Gittens: Nigeria Does Not Need a National Carrier
The Director General of Airport Council International, World, Angela Gittens, who spoke to Chinedu Eze at the ACI Africa Conference in Lagos, reasons that Nigeria does not need a national carrier because it has all the criteria to create a competitive and
The International Air Transport Association (IATA) Director General is circumspect about airport concession in Africa. He once said IATA is not fully in support of the concession because African governments tend to give it to the highest bidder not necessarily the organisation that can effectively manage and provide facilitation without prioritising what it is taking out of it. I don’t know whether ACI shares that view?
Well, ACI doesn’t have a position on concessions in general; that is the government decision. It is up to the government to decide how to manage and designate airports, but I do know that with the growth in traffic, there is the need for airport infrastructure to accommodate that growth. This is because if you don’t accommodate that growth you will strangle your economy. And so many countries, particularly in Africa have a lot of other priorities. You have schools, hospitals, roads and these things are also important and one area where you can get private capital is in airports. And so they look to getting private capital for their airports so they can both get investment and infrastructure and also get professional management without the kind of political micromanagement that often comes when government runs the entity. That is just the nature of the beat and so they are trying to accomplish both things to get investment as well as to get management without having to be encumbered on a day to day basis by political interference.
What is your evaluation of what has happened already in terms of the few airports that have been concessioned in Africa?
There really haven’t been that many and I am not sure, the one I can think of is Abidjan and if you look at their record, they do very well in that area. The airport service is quality, so their customers think that they are doing a good job. They are in the airport carbon accreditation programme, so they are being internally or environmentally responsible. So it sounds to me that this is very successful. Not that there are many others but the few there have seem to me as successful.
Can you recommend the South African system where government cedes the power of airport management to a body while it is still government owned?
We call that corporatisation and that can work in other places. North America, for example has that system in many of its airports. It works as long as the government truly allows it to be independent. It is the decision that the government makes or fails to make and so you do have sometimes a cyclical swing where for a while it is independent and it runs as a true business, as a true service to the traveling public and the community. But then you have these swings where the government interferes and it tends not to go well.
The International Civil Aviation Organisation (ICAO) Council President was talking about expanding, modernising airport facilities to meet passenger surge in the near future in Africa, what effort do you think ACI is making to enhance this possibility in conjunction with the government?
Well, for example this conference right here where we are talking about the need for business transformation in African airports is part of such effort. No matter who operates the airport, whether it is the public sector or private sector operating the airport; they must be run as commercial enterprises. Yes, they are a service to the community, to the country and the consumer-the traveling public. But they need to be commercial enterprises and they need to try to maximise their non-aeronautical revenue. It is what you get from discretionary activities, from passengers or other users. Aeronautical is what you get from airlines and with the competition among airports many airports find that they can’t charge the full cost of providing the service to the airlines because the airlines will insist on getting discount or incentives or they go to the government and say you need to lower the charges or not raise the charges. But the charges are based on the cost, so if you don’t charge the full cost where is the money going to come from? You still have the cost, if you build a terminal or a runway you have to pay for that. And whether you have enough traffic or not you still have to pay for it. You could lower your charges but you still have to pay for what you have built. And you can build facilities for an airline business model and then the airline changes this business model or goes to another airport where it can make more money. You still have to pay for everything that you supplied. So it is important for airports to diversify their revenue sources because things happen that the airport has no control over.
Non-aeronautical is still underdeveloped in Africa, is there anyway ACI can make government understand that if you burden the aeronautical charges it will draw fewer airlines and fewer passengers to the airport?
Well, I will look at it the other way round; I will say it is best to increase non-aeronautical revenue so you have more diversification in case something goes wrong. Because you can’t always depend on aeronautical revenue because the airlines can change their mind and you don’t have complete control over how much you could charge. In any case, it is only cost recovery so the best you can do is cost recovery, whereas with non-aeronautical revenue you can make a profit.
Do you think the Single African Air Transport Market (SAATM) which has recently been r atified and endorsed by 23 countries in Africa will succeed in liberalising Africa’s skies , as many countries in the region are trying to pr otect their own airspace?
I think that is one of the pr oblems Africa has. I think that is why Africa’s air transportation industry has not gr own as much as it has in other r egions because of the lack of liberalisation. If everyone holds back then you can’t get around in the continent and that is what has happened. It is starting to open up a little bit but if you look, we have confer ence in Africa all the time, so how do people get to a conference in Africa from Africa? They have to go to Europe or to the Middle East; that is crazy. You have some major centres in Africa that could provide more service to more cities. As I said, it is starting to happen; I think that has been a huge problem, everyone trying to protect their own national carrier . We saw this in other countries or r egions, we have seen it in Europe, North America, we have seen it in Asia Pacific, as they liberalise then they get better connectivity . Now it is difficult because the first thing that happens is that your national carrier gets into tr ouble because typically the national carrier is very inefficient because of the government subsidy and so it is more subject to governmental types of economics and not the market, they haven’t been exposed to the market. So when they do suddenly get exposed to the market sometimes they fail. And that is very difficult for a political leader to accept the failure of its national carrier. There is loss of identity for the country but in the long run, they are better off because they get more connectivity because you get other airlines coming in to try to compete with this