Election of new leadership for the Airline Operators of Nigeria (AON) has rekindled optimism in its zeal to negotiate a better deal for the industry. With the devastating effects of the COVID-19 pandemic on the economy and more airlines on the brink, stakeholders have said the AON would need a new bargaining approach to tackle perennial high cost of operation, unfriendly regulatory provisions and earn the confidence of the travelling public. WOLE OYEBADE writes.
Aircraft engineers are unanimous that a plane is just as good as its maintenance culture. Though brand new aircraft are alluring, well-maintained old Boeing 737 classics are just as good and safe for air travellers. But without a timely repair of snags, which hardly discriminate between old and new equipment, the aircraft stays on ground or is just a flying coffin.
The local aviation industry has one-too-many snags that have kept its growth retarded and on-ground for so long; suggesting that it technically lacks the maintenance culture.
Clearly, our aviation is an offshoot of the larger stuttering economy and its policy flip-flops. With the misfortune of being headed by politicians that have no understanding or patience for the complexity of modern commercial air travel, the outcome could only be dismal for investors and consumers. So, when bad economic decisions meet mismanagement, the output is a notoriously toxic operating environment where no airline – new or old – can survive for too long.
After an era of politicians-turned-aviation-ministers, about nine of them in 15 years, there is a thorough-bred aviator at the helm of affairs. Though the larger economy has not improved, expectations are high that the aviation industry would take a turn for the better with Capt. Hadi Sirika, the Aviation Minister, in the saddle.
But that is just a wish that has remained so in the last five years of Buhari’s administration. Apparently not giving up, some stakeholders remain optimistic that there is a ray of hope for the industry and operators if the newly constituted AON would be more strategic in their demands and focused on perennial difficulties like the high cost of operations, regulatory support against aero politics, and building travellers’ confidence.
Too expensive, yet avoidable
Aviation business is naturally expensive and dollar denominated. It is more expensive in Nigeria given that ticket sales are in naira, which is now N465 to $1. An average local airfare is less than $100; far cheaper than the rate in the 1990s. Meanwhile, the cost of operation is on the rise, with routine maintenance cost, aviation fuel, multiple charges, and personnel taking a substantial part of the revenue.
According to the airlines, sundry charges, under the guise of taxes and levies at airports nationwide, account for at least 65 per cent of revenue. Besides the five per cent charge on every ticket bought by passengers, which goes to all five regulatory agencies, there are another 37 multiple charges on the operators.
Together, these charges eat deep into earnings leaving the airlines with less than N10, 000 on a passenger ticket sold at an average price of N30, 000. Chief Executive Officer of Air Peace, Allen Onyema, said if this current regime of taxation is not removed and maintenance rules reviewed, no airline would survive.
Onyema called for a review of C-checks rules, to align with the manufacturers’ 4000-hour benchmark before C-check maintenance.
“Here in Nigeria, the rule is by calendar, whether you flew or not. They (regulators) will tell you 18 months or at most 24 months. That is not good given the huge cost that goes into a C-check. It is by hours elsewhere. Our executive jet, Dornier 328, two years ago had a C-check in Switzerland that costs us $2 million. It has to date not done more than 1500 hours of flying since 2008. It has not done up to 1300 landings.
“Yet, when it is time for C-checks, you must take it there. In the last two years, we have flown it maybe about seven times only. That is only seven hours of flying. That is underutilised. The (scheduled) ones we fly every day, if it has not gotten to that 4000-hour mark, the operator should be allowed to continue using it once you have done the right periodic maintenance on the plane.”
He also appealed for the review of zero Value Added Tax (VAT) on commercial aircraft parts that are coming into the country, coupled with bottlenecks in the clearance protocols.
Onyema recalled that the Federal Government about two years ago declared zero VAT for aviation spares, but “the Customs had recently returned to demanding five per cent charges”.
“Again, the clearing of aircraft goods like spare parts in Nigeria is not as they do it globally. The aircraft is like a human being. Once it is grounded, that aircraft part is never stopped by customs anywhere in the world. They just take the records and allow clearing to take place later.
“Here, your spare parts are with customs and still there for two weeks. So, tell me why will the Nigerian airlines not crumble? These are the things we need to understand and change them. We are not against the government earning revenue to discharge its duties to the citizenry. But at the same time, this is a critical sector of the economy and it must be protected,” he said.
Working things out… together
Expectations are high that some of these issues will now take the centre stage in operators’ demands from both the Federal Government and regulators. Unlike in the past when the main operators had only a passing interest in the association and speaking with one voice, the new executives of AON have the key investors at the helm of affairs.
For instance, Alhaji Abdulmunaf Yunusa, founder of Azman Airline emerged the President, while Allen Onyema, the Chairman of Air Peace, was elected as its Vice-President. Others included Barr. Shehu Wada, the Company Secretary & Executive Director of Business Relations of Max Air as Financial Controller, while Alhaji Muneer Bankole, the Managing Director, Med-View Airline and Capt. Edward Boyo, Chief Executive Officer of Overland Airways also emerged as Board of Trustees for the new body.
Onyema told The Guardian that the issues had been well reasoned out, with the right strategy to approach them.
“My president and I have agreed to collaborate with the government; seek their attention, sit down with them and let them know truthfully what needs to be done for aviation to move forward.
“We are certainly not going to be confrontational. If the government tells us ‘you are going to pay N1m for this tomorrow’, we will sit down with them amicably and study the issue and give our own suggestions. We believe that we are going to make a lot of difference going forward. Both of us have agreed and we are going to carry our members along.
“Of course, we are lucky to have a minister, who is an aviator and understands all of these things. A lot of people don’t understand what Senator Hadi Sirika goes through to convince his colleagues (at Federal Executive Council) about the importance of aviation. I don’t envy his job. He has been doing everything possible to move aviation forward. We at AON will help him to let the government see those things he has been saying.”
Apparently, in agreement with Onyema, the Director of Research, Zenith Travels, Olumide Ohunayo, advised the new executives to drive a policy thrust for airlines in order to attract more investors to their businesses, but noted that for this to take place, “there must be corporate governance in the airlines”.
Ohunayo said: “They must begin to look at how to get the attention of the government. There must be interactions and structures between the AON and the ministry of Aviation and NCAA. There must be interactions that will be beneficial to the industry.
“And happily, the government for the first time is beginning to look at, use and understand the word reciprocity. I am happy at the events that happened during the reopening of the airports, but unfortunately, we didn’t benefit because our airlines were not there. That is another area one needs to look at.”
Secretary-General of the Aviation Safety Round Table Initiative (ASRTI), Group Capt. John Ojikutu (rtd) regretted that the operators – scheduled and private – had not spoken with one voice over the years, which he said had worked against their interests.
Ojikutu, however, tasks the new leadership to demand the restriction of foreign airlines to only two international airports, stressing that it should ensure no foreign airline is given the right to operate into Lagos and Abuja, but only to Lagos or Abuja airports.
He noted that the multiple entry rights given the foreign carriers had contributed to the short lifespan of indigenous operators in the country, stressing that if the new executives were able to fight this battle for their members, they would be revered worldwide.
Indeed, the issues are well known and operators to are willing to drive a change. With the cooperation of the authorities and other stakeholders, the local aviation sector may just be in for a new lease of life.