriment of this continent. The problem could have been eliminated if the promised academic upgrade and expansion of the Nigerian College of Aviation technology (NCAT) had been carried out as planned. A recent census of ICAO recognised aviation training institutions in Africa showed that the United Kingdom has more ICAO recognised aviation institutions than the 54 African countries combined.
It is necessary for Africa to adopt a joint funding policy for aviation development
A major impediment to Aviation development in Africa is the issue of funding. Most African governments run huge debt portfolios which makes increased borrowing to fund aviation development low on their priority. 33 out of the 40 Countries classified as highly indebted poor countries (HIPC) are in Africa. Despite late colonel Gaddafi's notoriety he was an African leader who realised that Africa's real economic and political independence lies in its ability to extract the synergy that comes from working as a united group. After decades of isolation from both the Arab league and the capitalist West he learned that even a rich country needs to develop sensible alliances. It is on record that during his regime, Libya was the only country in Africa that never accrued any foreign debts. He became a great champion of the African union and was willing to fund a lot its initiatives. The declaration of the African Union (AU) in 1999 took place in Sirte, Libya. Gaddafi led the call for the formation of an African Central Bank (ACB) which is to be based in Abuja and expected to be fully operational in 2025.
At the meeting of the Council of aviation ministers held in Abuja on 16th-20th July 2012, the question of joint funding was again discussed. The African Union (AU) should establish at least one major aircraft easing company in order to take full advantage of the Cape Town convention of 2005. This convention in conjunction with the aircraft protocol addresses the issue of international interest in mobile equipment. Properly utilised it will provide leverage and favourable access to new equipment for African airlines. A monetary union in Africa is still a long way ahead but a leasing company that will spread insurance risks among African based underwriters will be a significant strategy to consolidating its financial system. Nigeria among other countries has just been approved a $300 million loan from the African development bank5 as well as a further $950,000 by climate investment fund (CIF) 6. Both loans are towards improvements in road transportation which is vital to regional integration. Hopefully, the African development bank (ADB) will be able to offer low interest loans to aviation businesses. A major challenge for African leaders is that such a multi-lateral initiative will entail giving up some level of sovereign control of at least their monetary policies in the interest of the entire continent.
Coming to Nigeria, what is your take on the current airport renovation project going on around the country?
A bold step in the right direction
The airport modernisation project is a fantastic idea that has been long overdue and we credit the honourable Minister for the level of success already achieved. Prior to the remodelling project our international airports have been a source of national embarrassment as a result of neglect, absence of routine maintenance and prevalence of out dated facilities. International airports do not only provide a gateway into a country but also gives an indelible first impression of the country to transit visitors. Considering that is the first and only part of the country they come into direct contact with. Although the project is not yet completed we are aware that there have been some significant positive changes. However, the issue of airport security hast to be given prime attention. Considering the incursion of armed robbers at the departure hall of the international airport in Lagos on 13th March 2013. Secondly, the level of finishing observed is not comparable to what is obtainable in airports like Johannesburg in South Africa, Delhi, Ethiopia, and other third world countries. Thirdly, it will be necessary to have a clear idea of the cost of the project. I have maintained that politicians are constrained by the need to show results within the four-year election cycle. Aviation on the other hand requires a clearly defined policy, a robust strategy that considers future technological advancement and very careful implementation. In summary, airport modernisation is a pivotal and capital intensive long-term project. It does not require a panic reaction; but rather a planning reaction to achieve the desired objective.
Transparency required in public private partnership
The public private partnership (PPP) strategy that the ministry is implementing may continue to encounter avoidable setbacks due to lack adherence to certain tenets of ethical business practice. The Federal airports authority of Nigeria (FAAN) currently has a number of court cases pending with two of their major concessioners namely Maevis Nigeria Ltd and Bi-Courtney aviation services Ltd. In the interest of Nigeria’s reputation such contractual conflicts should be promptly resolved in a fair and transparent manner.
There are synergies to be gained in working collectively: African partners will prevent capital flight out of the continent and accelerate transfer of the much-needed skill sets in Africa
Another brilliant strategy embarked by the honourable Minister last year was the drive to secure investments for aviation development. We would recommend that such a strategy should focus on getting African partners to jointly invest in aviation infrastructure. The disadvantages of having dominant overseas partners investing in our economy includes, loss of management control, loss of revenue through capital flight and the erosion of high level local skills. African nations need to co-operate with each other on major infrastructure projects. Infrastructure projects can stimulate the economy and provide employment, while green energy projects can help combat climate change. Nigeria may suffer capital fight but it is better for the revenue to end up being used to develop the African aviation industry through the contributions of South African Airways, Ethiopian, Kenya Airways etc, than if it ends up in the portfolio of foreign partners in Europe or America. The African aviation environment is affected by factors all of which must be appropriately managed on a regional scope to effect any significant change. Impressive strides made by individual countries like South Africa, Ethiopia, Egypt, Kenya, e.t.c., within Africa in achieving global safety and technological standards can be transferable by working together. Such initiatives will speed up regional integration and increased dependency, thus minimising chances of regional conflict between member states.
Air crashes have occurred in Nigeria over time and NASI has been in the forefront of championing Air Safety. Are we on course to minimise incidences of air crashes?
Nigeria has witnessed remarkable safety improvements in the past six years
However, much more remains to be done. The absence of accidents does not infer that the industry is safe. It is quite possible that some accidents have occurred but were not reported or documented appropriately. We need to strive for the entrenchment of a safety culture within the industry. We aspire to see individuals and groups that will commit to personal responsibility for safety, preserve, enhance and communicate safety concerns. We need to actively learn, adapt and modify behaviour based on lessons learned from the mistakes of the past.
Safety is not the absence of accidents, but is the presence of practices and processes that prevent incidents from escalating and becoming accidents
Simply defined, safety is the management of risk to an acceptable level that will prevent harm to persons or damage to property. Below is a list of issues that when addressed will greatly enhance safety:
Why do airlines keep closing shop in Nigeria?
Nigeria presents a rather difficult and unstable economic operating environment.
Aviation business is capital intensive and has to respond to a lot of variables. In order to address the question, we have to consider factors that exert macro effects on the business environment. This will include political, economic, social, technological, legal, and environmental issues. Considering just the macro-economic issues that exert over arching influence on the aviation sector. These include double-digit aggregate inflation, high interest rates (up to 20%), poor access to long term lending, generally low productivity due to absence of a virile manufacturing base, high unemployment, low skill levels due to low literacy level. Most of these issues are products of past socio-economic failures that now require adroit fiscal and monetary adjustments by the CBN. It is impossible to obtain a balanced fiscal policy when government expenditure does not address the needs of the over 100 million Nigerians living below the International poverty line of USD $2 a day. This scenario discourages long-term investment in aviation infrastructure; even by the Federal government. In order to raise revenue required to meet the unbalanced fiscal condition, the government resorts to abhorrent tax regimes the consequences to which the airline industry is not immune.
The recent banking reforms witnessed a number of banks over exposed to non-performing loans by airlines with a strong possibility of bankrupting both the banks and the airlines. This posed a serious threat for the general economy. A few of these factors were tackled by the visionary brinksmanship of the Central bank of Nigeria (CBN) in concert with AMCON. However limited success was achieved by the both airline re-capitalisation and the aviation intervention fund. Primarily due to lack of effective oversight including managerial scrutiny of airline management.
Other related factors are:
Weak economy and safety regulation by the regulatory agency.
The first part involves ignoring obvious signs that airlines are insolvent and are unable to fund their operations. . Usually evidenced by a host of abnormalities such as:
The second part involves the abuse of discretion to grant extensions to airlines requesting to defer periodic maintenance processes. This should only be granted in extraneous circumstances.
Kindly recommend a panacea to incessant airline closures in Nigeria.
Provision of Security, adequate power supply and respect for the rule of law to enhance both sustainable safe operations and attract foreign direct investment (FDI)
The current economic foot print of Nigeria’s aviation industry is marginal considering its obvious potential. Primarily because the sectors’ main activities of airlines operation and the supporting ground infrastructure are still in a low levels of development. In 2010, the cumulative contribution of the direct, indirect, induced and catalytic channels of air travel to both employment and gross domestic product (GDP) was approximately 295,000 jobs and N200b respectively. Two major factors responsible for the slow social and economic development of the entire country for the past three decades are lack of adequate electrical power supply and the lack of jurisprudence or respect for the rule of law. Recently the country has experienced a worsening security situation as a result of activities of both internal and external terrorists groups; notable among them is one identified as boko-haram. The current lack of security is causing more concern than the first two factors. Without adequate power supply it’ll be difficult for the Country to make progress in areas of key infrastructural projects and manufacturing processes. Without jurisprudence and respect for law and order it will be tough to attract foreign investors. These two factors were also raised by the Chinese investors to our Okonjo-Iwealla led economic team in February 2012 as impediments to their planned $3.5 billion investment in Nigeria’s economy.
Airlines must understand the key industry characteristics and growth needs
The aviation industry provides ample opportunities for growth and profitability. This has been aptly demonstrated by the plethora of foreign airlines that are eager to enter the Nigerian market. Case in point, in 2011 foreign airlines repatriated N156 billion as revenue from ticket sales in Nigeria. In 2012 foreign airlines made N158 billion courtesy of the Nigerian traveling public again. This constitutes self inflicted capital flight to the Nigerian economy due to failure to appropriately manage Nigeria’s bilateral air service agreements (BASA). Theoretically speaking, since most of our bilateral air service agreements (BASA) are based on equal designation and reciprocity, Nigeria carriers lost the opportunity to earn N79 billion in revenue and N6.3 billion in profits. Imagine the positive impact this could have achieved on the airline industry and the wider economy. It is a fact the Lagos-London route is British Airways’ most profitable route, therefore Nigeria should ensure that its 21 weekly frequencies are utilised to maximum advantage.
Nigerian airlines should embark on strategic review of their business models to aid in choice of strategic options; commercial agreements, mergers and acquisitions
Nigeria has the market; a rising middle class population and strong predicted economic growth rate. What we don’t have is the airline structure. Airlines should seriously consider strategic mergers and acquisitions to facilitate access to intangible assets such as new markets, airport slots, supply chain integration and increased corporate versatility. For the immediate future we need to consolidate Nigeria’s 16 airlines into three or five viable airline groups. Only strong airlines that can provide World class service will be able to favourably compete with established foreign carriers.
The prebendal culture and the absence of the whistleblower protection policy.
Nigeria needs to evolve a whistleblower policy that gives protection to both the system and the its users. This will serve to reduce the spread of corruption within the system by facilitating the identification of unethical behaviour and taking mitigating action before the entire group is compromised. The absence of this feature has left our aviation system constantly being overrun by corruption. Good people within the system who observe anomalies such as unsafe practices or misuse of public funds are left with the difficult choice of speaking out and risk their careers or keeping quiet and hoping someone else does something about it. The result is a system devoid of transparency and accountability that fosters a contagion of corrupt and unethical practices. The inherent client-patron prebendal culture leads to depletion of the much needed manpower. It is unfortunate that with every change in Administration the top level management are usually prematurely retired or fired irrespective of competency and integrity.
Modern infrastructure adequate aerodrome lighting to support nighttime operations operations
Lack of proper facilities at airports has led to serious losses by airlines. Aero Contractors claims to have lost about N6 billion as a result of poor infrastructure across the country. Some reports indicate that the combined losses to airlines is in excess of N2 billion as a result of runway 18left at Lagos being unusable at night. Another aspect that is being neglected is the impact of uneven wear on the runways and the cost of maintenance.
Commercial simulator facility in the west African region
In a widely circulated publication the NCAA reported that Nigerian airlines spend about USD$16.3 million every year on pilot recurrent simulator training. Approximately 70% of this cost is expended on acquisition of relevant visas, flight tickets, subsistence allowances, hotel accommodation and other sundry expenses. The actual simulator training requires only about 30% of the total cost
Maintenance repairs and overhaul (MRO) facilities to cater for the various commercial and civil aircraft in operating Nigeria.Once again another case of policy neglect at the implementation stage. If the National hangar project which was decided in 1977 had been implemented, this problem would have been non-existent. In 2009 negotiations had commenced between the Nigeria’s aviation authorities and Lufthansa technik with a view to setting up an MRO in Nigeria. It is unfortunate that nearly 4 years later no progress has been made. Aero contractors has made substantial investment and has won the necessary approvals to carry out C-checks on the very popular Boeing 737 aircraft. Which incidentally is the dominant commercial jet aeroplane in the Nigerian industry. I view this initiative with Aero contractors as a stopgap and an interim measure rather than the final solution. A sensible plan will be to provide a facility that will be able to meet the maintenance needs of the entire West African sub region, seeing that Nigeria provides 65% of aircraft movement in the region.
Excessive import duties and tariff on aviation consumables and spare parts
There is no doubt aviation businesses in Nigeria have been subject to a regime of harsh taxes and tariffs. With industry margins averaging 3 to 5% it is inevitable this will erode any chances for profitability. It is strongly recommended that the following incentives be immediately implemented:
All aviation businesses should be given a five-year tax holiday commencing from next financial year.
This should be accompanied by zero import duties on all aircraft spares and consumables.
Nigerian airlines should be licensed to import jet A1 to reduce operational cost.
Your assessment of the current Aviation Minister and her lieutenants.
The policies and actions of Nigeria’s system managers is of great interest to the international community
Nigeria has always occupied an important position in African history, politics and development. Due to the fact that Nigeria’s population of 170 million is approximately 18% of Africa’s population. Thus, events in Nigeria will affect one in every five Africans.. The future of the Nigeria aviation industry is strongly dependent on the future of the African industry as well. As I’m sure you’re aware Nigeria as a country provides 65% of the aircraft movement in West African sub-region which is more or less representative of the Banjul accord group (BAG) which now has its headquarters in Abuja. Nigeria also hosts the West Africa’s regional safety oversight organisation (RSOO) office. There is urgent need for more co-operation and consensus building among the African states and their carriers.
Champion for consumer rights and protection
We do acknowledge that the minister has worked very hard and deployed considerable effort to revamp the aviation industry which is highly commendable. She has attempted to address the issue of consumer protection from unfair and discriminatory practices by certain international carriers. For example, the fuel surcharge unilaterally imposed by certain international airlines as well as the disproportionately higher cost of international travel being charged. The ministers’ attempts to seek redress for the Nigerian public seems to have been frustrated by the courts. The deregulated and liberalised industry has no real price control mechanism other than demand and supply.
Transparency gravity and accountability required
With regards to the Federal airport authority of Nigeria (FAAN) and the Nigeria airspace management agency (NAMA) we would like to see the commitment to transparency and accountability displayed by these two establishments. Without having to invoke the Freedom of information act we call upon these two agencies to publish their accounts and expenditures for the last couple of years on their relevant websites. We believe this will put to rest all the allegations of monumental fraud levelled against the organisations.
The national carrier or the myth of 30 newly acquired aircraft
It is evidently clear that the Nigerian government, its politicians and bureaucrats do not have the discipline, public confidence and integrity to initiate and successfully run a national carrier. A cursory reminder of the activities in the last 10 years of the defunct national carrier Nigeria Airways ltd. (NAL) shows how dysfunctional things can get. Already the sector is suffering gross inefficiencies as a result of federal government involvement in the federal airport authority of Nigeria (FAAN), the Nigerian airspace management authority (NAMA), the Nigerian meteorological agency( NIMET) and the Nigeria college of aviation technology (NCAT). The bureaucratic bottlenecks and lack of transparency existing in these organisations creates breeding grounds for misappropriation of public funds, abuse of office and gross mismanagement. Thereby making these service providers very inefficient, unreliable and a bedrock of corrupt practices.
Government involvement has always left the taxpayers, the travelling public and the aviation professionals worse off. Nigeria Airways was liquidated with liabilities of over $320 million, however its assets and landed properties in Nigeria and its outstations including London were auctioned for next to nothing. The gullible Nigerian taxpayer was saddled with these frivolous debts. We still remember the horrific experiences of the travelling public with the inglorious exit of international operators like Bellview, world Airways, and recently Air Nigeria.
The cost of 30 brand-new commercial jets should be close to USD $800m. There is no merit in procuring 30 brand-new aeroplanes only to hand them over to airlines which are currently highly indebted and badly managed. That level of funds can be wisely invested in an aircraft leasing company. Without first consolidating the airline industry I fear that this will just be another wasteful venture.
What is the way forward for the Aviation Sector in Africa?
The future of African aviation is Strategic consolidationA signal that the era of cross-border mergers has arrived is the case of British Airways (BA) and Iberia; the flag carriers of two European countries. The two airlines completed their merger on the 21st January 2011 and evolved into the International Airlines consolidated Group (IAG). The group has recently acquired British Midlands International (BMI) from Lufthansa. IAG is still working towards a closer union with American Airlines.
The industry seems to naturally gravitate towards post liberalisation consolidation to spread risks and exploit group synergies. Airlines must be able to translate broad competitive strategies into specific action steps required to gain and sustain competitive advantage. It is expedient to link strategy formulation and implementation into one efficient and seamless process.
In global business, the competitive advantage of nations plays a significant role in defining the competitive advantage of their carriers. As illustrated above, governments sometimes play active roles in strategic industries like aviation and nuclear power in to further their economic interests. Countries are now willing to make policy adjustments in the interest of macro-economic benefits. Though this interference results in a distortion of the natural balance of market forces, it remains part of global economic realities. In the case of Africa, I will like to see:
This is Africa’s moment and we are going to cease it.
Can you give a general overview of the Aviation Sector in Africa?
It will be difficult to give a general overview of aviation in Africa without introducing four important organisations. They are the International Civil Aviation Organisation (ICAO), the African Civil Aviation Commission (AFCAC), the African Airlines Association (AFRAA) and International Air Transport Association (IATA).
The International Civil aviation Organisation (ICAO) is an arm of the United Nations (UN) that sets global standards and recorded practices for cilvil aviation
It prescribes certain basic requirements which are required of air travel. In order of priority they are safety, reliability, efficiency, comfort, and environmental sustainability. ICAO’s role in Africa is technical and nonpolitical. Therefore in order to determine the state of civil aviation in Africa, it will be prudent to benchmark its performance against these criteria. Simply defined, safety is the management of risk to an acceptable level that will prevent harm to persons or damage to property. It is not the absence of accidents, but the presence of practices and processes that prevent incidents from escalating and becoming accidents. Human error and mechanical failure are inevitable flaws that will accompany all human interaction with machines. Therefore achieving a zero accident rate is extremely difficult if not highly improbable. Historically, the public assumes developed economies such as USA and the UK are safe while Nigeria and most of Africa are inherently unsafe. It is this public perception that we have to correct. Not by denying and ignoring our shortcomings but by identifying and correcting them.
The global average performance for aviation safety for western-built commercial jet aircraft in 20121 was 0.20 accidents for every 1 million flights. Which means that statistically, you’ll need to fly 5 million sectors before you encounter one accident that results in total hull loss. However, Africa’s performance is 3.71 accident per million sectors. Making it 18 times the global average. The performance for 2011 and 2010 were 9 and 12 times respectively. However, when you consider all aircraft accident involving jets and propeller driven, western and eastern built, Africa experienced less accidents in 2012 than, Europe, North America and Asia Pacific. So the devil is in the detail. It may surprise you to know that within a period of just three weeks; 22nd July 2012 to 12th August 2012, the UK and the USA together experienced over 84 aircraft accidents with 15 fatalities. This did not make any headlines at least in Africa. Those interested in the statistics of all reported accidents you can find them on this Flight Safety Foundation (FSF) website at this link2. So accidents still happen even in developed economies. Most of the aircraft involved were small privately owned propeller driven aircrafts but these are still accidents nonetheless.
On the issue of reliability, the short life expectancy of most African airlines speaks for itself.
Before closing shop, some symptoms indicative of impending failure are poor despatch and operational reliability, schedule integrity, customer satisfaction, etc. You can easily infer how the travelling public rate African airlines by how they exercise their right to choose which airlines they patronise. That explains why over 70% of international traffic in Africa is carried by non- African airlines. African airlines can make better use of their resources by consolidating and cooperating with each other. This will enable them to acquire modern, comfortable and more efficient aeroplanes, as well as reduce their impact on the environment.
The African civil aviation commission (AFCAC) is the specialised Agency of the African Union (AU) responsible for civil aviation matters on the continent
Empowered by a revised constitution that came into force on 13th May 2010. It is expected to coordinate civil aviation matters in Africa and cooperate with ICAO and other relevant organisations/bodies that are involved in the promotion and development of civil aviation. It is rather surprising that it took the continent 41 years to put into practice what was agreed in 1969, i.e. the formation of a common African civil aviation policy.
AFCAC must be desperate to show both resolve and results considering that over 110 airlines from 10 of its member Countries were on the EU airlines blacklist (April 2011). Their liaison with ICAO must be commended but it appears they are not getting the full attention of the African governments. As at February 2010, only 7 member States had signed the African and Indian Ocean Cooperative Inspectorate Scheme (AFI-CIS) Memoranda Of Understanding (MOU). Its strategic objectives for the period 2011-2016 is to foster a safe, secure, efficient, cost effective, sustainable and environmentally friendly civil aviation industry in Africa. AFCAC’s role in Africa is both political and technical.
AFRAA was established as a trade organisation to protect the common interest of the newly independent State owned airlines on April of 1968 in Accra, Ghana
It naturally emerged as the frontline organisation for African airlines in Africa. It currently has 34 member airlines. The organisation became necessary after most African Countries secured their independence and realised they needed to establish a working partnership with each other whilst navigating the path to nation building. The vision and primary objectives of this association include the desire to be the leader and catalyst for the growth of a globally competitive and integrated African airline industry.4 It has also been instrumental in sensitising African Governments through AFCAC and other regional and sub-regional organisations on the actions to be taken for the development of an efficient air transport system. Although AFRAA has only 34 members it is has maintained its pivotal role as a catalyst for most major policy decisions in the Continent. To attain critical mass, AFRAA needs to encourage the remaining over 170 airlines in the region to join its fold.
The international air transport association (IATA) is a successfully run non-governmental, profit seeking organisation
IATA initially incepted with 57 members in 1945, now has a membership of over 240 airlines across 115 countries around the globe. Its members account for 84% of global aviation traffic and corresponding earnings. It’s African membership is composed of only 29 airlines; 9 in the North Africa and Middle East (MENA) group and 20 in the rest of Africa. It is note worthy that the African continent seems to be stratified along various social and economic lines of interest. With the bulk of North Africa countries preferring to be associated with the Middle East rather than with the rest of the continent. IATA’s main focus is the interest of its member airlines, travel and cargo agents. It accomplishes this by effectively liaising with governments, their agencies, airports, etc. Although IATA appears to generously donate and initiate projects that require extensive capital, it is still a profit-oriented organisation funded by its member airlines that are intent on maintaining profitability. We have to accept that it is one of most active organisations in aviation development on the continent.
NASI has been involved in canvassing for improved aviation safety for a very long time now. What has been your achievements and challenges?
It will be conceited to ascribe any successes in the aviation sector to NASI’s campaign alone.
NASI’s role as a watchdog for the aviation industry is a rather unenviable but an indispensable one. Our policy has always been to applaud and commend achievements, constructively criticise failings and always proffer alternative solutions and strategies from our point of view. It will be conceited to ascribe any successes in the aviation sector to NASI’s campaign alone. We have always worked in concert with other NGOs, professional bodies and civil liberty organisations such as National Association of airline pilots and engineers (NAAPE), the aviation roundtable (ART), Air Transport Service Senior Staff Association (ATSSSAN),and the National Union of Air Transport Employees (NUATE) to mention a few. We have received a lot of support and encouragement from the brave men and women of the press without which our efforts would have been at best marginal. Since inception we have witnessed a lot of pragmatic changes within the aviation industry. In February 2004 we published an overview of the Nigerian aviation industry including our future expectations in a brief document title ‘drifting in turbulent waters’ (http://www.scribd.com/doc/24010869/Nigeria-Aviation-industry-drifting-in-turbulent-waters). Considering the content of that document our successes have been modest. Top on the list is the autonomy of the Nigeria civil aviation authority (NCAA) and the emergence of an independent accident investigation Bureau (AIB). I’ll have to say that we are greatly encouraged by the Freedom of information act (FOI) which has engendered increased in public awareness in aviation safety. Much of the credit for that success goes to the brave members of the free press and media who have been instrumental in projecting and presenting our input to the public. As a result we have noticed that our system managers pay more attention to our input as they are aware that the public will hold them accountable.
The major obstacle to the attainment of the goals within the sector still remains lack of transparency, probity and accountability within the polity.
The result is a loss of group synergy. However, we remain resolute and optimistic that the spate of successes will be sustained.
Most Nigerian airline operators and service providers are paying lip service to safety and quality management
On the side of the airline operators and service providers, there is very little evidence to demonstrate management commitment and responsibility to safety policies and objectives. There is no evidence of practical risk management within line management personnel. This involves the identification, analysis and elimination or mitigation of the risks that pose a significant threat to the reputation of the organisation. It has to do with balancing the allocation of resources and making positive changes. The result might be a review of the operating and or maintenance procedures to achieve a segregation of exposure or the building of redundancies to protect against perceived risks. The tools used to achieve this are usually regulations, training and technology.
The regulator needs to provide evidence that a safety culture is in place
One of the key elements of a safety culture is safety reporting and dissemination of relevant information. If a safety culture was in place, the NCAA would have received confidential or anonymous reports from professionals working in Dana about the safety violations/concerns before and not after the accident. This would have triggered corrective actions and mitigating measures which could have prevented the accident from happening. Obviously people knew there were violations but we’re afraid to report them. Perhaps they had no confidence in the NCAA’s ability to address their concerns. The findings of in-house audits carried out by company safety managers should be able to reveal the gaps in the safety chain, as well as the remedial actions required to close these gaps within a specified time frame. An external audit by the regulator should be able to show continuous improvement towards safety which is the true test that a safety culture is in place.
Nigeria needs an Aviation Advisory Council (AAC)
In order for the industry to obtain maximum benefit from it’s stakeholders, we still strongly advocate for the formation of an Aviation Advisory Council (AAC). This is a forum composed of all relevant stakeholders that will discuss policy, strategies, programs, projects, investment opportunities and all issues that relate to aviation business in an open transparent manner that will benefit both the travelling public and the decision makers.
The African Aviation Sector may not have attained its full potential but there is hope. Your take on this.
Africa currently houses 6 of the worlds 10 fastest growing economies
The aviation sector in Africa has immense potential for growth and is being viewed as virgin territory by foreign established airlines. Africa’s Revenue Passenger Kilometres (RPK) is set to more than double in the 19 year period from 250 billion RPK in 2011 to 720 billion RPK in 2030. While Europe and America are on the throes of a double dip recession, Africa’s growth is expected to be an average of 4 to 5%, all eyes are set on the continent. Traffic between Africa and the EU has consistently accounted for over 60% of all aviation activity on the African continent. The Africa-Asia route is showing the highest growth rate due to increased activity of Middle East and Chinese carriers. The operating environment is getting very competitive and the biggest threat to African airlines is from overseas carriers.
Foreign carriers with foresight are focussing their expansion and investment into Africa.
In 2012 alone, British Airways dedicated USD $5 billion as investment for route expansion and service upgrade in the African aviation market. Currently Nigeria is the second largest aviation market on the continent. The World bank estimates that Nigeria will overtake south Africa and become Africa’s largest economy by 2018. The revised forecast for Nigeria indicates an average GDP growth of 5.6% for the next 20 years. The new strategy adopted by the Middle Eastern carriers is to buy equity in struggling African carriers. Etihad which currently owns 40% stake in Air Seychelles has just won daily frequencies into Lagos. Turkish and Emirates who currently fly daily into Lagos have asked for daily frequencies into Kano and Abuja airports. Lufthansa is asking for more frequencies as well. The general trend is that foreign airlines are looking for increased activity into all the major African markets.
The implication of this development for African airlines
The travelling public will see this as more opportunities for connections and choice of flights. However to industry watchers, African Airlines are subjected to increased competition from foreign carriers while the EU blacklist denies them access to the European market.
Dearth of skilled and experienced man-power due to emigration and neglect of training and manpower development.
For the past 7 years a major obstacle in Africa's inability to meet its safety oversight functions is the lack of requisite competent manpower. According to the World Bank, tertiary enrolment for developing Countries stands at 10% of the population compared to 56% for Organisation for Economic Co-operation and Development (OECD) Countries. It is evident that Africa will find it challenging to produce the number of development professionals needed to sustain economic growth in the aviation sector without a serious change in her educational and labour policies.
Note that a conservative estimate from Boeing in 2012 dictates that Africa needs to provide and additional 725 pilots and 810 aircraft engineers every year for the next 20 years to be able to man it's aviation sector planned capacity. Nigeria's' population is 18% of Africa's hence we are expected to provide the appropriate 18% of the manpower. This comes to precisely 130 additional pilots and 146 new engineers every year. Failing to meet this target means Africa will have to mitigate the shortfall by employing expatriates. These will eventually repatriated both the acquired skills and revenue back to their home countries to the detriment of this continent. The problem could have been eliminated if the promised academic upgrade and expansion of the Nigerian College of Aviation technology (NCAT) had been carried out as planned. A recent census of ICAO recognised aviation training institutions in Africa showed that the United Kingdom has more ICAO recognised aviation institutions than the 54 African countries combined.
It is necessary for Africa to adopt a joint funding policy for aviation development
A major impediment to Aviation development in Africa is the issue of funding. Most African governments run huge debt portfolios which makes increased borrowing to fund aviation development low on their priority. 33 out of the 40 Countries classified as highly indebted poor countries (HIPC) are in Africa. Despite late colonel Gaddafi's notoriety he was an African leader who realised that Africa's real economic and political independence lies in its ability to extract the synergy that comes from working as a united group. After decades of isolation from both the Arab league and the capitalist West he learned that even a rich country needs to develop sensible alliances. It is on record that during his regime, Libya was the only country in Africa that never accrued any foreign debts. He became a great champion of the African union and was willing to fund a lot its initiatives. The declaration of the African Union (AU) in 1999 took place in Sirte, Libya. Gaddafi led the call for the formation of an African Central Bank (ACB) which is to be based in Abuja and expected to be fully operational in 2025.
At the meeting of the Council of aviation ministers held in Abuja on 16th-20th July 2012, the question of joint funding was again discussed. The African Union (AU) should establish at least one major aircraft easing company in order to take full advantage of the Cape Town convention of 2005. This convention in conjunction with the aircraft protocol addresses the issue of international interest in mobile equipment. Properly utilised it will provide leverage and favourable access to new equipment for African airlines. A monetary union in Africa is still a long way ahead but a leasing company that will spread insurance risks among African based underwriters will be a significant strategy to consolidating its financial system. Nigeria among other countries has just been approved a $300 million loan from the African development bank5 as well as a further $950,000 by climate investment fund (CIF) 6. Both loans are towards improvements in road transportation which is vital to regional integration. Hopefully, the African development bank (ADB) will be able to offer low interest loans to aviation businesses. A major challenge for African leaders is that such a multi-lateral initiative will entail giving up some level of sovereign control of at least their monetary policies in the interest of the entire continent.
Coming to Nigeria, what is your take on the current airport renovation project going on around the country?
A bold step in the right direction
The airport modernisation project is a fantastic idea that has been long overdue and we credit the honourable Minister for the level of success already achieved. Prior to the remodelling project our international airports have been a source of national embarrassment as a result of neglect, absence of routine maintenance and prevalence of out dated facilities. International airports do not only provide a gateway into a country but also gives an indelible first impression of the country to transit visitors. Considering that is the first and only part of the country they come into direct contact with. Although the project is not yet completed we are aware that there have been some significant positive changes. However, the issue of airport security hast to be given prime attention. Considering the incursion of armed robbers at the departure hall of the international airport in Lagos on 13th March 2013. Secondly, the level of finishing observed is not comparable to what is obtainable in airports like Johannesburg in South Africa, Delhi, Ethiopia, and other third world countries. Thirdly, it will be necessary to have a clear idea of the cost of the project. I have maintained that politicians are constrained by the need to show results within the four-year election cycle. Aviation on the other hand requires a clearly defined policy, a robust strategy that considers future technological advancement and very careful implementation. In summary, airport modernisation is a pivotal and capital intensive long-term project. It does not require a panic reaction; but rather a planning reaction to achieve the desired objective.
Transparency required in public private partnership
The public private partnership (PPP) strategy that the ministry is implementing may continue to encounter avoidable setbacks due to lack adherence to certain tenets of ethical business practice. The Federal airports authority of Nigeria (FAAN) currently has a number of court cases pending with two of their major concessioners namely Maevis Nigeria Ltd and Bi-Courtney aviation services Ltd. In the interest of Nigeria’s reputation such contractual conflicts should be promptly resolved in a fair and transparent manner.
There are synergies to be gained in working collectively: African partners will prevent capital flight out of the continent and accelerate transfer of the much-needed skill sets in Africa
Another brilliant strategy embarked by the honourable Minister last year was the drive to secure investments for aviation development. We would recommend that such a strategy should focus on getting African partners to jointly invest in aviation infrastructure. The disadvantages of having dominant overseas partners investing in our economy includes, loss of management control, loss of revenue through capital flight and the erosion of high level local skills. African nations need to co-operate with each other on major infrastructure projects. Infrastructure projects can stimulate the economy and provide employment, while green energy projects can help combat climate change. Nigeria may suffer capital fight but it is better for the revenue to end up being used to develop the African aviation industry through the contributions of South African Airways, Ethiopian, Kenya Airways etc, than if it ends up in the portfolio of foreign partners in Europe or America. The African aviation environment is affected by factors all of which must be appropriately managed on a regional scope to effect any significant change. Impressive strides made by individual countries like South Africa, Ethiopia, Egypt, Kenya, e.t.c., within Africa in achieving global safety and technological standards can be transferable by working together. Such initiatives will speed up regional integration and increased dependency, thus minimising chances of regional conflict between member states.
Air crashes have occurred in Nigeria over time and NASI has been in the forefront of championing Air Safety. Are we on course to minimise incidences of air crashes?
Nigeria has witnessed remarkable safety improvements in the past six years
However, much more remains to be done. The absence of accidents does not infer that the industry is safe. It is quite possible that some accidents have occurred but were not reported or documented appropriately. We need to strive for the entrenchment of a safety culture within the industry. We aspire to see individuals and groups that will commit to personal responsibility for safety, preserve, enhance and communicate safety concerns. We need to actively learn, adapt and modify behaviour based on lessons learned from the mistakes of the past.
Safety is not the absence of accidents, but is the presence of practices and processes that prevent incidents from escalating and becoming accidents
Simply defined, safety is the management of risk to an acceptable level that will prevent harm to persons or damage to property. Below is a list of issues that when addressed will greatly enhance safety:
- The lack of general security and the increasing threat of terrorists activities is threatening flight operations and safety of aviation personnel at some locations.
- Adequate emergency response (ER) and search and rescue (SAR) services.
- Nigeria meteorological agency (NIMET) to provide timely routine weather reports and forecast that will enable our pilots to make safe and sensible decisions.
- Nigeria Airspace Management Agency (NAMA) to provide timely and accurate notices to air men (NOTAMS) with regards to status of critical operational equipment.
- Improved infrastructure especially adequate aerodrome lighting, rescue and fire fighting (RFF) facilities to support night time operations at all major airports.
- Provide and publish standards instruments departures (SID) and standard arrivals routes (STAR) and full radar vectoring to final approach at all our airports.
- The AIB to conclude and release all accident reports to the public so that safety lessons can learnt and future accidents prevented.
- The regulator to implement the ensuing safety recommendations contained in the accident reports that have been released to the public
- Aviation professionals; engineers, pilots, dispatchers, air traffic controllers to to perform the duties without undue commercial pressure and intimidation.
Why do airlines keep closing shop in Nigeria?
Nigeria presents a rather difficult and unstable economic operating environment.
Aviation business is capital intensive and has to respond to a lot of variables. In order to address the question, we have to consider factors that exert macro effects on the business environment. This will include political, economic, social, technological, legal, and environmental issues. Considering just the macro-economic issues that exert over arching influence on the aviation sector. These include double-digit aggregate inflation, high interest rates (up to 20%), poor access to long term lending, generally low productivity due to absence of a virile manufacturing base, high unemployment, low skill levels due to low literacy level. Most of these issues are products of past socio-economic failures that now require adroit fiscal and monetary adjustments by the CBN. It is impossible to obtain a balanced fiscal policy when government expenditure does not address the needs of the over 100 million Nigerians living below the International poverty line of USD $2 a day. This scenario discourages long-term investment in aviation infrastructure; even by the Federal government. In order to raise revenue required to meet the unbalanced fiscal condition, the government resorts to abhorrent tax regimes the consequences to which the airline industry is not immune.
The recent banking reforms witnessed a number of banks over exposed to non-performing loans by airlines with a strong possibility of bankrupting both the banks and the airlines. This posed a serious threat for the general economy. A few of these factors were tackled by the visionary brinksmanship of the Central bank of Nigeria (CBN) in concert with AMCON. However limited success was achieved by the both airline re-capitalisation and the aviation intervention fund. Primarily due to lack of effective oversight including managerial scrutiny of airline management.
Other related factors are:
- Market entry without a robust business plan and poor management skills
- No proper understanding of the start up cost and running capital required for Airline operations.
- Underestimation of the time it takes for route development and subsequent profitability.
- The global average profit margins for aviation is 5%. Therefore, in order to declare an net profit, Nigerian operators need to make at least 10% ROI considering 'real' inflation stands at double-digits.
- Managerial incompetence or where a competent management is often hijacked and overruled by an incompetent ‘sole proprietor owner’ who then sadly ruins the business.
Weak economy and safety regulation by the regulatory agency.
The first part involves ignoring obvious signs that airlines are insolvent and are unable to fund their operations. . Usually evidenced by a host of abnormalities such as:
- staff salaries delayed for extensive periods.
- flights delayed because the 90 day credit limit with fuel vendors is breached and fuel has to be purchased by cash from ticket sales after passengers have boarded the flight.
- Air traffic control and airport authority refusing to issue departure clearance because navigation/landing/parking fees have not been settled as promised.
The second part involves the abuse of discretion to grant extensions to airlines requesting to defer periodic maintenance processes. This should only be granted in extraneous circumstances.
Kindly recommend a panacea to incessant airline closures in Nigeria.
Provision of Security, adequate power supply and respect for the rule of law to enhance both sustainable safe operations and attract foreign direct investment (FDI)
The current economic foot print of Nigeria’s aviation industry is marginal considering its obvious potential. Primarily because the sectors’ main activities of airlines operation and the supporting ground infrastructure are still in a low levels of development. In 2010, the cumulative contribution of the direct, indirect, induced and catalytic channels of air travel to both employment and gross domestic product (GDP) was approximately 295,000 jobs and N200b respectively. Two major factors responsible for the slow social and economic development of the entire country for the past three decades are lack of adequate electrical power supply and the lack of jurisprudence or respect for the rule of law. Recently the country has experienced a worsening security situation as a result of activities of both internal and external terrorists groups; notable among them is one identified as boko-haram. The current lack of security is causing more concern than the first two factors. Without adequate power supply it’ll be difficult for the Country to make progress in areas of key infrastructural projects and manufacturing processes. Without jurisprudence and respect for law and order it will be tough to attract foreign investors. These two factors were also raised by the Chinese investors to our Okonjo-Iwealla led economic team in February 2012 as impediments to their planned $3.5 billion investment in Nigeria’s economy.
Airlines must understand the key industry characteristics and growth needs
The aviation industry provides ample opportunities for growth and profitability. This has been aptly demonstrated by the plethora of foreign airlines that are eager to enter the Nigerian market. Case in point, in 2011 foreign airlines repatriated N156 billion as revenue from ticket sales in Nigeria. In 2012 foreign airlines made N158 billion courtesy of the Nigerian traveling public again. This constitutes self inflicted capital flight to the Nigerian economy due to failure to appropriately manage Nigeria’s bilateral air service agreements (BASA). Theoretically speaking, since most of our bilateral air service agreements (BASA) are based on equal designation and reciprocity, Nigeria carriers lost the opportunity to earn N79 billion in revenue and N6.3 billion in profits. Imagine the positive impact this could have achieved on the airline industry and the wider economy. It is a fact the Lagos-London route is British Airways’ most profitable route, therefore Nigeria should ensure that its 21 weekly frequencies are utilised to maximum advantage.
Nigerian airlines should embark on strategic review of their business models to aid in choice of strategic options; commercial agreements, mergers and acquisitions
Nigeria has the market; a rising middle class population and strong predicted economic growth rate. What we don’t have is the airline structure. Airlines should seriously consider strategic mergers and acquisitions to facilitate access to intangible assets such as new markets, airport slots, supply chain integration and increased corporate versatility. For the immediate future we need to consolidate Nigeria’s 16 airlines into three or five viable airline groups. Only strong airlines that can provide World class service will be able to favourably compete with established foreign carriers.
The prebendal culture and the absence of the whistleblower protection policy.
Nigeria needs to evolve a whistleblower policy that gives protection to both the system and the its users. This will serve to reduce the spread of corruption within the system by facilitating the identification of unethical behaviour and taking mitigating action before the entire group is compromised. The absence of this feature has left our aviation system constantly being overrun by corruption. Good people within the system who observe anomalies such as unsafe practices or misuse of public funds are left with the difficult choice of speaking out and risk their careers or keeping quiet and hoping someone else does something about it. The result is a system devoid of transparency and accountability that fosters a contagion of corrupt and unethical practices. The inherent client-patron prebendal culture leads to depletion of the much needed manpower. It is unfortunate that with every change in Administration the top level management are usually prematurely retired or fired irrespective of competency and integrity.
Modern infrastructure adequate aerodrome lighting to support nighttime operations operations
Lack of proper facilities at airports has led to serious losses by airlines. Aero Contractors claims to have lost about N6 billion as a result of poor infrastructure across the country. Some reports indicate that the combined losses to airlines is in excess of N2 billion as a result of runway 18left at Lagos being unusable at night. Another aspect that is being neglected is the impact of uneven wear on the runways and the cost of maintenance.
Commercial simulator facility in the west African region
In a widely circulated publication the NCAA reported that Nigerian airlines spend about USD$16.3 million every year on pilot recurrent simulator training. Approximately 70% of this cost is expended on acquisition of relevant visas, flight tickets, subsistence allowances, hotel accommodation and other sundry expenses. The actual simulator training requires only about 30% of the total cost
Maintenance repairs and overhaul (MRO) facilities to cater for the various commercial and civil aircraft in operating Nigeria.Once again another case of policy neglect at the implementation stage. If the National hangar project which was decided in 1977 had been implemented, this problem would have been non-existent. In 2009 negotiations had commenced between the Nigeria’s aviation authorities and Lufthansa technik with a view to setting up an MRO in Nigeria. It is unfortunate that nearly 4 years later no progress has been made. Aero contractors has made substantial investment and has won the necessary approvals to carry out C-checks on the very popular Boeing 737 aircraft. Which incidentally is the dominant commercial jet aeroplane in the Nigerian industry. I view this initiative with Aero contractors as a stopgap and an interim measure rather than the final solution. A sensible plan will be to provide a facility that will be able to meet the maintenance needs of the entire West African sub region, seeing that Nigeria provides 65% of aircraft movement in the region.
Excessive import duties and tariff on aviation consumables and spare parts
There is no doubt aviation businesses in Nigeria have been subject to a regime of harsh taxes and tariffs. With industry margins averaging 3 to 5% it is inevitable this will erode any chances for profitability. It is strongly recommended that the following incentives be immediately implemented:
All aviation businesses should be given a five-year tax holiday commencing from next financial year.
This should be accompanied by zero import duties on all aircraft spares and consumables.
Nigerian airlines should be licensed to import jet A1 to reduce operational cost.
Your assessment of the current Aviation Minister and her lieutenants.
The policies and actions of Nigeria’s system managers is of great interest to the international community
Nigeria has always occupied an important position in African history, politics and development. Due to the fact that Nigeria’s population of 170 million is approximately 18% of Africa’s population. Thus, events in Nigeria will affect one in every five Africans.. The future of the Nigeria aviation industry is strongly dependent on the future of the African industry as well. As I’m sure you’re aware Nigeria as a country provides 65% of the aircraft movement in West African sub-region which is more or less representative of the Banjul accord group (BAG) which now has its headquarters in Abuja. Nigeria also hosts the West Africa’s regional safety oversight organisation (RSOO) office. There is urgent need for more co-operation and consensus building among the African states and their carriers.
Champion for consumer rights and protection
We do acknowledge that the minister has worked very hard and deployed considerable effort to revamp the aviation industry which is highly commendable. She has attempted to address the issue of consumer protection from unfair and discriminatory practices by certain international carriers. For example, the fuel surcharge unilaterally imposed by certain international airlines as well as the disproportionately higher cost of international travel being charged. The ministers’ attempts to seek redress for the Nigerian public seems to have been frustrated by the courts. The deregulated and liberalised industry has no real price control mechanism other than demand and supply.
Transparency gravity and accountability required
With regards to the Federal airport authority of Nigeria (FAAN) and the Nigeria airspace management agency (NAMA) we would like to see the commitment to transparency and accountability displayed by these two establishments. Without having to invoke the Freedom of information act we call upon these two agencies to publish their accounts and expenditures for the last couple of years on their relevant websites. We believe this will put to rest all the allegations of monumental fraud levelled against the organisations.
The national carrier or the myth of 30 newly acquired aircraft
It is evidently clear that the Nigerian government, its politicians and bureaucrats do not have the discipline, public confidence and integrity to initiate and successfully run a national carrier. A cursory reminder of the activities in the last 10 years of the defunct national carrier Nigeria Airways ltd. (NAL) shows how dysfunctional things can get. Already the sector is suffering gross inefficiencies as a result of federal government involvement in the federal airport authority of Nigeria (FAAN), the Nigerian airspace management authority (NAMA), the Nigerian meteorological agency( NIMET) and the Nigeria college of aviation technology (NCAT). The bureaucratic bottlenecks and lack of transparency existing in these organisations creates breeding grounds for misappropriation of public funds, abuse of office and gross mismanagement. Thereby making these service providers very inefficient, unreliable and a bedrock of corrupt practices.
Government involvement has always left the taxpayers, the travelling public and the aviation professionals worse off. Nigeria Airways was liquidated with liabilities of over $320 million, however its assets and landed properties in Nigeria and its outstations including London were auctioned for next to nothing. The gullible Nigerian taxpayer was saddled with these frivolous debts. We still remember the horrific experiences of the travelling public with the inglorious exit of international operators like Bellview, world Airways, and recently Air Nigeria.
The cost of 30 brand-new commercial jets should be close to USD $800m. There is no merit in procuring 30 brand-new aeroplanes only to hand them over to airlines which are currently highly indebted and badly managed. That level of funds can be wisely invested in an aircraft leasing company. Without first consolidating the airline industry I fear that this will just be another wasteful venture.
What is the way forward for the Aviation Sector in Africa?
The future of African aviation is Strategic consolidationA signal that the era of cross-border mergers has arrived is the case of British Airways (BA) and Iberia; the flag carriers of two European countries. The two airlines completed their merger on the 21st January 2011 and evolved into the International Airlines consolidated Group (IAG). The group has recently acquired British Midlands International (BMI) from Lufthansa. IAG is still working towards a closer union with American Airlines.
The industry seems to naturally gravitate towards post liberalisation consolidation to spread risks and exploit group synergies. Airlines must be able to translate broad competitive strategies into specific action steps required to gain and sustain competitive advantage. It is expedient to link strategy formulation and implementation into one efficient and seamless process.
In global business, the competitive advantage of nations plays a significant role in defining the competitive advantage of their carriers. As illustrated above, governments sometimes play active roles in strategic industries like aviation and nuclear power in to further their economic interests. Countries are now willing to make policy adjustments in the interest of macro-economic benefits. Though this interference results in a distortion of the natural balance of market forces, it remains part of global economic realities. In the case of Africa, I will like to see:
- Evolution of transformational Leadership across the continent.
- Full implementation of the Yamoussoukro decision (YD)
- A Fly Africa policy for all government sponsored travel.
- Single Air Service agreement between the Africa and the rest of the world.
- The formation of a single Africa sky ATC network.
This is Africa’s moment and we are going to cease it.
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