Ado Sanusi, the chief executive officer of Aero Contractors in this interview, speaks on how the airline will address its infrastructure gap to grow passenger traffic.
Kindly give an assessment of aircraft operation in the sector today?
If you look at the number of operating aircraft in the entire system, including all the airlines in the past 12 months or starting from January 1, 2019, till date you will see that there is remarkable decrease in the inflow of aircraft into the country, there is definitely a significant decrease. If you also look at the inflow of leased and acquired aircraft you will also notice that there is a decrease.
The only airline that is bringing aircraft to operate in the country is Air Peace. So, the capacity of the airlines has not grown because Nigerian airlines are not able to lease aircraft that will operate in the country.
Passenger demand has increased because after the election there was stability, which triggered the demand. More people travel since after the election and this is natural. But unfortunately, we are not meeting the demand by making sure that we have adequate number of aircraft that are operating in the system to feed the market.
It is quite unfortunate that Nigeria that is well blessed with a lot of natural resources and well respected in Africa, we still cannot boast of buying aircraft and bringing them into the country for operations.
If you look at Rwand Air, the airline is buying new aircraft; even Uganda is buying new aircraft and they are operating. We have to look inwards to see what went wrong at the beginning and then correct it. We could establish a leasing company that can make aircraft available to us or we make the leasing companies in other parts of the world feel comfortable to lease aircraft to us.
Are there hitches in getting aircraft by Nigerian airlines?
Yes. There is a big hitch because a lot of leasing companies do not want to do business with Nigeria. So when Nigerian airlines make enquiries to lease aircraft the response they get from the leasing companies is that they are only willing to sell; that they are not in the position to lease. What is the reason to that? They said country risk. What is country risk? They don’t think that if there is default and they want to reposes their airplane they will have smooth repossession or at least, a hitch free repossession.
They don’t also feel that at the time of returning the aircraft it would be returned based on the leasing conditions. They feel that the safety oversight is not strong enough to make sure that the aircraft are effectively maintained and when they are to be returned, they will be returned in good condition.
They also feel we are not very good in record keeping. These are the things we need to address. As an industry we need to go to government and urge them to make sure that the Convention is fully implemented.
Yes, we are signatory and it is fully domesticated but is it implemented to make sure that anybody that is bringing his aircraft will feel very safe, knowing that the government of the day is the government of rule of law and respects international treaties signed by the country; and whenever the leasing companies want to take their asset (aircraft), they would be freely allowed to take their asset. In fact, they will be assisted to take their assets. If we do this they will be willing to lease their aircraft to us.
Read also: Here’s why Nigeria’s growing Airbnb market lags peers, way forward
What policies can Nigeria introduce to create a West Coast market that will benefit both Nigerian and other operators in the sub-region because currently Nigerian airlines spend more money flying to West Coast destinations than the airlines in the ECOWAS countries spend in coming to Nigeria?
This yields itself to the demand and supply theory. In Nigeria we have the flying public so we can still cultivate more and grow passenger traffic to 10 million per annum. This is achievable but we must have the aircraft to fly the people. We must also make sure we have the infrastructure so that when they enter the airport they will be happy with what they see. We must also have the confidence of the flying public so that they will feel comfortable flying our airlines. With all these in place, the introduction of new airplanes will definitely allow growth in the market.
What can government do to reduce cost of operation for domestic airlines?
Yes. The first intervention should be in the supply of fuel, which over the years government has been striving to bring down. 40 percent of the cost of operation is almost on fuel, Jet A1. So we can look at it and ensure that the fluctuation in the prices is not much. Look at the situation now. The prices go from N198 to 220 per litre. So if we can have a constant supply of Jet A1 at constant price, airlines will know how to plan their budget and how they can bring down the cost of ticket based on the lower cost of aviation fuel.
In most countries the price of Jet A1 is very, very dependent on the price of crude oil but in Nigeria it is dependent on the landing cost of imported product. Crude oil price can be steady for the next six months but Jet A1 price will be fluctuating. So I think we can streamline that. It is already deregulated but we can persuade the importers to ensure constant supply of the product. Or government can be importing Jet A1 and be selling to marketers.
Government should also look at the taxes. It has done very well in the taxes by reducing some and looking at removing VAT. I hope it has done that already. But the most important thing government should tackle is multiple taxation. The federal government should look at it. The last time they reviewed taxes in aviation was a very long time ago and I think they should look at it and reflect the reality on ground.
Besides weather and VIP movement, what other factors cause flight delays and cancellations?
Infrastructure. If I have 10 departures out of the General Aviation Terminal of the Lagos airport and let’s say my departures are 100 passengers per flight, it means I will have 1000 passengers for the 10 flights. All of them are departing at 7:00 and they had come about 40 minutes before. This means that we have to process the passengers 30 minutes before departure, but if the infrastructure cannot support that physically, there is nothing you can do but to delay your flight.
If I have five checking in counters but I have one x-ray machine at the screening point. That means we all have to queue and it takes the x-ray machine about 40 seconds to one minute to screen one passenger and if the x-ray machine should break down they will revert back to manual searching. This will take up to two minutes to screen each passenger, so physically it will not be possible to quickly dispatch the passengers in time.
Another factor is Aircraft on Ground (AOG) is a major factor issue and when a company says that we are delaying flight because there is fault in the aircraft that is a good company. Nigerian passengers are apprehensive when it comes to technical issues with the aircraft. I don’t blame them because there have been so many mishaps in the country. So when you say there are technical issues they will become afraid.
What are you looking at in the future for Nigerian airlines in a situation where there is increasing passenger traffic but few aircraft?
When you look at the trajectory and you notice that it is shrinking. This may bring us to a time of 1992, 1993 and 1994 when Nigeria Airways was down to one or two aircraft and Kabo was coming in with aircraft and Okada was coming in with aircraft. Then people were struggling for aircraft seats, running on the tarmac to get on board the flight. But that is not exactly what will happen now. What will happen is that the highest bidder will be inside the airplane. If I know that I am the only airline that goes to Abuja from Lagos at 1 pm, what I will do is that I will put the price at N70,000. That is how the demand will be if this trend is not checked in the next three to four years. The ticket price will increase. I don’t know how much it will increase.
Do you think the private sector can save the situation and does the situation now justify the clamour for national carrier?
I am always a true believer in national carrier. In fact, every country should have a national carrier. National carrier is a source of pride to any nation. But will the national carrier solve the problem? I think it will just ease the problem. This is because we must try to understand what is wrong with the aviation industry. If a national carrier will come and change the architecture of the entire aviation industry by saying, we are going to bring 20 brand new aircraft and every airport will experience flights. We are doing this to change how aviation is being run in the country for decades.
Do you think this should be done by government or private sector? I think both. I think government has a big role to play and I think the private sector also has a big role to play. But I think private sector driven but government backing. I don’t think government has money to put aside for airline business but it can give sovereign guarantee for private investors. It will encourage investors to commit their money because their money is guaranteed by the state. I think that will help if the state will guarantee bringing in new airplanes into the country. I think that will also help.
Join BusinessDay whatsapp Channel, to stay up to date
Open In Whatsapp
