Police’s aircraft concession criteria disqualify domestic carriers
The requirements listed by the Nigerian Police Force (NPF) for the concession of its under-utilised aircraft and facilities in its air wing mean domestic carriers cannot bid, BusinessDay’s findings have shown.
The NPF, in a recent circular, titled ‘Concession of Nigerian Police Airwing Aircraft and Facilities’, signed by the deputy inspector of police for the inspector general of police, said the project involves the concession of the Nigerian Police air wing’s under-utilised aircraft and facilities in Abuja and Lagos to a private sector partner that will rehabilitate, operate and transfer (ROT) them back to the Nigerian Police after recovering their investment with a reasonable profit margin.
The requirements include 25 years of combined experience in the aviation industry, an air transport licence issued by the Nigeria Civil Aviation Authority, at least 25 years of combined experience in ground handling equipment and support services, specialised experience in aviation fuelling and handling supply and aviation depot construction, at least 25 years’ experience in travel and tour or as registered agent and verifiable evidence of financial capability, financing sources and reputable bankers.
BusinessDay’s findings show that most airlines currently operating in Nigeria have not operated for more than 10 years except for Dana and Overland, which have operated for 14 and 20 years respectively.
Aero Contractors, the only airline that has spent over 60 years in operations, recently suspended scheduled flight operations as a result of a challenging operating environment that affected its revenue.
Stakeholders say this project may be too capital-intensive for domestic carriers to pull through, considering the finance involved and the type of aircraft on the fleet of the police may not be suitable for scheduled commercial operations in Nigeria.
Olumide Ohunayo, an aviation analyst, told BusinessDay that currently no airline can really match that number of years required by the police for prospective concessionaires.
“The number of years used as qualifications should be reduced. How many airlines can really match that number of years? People don’t have to spend 25 years to show some experience in managing such assets. All you need is to get capital and partners that can invest in the project and they begin to work out their business plans,” Ohunayo said.
He commended the police for the proposed concession rather than allow the assets to rot away, becoming under-financed and a risk, considering the amount of accidents that have happened with the police aircraft in recent times.
“I strongly believe that it will be difficult for our domestic carriers to handle this ROT arrangement. The capital requirement or adequacy alone will throw many of them, if not all, out of the equation. The huge capital therein includes funds for rehabilitation, training, spares, training and re-training, etc.,” Seyi Adewale, chief executive officer of Mainstream Cargo Limited, said.
Adewale believes that an international firm with interest and huge (FX) financial capabilities may form a consortium or a special-purpose entity with domestic partners such as with an aviation ground handling company, aviation fuelling company or to disclose these domestic companies as third-party agents.
He said this is generally acceptable in a request for proposal or request for quote case in as much as the legal and commercial framework and/or requirements have been well thought out.
“It is also interesting to note that many of these domestic support companies or potentially third-party agents have over 25 years’ experience in aviation handling,” he said.
According to Adewale, the ROT proposition is a smart move by the NPF because it takes and entails a lot to run an efficient aircraft fleet management company or indeed an airline.
He said: “The logistics value chain capabilities needed to run smoothly are huge, complex, time-dependent, forex-based, technical and safety biased. Managing its own fleet and air wing would have been tough and a major distraction to NPF, considering the current challenges in Nigeria; manpower, funding, training, emerging (evolution) crime.
“Furthermore, I’m pleased with the disclosure expressed in its RFPQ because it provided clarity on how this opportunity emerged and the openness for competition. This will be a win-win PPP situation because I expect NPF to still have preferred paid access to use of its aircraft and/or helicopters as at when needed whereas the successful ROT partner still earns income, ensures and guarantees the safety of the fleet and entire operations,” he said.
Sindy Foster, principal managing partner at Avaero Capital Partners, said on a first glance, the requirements look onerous and likely to rule out the majority of domestic aviation businesses but they are encouraging consortiums providing combined experience.
“But some of the requirements e.g. 25 years in travel and tours are frankly bizarre. Are they proposing to allow a concessionaire to use critical airborne assets intended for combat missions, surveillance operations, critical search and rescue operations for tourism?” she said.
Foster however expressed concerns over the decision taken by the NPF.
According to Foster, the Nigeria Police Air-Wing is a critical airborne asset and as such, it should not be in the hands of private concessionaires.
“We have a huge security problem in Nigeria. So I find it odd that the Nigeria Police Force does not need these assets to improve the security situation. Given where we are, we should not have any underutilised assets or facilities,” she said.
Ibrahim Mshelia, owner of West Link Airlines Nigeria and Mish Aviation Flying School, said the police aircraft are security equipment that should not be in the hands of private individuals.
He said: “If we look at the Act establishing the police air wing, you will find the justification why the police needed an air wing in the first place, and from the concession paper I saw, it says combat operations and surveillance, etc. These are security equipment that cannot be given to private individuals.
“Did they buy these helicopters for commercial operations? I think this is another way of trying to sell the equipment to someone and Nigerians should resist it. Police air wing is a paramilitary wing of our security system. Why should it be given to individuals? If they find out they are not willing to use this for security, then they should sell it out.”
He said money had been spent on the purchase of the equipment and training.
He called on Nigerians to resist the move by the NPF, stressing that to put up the equipment for concession means the NPF would be giving out the secret of the police air wing to private individuals.
“The National Assembly should investigate this, stop this and call for a public hearing, and Nigerians should have a say about this,” he added.