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Airlines: AMCON ask to run and at the same time collect money, an effort in futility…Olowo

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Dr. Gbenga Olowo, is the President, Aviation Safety Roundtable Initiative, ASRTI, in this interview he speaks on key issues in the aviation industry.
AMCON Foray into Aviation Industry 
For me from day one, it was a misplaced judgment to put AMCON as a turnaround manager of an airline. AMCON was set up to collect debts of banks. If you are to collect debts, how can you turn the business around? If you have to collect debts in the US that is Chapter 11 of Bankruptcy. I don’t know whether we have that in Nigeria, but if you are declared bankrupt, that means debt is set aside. Bankruptcy does not mean you are dead. It means you set the debts aside. You are to pump in fresh funds and resuscitate the business. When the business comes back alive after some years, you can now begin to service these debts. That is what they call turnaround, but to ask AMCON to come and turnaround and at the same time to pay the airline debts, that is the consequence that you are seeing.

They have not been able to deliver the airline of your dream, neither have they been able to sufficiently pay the banks’ debts. I flew on one of the airlines under AMCON receivership one day en rooute to Ghana, but I won’t mention the name of the airline. Onboard, I was able to meet a senior official of AMCON and I asked if that was the standard they came here to deliver because I saw wires that can short-circuit and could cause fire breakout inside aircraft. That is safety measure and somebody is doing oversight on that airline.

But, because it is a government affair, somebody turned away his eyes. As it is, we cannot afford to compromise safety. There is no straight cut assignment; ‘I must keep the operations going and I must collect debts.’ This is not possible and we are all seeing the consequence. They proposed a few years ago to merge Aero and Arik Air as one flag carrier for Nigeria, but government officials started disagreeing with one and other. That means we are not cohesive in policy.

What do you want to do with these two airlines? Set them bankrupt, get all the assets and let it float a strong airline for you and then, you will know you are making some progress. That progress will service the debts. That is the way out. Otherwise, if they continue with the way they are doing, they will end up killing the airlines and will have nothing out of them.

I read that they met about 17 aircraft at Arik Air when they came onboard, but now, they have less than five. Is that a progress? Then, go and check the on-time departure of that airline. If an airline is doing 70 per cent delays, is that an airline? And our number airline in Nigeria today, Ibom Air is still above 50 per cent delays. So, none of them can say in terms of on-time performance, is good. So, we are not operating an airline business. A flight is supposed to depart at noon and it’s departing at 10pm, what does that suggest? Operational reasons? No. it is simply inadequate service; they don’t have enough fleets or the fleets are frequently breaking down. When they breakdown, you cannot operate a flight that is not safe. So, you will continue to delay departure. How can you delay a flight for five hours? Maximum delay you can have should not be more than two hours.

So, for me, AMCON coming into that sector is absolutely misplacement of judgment. We didn’t get it right. Shut the airline down, collect your money and you know the airline has become a history. But to ask them to run and at the same time collect money, it is an effort in futility.

AMCON, NG Eagle and new owner 
The question we should ask ourselves is who owns Nigeria Eagle, AMCON? If I own a property, I should be able to sell it. The NG Eagle, Arik Air and Aero that government has taken over, they took them over legally. So, the Nigeria Civil Aviation Authority (NCAA) has done the right thing. I don’t know the name of the fellow who bought it. So, for me, it is correct. NCAA has done nothing wrong.

Assessment of federal government in aviation in eight years?
I don’t like talking about people, I like talking about institutions. What has aviation lacked in the last eight years? You know people running the sector, I have seen close to 20 aviation ministers in my aviation career. In the last eight years, the agenda set were very clear. What we did at Aviation Round Table (ART), is that we tried to measure their performance with indices of our breakfast meetings. We took topics on each of the six roadmaps, but we focused on about four of them. For instance, we did some things on the national carrier, we recommended options to national carrier.

We focused on airport concession, hub creation and how to finance airport. We focused on maintenance facilities, training and manpower development, corporate governance. We shouted on the appointment of Board members for agencies, which is at the prerogative of the Minister according to the Acts setting up the agencies.

By the time we appraised all the indices, we tried to tick any of our voices that were hearkened to, but regrettably, those voices went down into the drains. All the efforts of eight years, I think we scored the government about 40 per cent performance. We expected government to have done at least 60 per cent and leave the rest to politics. To us at ART, following our indices, we scored the administration below par. We didn’t see the national carrier. We started acquiring non-profitable airports from State governments and some State governments still want to develop their own. And we said no. How about the existing ones that are unprofitable? The Murtala Muhammed Airport (MMA), Lagos that is supposed to be our number one airport has been neglected. The one added by the Chinese, recently, some foreign airlines rejected it. How can we deliver a facility that operators don’t want? So, who is delivering facilities for who? No airline growth, no airport growth because I didn’t see a hub developed.

Maintenance Hangar of Aero 
Contractors, I don’t know how much savings we have been able to achieve from taking our aeroplanes there. NCAA should be able to tell us for instance that within a certain period, maintenance figure came down to a certain amount of money because of the facilities of Aero.

Foreign airlines non-remittance has reached all figure high of $718m. We are 44 per cent of the entire world’s debts on non-remittance of funds to foreign airlines as at the end of March, 2023. So, Nigeria is almost the half of the world.

What the airlines are now doing is that they started withdrawing their seats from Nigeria. They can sell the seats from Ghana, Lome, US and elsewhere and board here. When they board here, ticket sales charge that NCAA enjoys is not there anymore. That is what we call Point of Sales (PoS). And that runs to millions of dollars yearly. Our travel agents are losing business; they are firing staff. In this month of April, booking figure has collapsed by 50 per cent. Go and check the figure of Wakanow and other travel agencies. The seats are not available to sell.

The aviation industry in Nigeria is facing serious calamity. I don’t know if it is a government policy not to remit airlines’ funds. If it is not a policy, it is a breach of international trade. Bilateral Air Service Agreements (BASAs) that bring these airlines here stipulate that all airlines net earning must be moved to their head offices. Why are we not doing that here? So, we are breaching that aspect of the law. How about investors’ confidence in you in airlines and other industries? Don’t be sure that they will not do same to Air Peace in its operations in China when Air Peace has excess. Same thing may apply to our national carrier when it births.

In the late 1980s or early 1990s, Scandinavian Airlines, Iberia, Swiss Air and other Brazilian Airlines left Nigeria because of this issue of trapped funds. And unfortunately, same thing is happening again. Sanctity of business is very key if you want to grow the country. When they sign business with you, it will be respected as such.

Also, this problem of ‘you must buy in Nigeria,’ national pride is very good, but give a window. Let people elect to buy in dollars or any other currencies of their choice in addition to naira. Some African countries are already doing it. They are already accepting purchase of tickets in dollars. That dollars go to CBN. So, you have more dollars in your pouch because people want to travel. Why must I go to Ghana to buy air ticket with dollar when I can use the dollars here in Nigeria?

Advice for the incoming government
The priority of the incoming government should be first, to pay all the trapped funds to the foreign airlines to zero if you want that sector to flourish so that all the inventories will come back. This is to prove that we respect international trade.

Also, you cannot be begging the airlines to die. Where do you want me to get fuel to bring down my aircraft down here when all the money is kept in Nigeria? Do you expect them to go and borrow to operate their aircraft into Nigeria? Maintenance is due every six months, where do you want me to get the money from? Do we have maintenance facilities here in the country, which can force the airlines to do their heavy check maintenance in here? What is the capacity of the maintenance? And if I am lifting fuel in Nigeria, what capacity will I lift at a time? So, the government should pay the debts instantly to zero and tell the world that we are ready to shore up investors’ confidence.

Sir Richard Branson of Virgin Atlanta is one of the successful airline operators in the globe. The airline succeeded in the United Kingdom with Virgin UK, Virgin US, Virgin Australia and Virgin Blue. Virgin came here with Virgin Atlantic, but it ran back. Why? It was because of sanctity of contract. Don’t sign what you cannot do. And why Branson was leaving, he issued a bad statement by saying ‘Nigeria is a business destroyer”.

We need to shore up investors’ confidence in Nigeria. This is key and it is a foundation to progress in every sector of the economy.  

Number two, let’s deliver a modern gateway. The international terminal at the Lagos airport is overstretched, it has expired and we need to shut it down. Strip it 100 per cent and rebuild.

The plan for that airport is A,B,C,D, E fingers. We have been parading D and E since 1978, which is 45 years now. What happens to A, B, C fingers? Let’s go and build A, B, C and when that is ready, you can move in there and strip the D and E so that they can join later.

Then, we can add aerotropolis to it. Aerotopolis will extend to Ikeja. That is what you have in Turkey and Dubai with light rail that will take you to different gates, which is known as concusses. And in doing this, we are not looking for government money, private investors will do it. We have to demonstrate consistency. Master plans must go beyond eight years. There must be continuity so that investors will see us as a country that is ready to do business.

Nigeria must honour contracts and this accumulation of foreign airlines’ funds is one of the major breaches that we have as at today in the country.

Proliferation of more airports by State Governments?
State airports are not necessary, may be they are good politics, but bad economics. The only viable airport we have in Nigeria is MMA, which is feeding the rest, including Abuja. Go and check the books of the Federal Airports Authority of Nigeria (FAAN). So, how can you start an airport in the name of security landing? There are good alternates to all the airports in Nigeria right now that you can go within 10 to 15 minutes if you need an alternate. Must you start a new airport because of an alternate?.

And what is an airport anyway? Is it just runway? They went to commission one runway in Ogun State recently. No single building. When an aircraft lands on the runway, do you expect it to discharge its cargo on the runway? Where are the terminal buildings, operational offices and the other facilities? Ibadan Airport is there, how can someone think of another state airport? Ibadan Airport can serve Osun, Oyo and Ondo, but where are the good roads.

If you are even building them for cargo purposes, number one linkage for cargo is road and rail, which must be very efficient to deliver to the airport. Where are the rail and road that link Ilesha with Osogbo, Aye Coker and others? From the rail line, then it goes to the trucks and from there to the airport – intermodal connection. Can an airport operate in isolation? It is not possible.

So for whatever reasons the governments are trying to construct more airports, I think it has other objectives. They have ulterior motive. For the absence of nothing to do, please, the State governments should leave aviation alone; they should focus on some other things. This is a sector you don’t joke with at all.

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