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Aviation sector needs complete overhaul –Ex-NAMA CEO



Ado Sanusi

An aviation consultant and former Managing Director/Chief Executive Officer of the Nigerian Airspace Management Agency, Captain Ado Sanusi, speaks with FUNMI FABUNMI on salient industry issues with an emphasis on the need for a robust working roadmap to move the aviation sector forward

Do you think domestic airlines can overcome flight delays and cancellations?

No. Flight cancellations and delays are everywhere in the world and they are inevitable. There will be flight delays, and there will be flight cancellations in the entire world, including Nigeria. Now, how to minimise it in Nigeria is what I think we should be discussing. You can minimise flight delays by looking at your equipment, the aircraft that you have, and then your schedule so that you don’t overstress your schedule with the very few aircraft that you have.  So, you can recover from flight delays that can be weather-related, or due to unserviceable airplanes. Other technical reasons could be due to a shortage of pilots or other reasons. As the head of operations of an airline, it depends on the way you manage and minimise it. You need to do everything to eliminate it. However, it is not something you can eliminate completely. You just have to manage it. Why are flight delays and cancellations so rampant and very disturbing in Nigeria now? Firstly, it is because we do not have enough aircraft to service the demands of our passengers. Secondly, the airlines are stretched to the limit of their schedule. Sadly, the infrastructure that we have also contributes to this. And then, lastly, the environment, which is also the infrastructure. It also adds to the hardship the passengers are experiencing. So, all these things must be addressed in totality in order to reduce and minimise flight delays so that the travel experience becomes memorable or come with less hardship for the passengers.

Do you think domestic airlines may further raise their fares considering the forex challenge currently affecting them?

The ticket price will continue to rise. This will be due to three main reasons. There could be more, but there are mainly three reasons. You have mentioned the naira to dollar rate, which is one, and this is a very big factor. Aviation fuel, also known as Jet A1 – which is also dependent on the dollar rate -will also affect the ticket price. But what people refuse to understand and mention is the agencies in the aviation sector. By this, I mean the parastatals and the service providers like the ground handling companies. We must all come together and realise that we don’t need to overprice the ticket. This is because if we overprice the tickets and the passenger number reduces, everybody is going to be affected, including the regulators and the other service providers like the Federal Airports Authority of Nigeria, the Nigeria Civil Aviation Authority and the rest.

Now, FAAN, NCAA and the rest also contribute to the high prices of tickets. If we look at the debt of the airlines, the NCAA is currently quoting N42bn and $7.8m as airlines’ debts. Of course, the airlines will have to increase their tickets to pay the debts they have incurred. So, all these are factors that affect the growth of the airlines. As the saying goes, you cannot tax yourself to grow or to economic prosperity. It’s not possible because one party is suffering. So, aviation taxes need to be reviewed. We cannot continue to tax the airlines to grow the parastatals; we cannot overtax the airlines. So, it must be a very delicate symbiotic balance between the airlines and the parastatals. My opinion is that some of these parastatals should be government-funded. I know the other side of the argument is that the government is already funding other critical sectors. I agree, but if we want to have a vibrant aviation industry, which is also a catalyst for economic growth, we must look at what we’ve been doing. We’ve been doing this now for many years; can we continue to do it that way and think that we will get a different result? We can’t continue to tax the airlines to grow the parastatal and then say, “Oh, why can’t we have a vibrant aviation industry?” Of course, we have to take a cursory look at what we have been doing and probably change it. Maybe that is why the growth has not been so great in the aviation industry. Yes, it is a worldwide practice to tax the airlines, but not to completely tax the airlines to fund the parastatals. You must look at how you are going to tax the airlines, but not depend solely on taxing the airlines. You can never tax yourself to growth; it’s not possible because the other sector will suffer with too much tax. As a result, this will increase the price of tickets and subsequently reduce the number of passengers that are travelling. Of course, this will negatively impact the growth of the aviation sector in the country.

What in your opinion is the way forward to a robust domestic airline industry?

Well, it’s a combination of so many factors and I don’t think I can finish that at once. It’s not a simple solution that can give the aviation sector a robust growth trajectory. It’s not like one solution fits all, but I still keep saying it, it must be a comprehensive and total solution to the aviation industry. We cannot fix one part and then leave another. And we are very blessed that we have a lot of studies being done. There are a lot of reports; there are a lot of committees that have worked on the problems of the aviation sector, both nationally and internationally. We have a lot of roadmaps that have been followed, but maybe we are following the wrong roadmaps. This, perhaps, is the reason we must look and see what exactly the way forward is. There are so many roadmaps that have been drawn by so many ministers and a lot of other international bodies like ICAO. We have the Paul Dike Committee and so many of them. I was involved in some of these roadmaps that were drawn, and there is a particular roadmap now that we are following. But the basic thing that we have to look at is why the aviation industry is like this, or why domestic airlines keep dying in Nigeria. That is the key factor that we have to look at, and it may look as simple as it sounds, but it’s quite complicated.

This is because you can say, “Oh, what happened to Arik or what happened to Virgin Nigeria or what happened to Okada or what happened to KA or what happened to Oriental, or what happened to Nigeria Airways?” But all of them had financial problems. So, you may ask about the kind of business models that these airlines have used. Could it be that the same business model was replicated again in different forms for each of the airlines so that it is like just changing the name and replicating the same business model? The environmental conditions also exist, which means that the same harsh working condition and the same poor infrastructure exist. So, if we really want to make the aviation industry a success, we have to look at the roadmap we’re following.

The roadmap should look at infrastructure. What are we doing with infrastructure? The airport runway and everything must be examined. When we have the airlines, “Oh what are we doing with the airlines?” How are we making sure that they have the right business model? How are we sure that they have the right funding? How are we sure that they have long-term funding with single-digit interest rates? How are we sure that they have access to foreign exchange? How are we sure that they have the infrastructure needed to remain profitable and sustainable? And then we also look at the other factors that affect the growth of the aviation industry. We have to look at leisure travel, and tourism. The roadmap should be in totality because it will also stimulate the market and increase our leisure travel.

We have a very good business travel because people move from Lagos to Abuja, Abuja to Port-Harcourt, and all that. But we also need to stimulate leisure travel and make it affordable for Nigerians. And how do you do that by developing tourism and the economy so that we can get disposable income for people to buy tickets? So, the solution is not just a single dose one. It’s a solution that has to be looked in totality and then applied over the years. What we are doing now is to tax the airlines to fund the parastatals.

So, we take money from the airlines when they sell tickets and then fund NAMA, NCAA, NiMET, AIB. The only parastatal that receives very small funding from the sales of ticket is probably the Nigerian College of Aviation Technology, Zaria. FAAN also taxes passengers to fund itself. So, how can we have a robust aviation industry if the airlines are struggling and you’re still taxing them to fund the parastatals? Naturally, some of these agencies are not even working efficiently.

Most of these parastatals are working with more supporting staff and less of professionals, which make them over-bloated and very expensive to run. So, we need a total overhaul of the aviation industry -the way we run the parastatals, and the way we fund them.

Three airlines, namely Aero, Dana and Azman were grounded at one point or the other. What does this tell us about Nigeria’s domestic airline industry?

It’s so basic. When you have an industry where three carriers are grounded and you look at what is wrong with them, you would see that it is one common denominator-which is financial health and then some other aspects. There is a problem with the Nigerian aviation industry and I think it’s like when you have a sector that is sick, you don’t eliminate the sick people, but I think you have to X-ray the sector and then find the medication that you are going to give to the sector so that the sector can start recovering. So, yes, it tells you that the entire sector is sick, but to avoid any kind of incident, maybe that is why they were grounded. I think there should be an effort to look into the sector to see why these things keep happening. Let me give you an instance. When two or three banks collapse, I believe the CBN will definitely look into the economy and see why this is like this. They would want to know why three banks are grounded and their licences suspended in order to avoid a financial crisis. They would then come in and support the sector to ensure there is no financial crisis. It’s done all over the world in every sector. When you see that a sector is underperforming, there are some elements of the sector having challenges, then you go, yes, of course, you will try and ensure that you mitigate any incident or accident. You then go into that sector to find out what is actually wrong and then proffer solutions to that. I believe the aviation sector needs to be examined. We can have debates from now to 10 or 15 years’ time. As long as we continue to do things the same way we’ve been doing them, and we are not actually addressing the problem, then we are just going to get the same results just at different times.

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