Akinkuotu: Long-term Funds Required to Sustain Airlines
Managing Director of the Nigerian Airspace Management Agency, Captain Fola Akinkuotu, in this interview, says the airline business in Nigeria would be enhanced if operators have access to long-term funding. He says in the last two years his agency has significantly improved safety in the country’s airspace. Chinedu Eze presents the excerpts:
We learnt the Nigerian Airspace Management Agency (NAMA) is installing Category 3 (CAT 3) Instrument Landing System (ILS) in Abuja and Lagos. What are the details of what NAMA has done so far? There is a process in whatever we want to achieve. So as far as Cat 3 is concerned, we are in the process. I don’t want to say we are installing because we are not installing yet. Early this year approval was given by FEC (Federal Executive Council) for the awards of the contracts. The contracts have been awarded. In the last one week we mobilised the contactors. That means we have commenced the project.
The intent here is that by December they should have the ILS in place. I just wanted to make that very clear. Lagos and Abuja with all hand being on deck should have Category 3 ILS approach capability by December of this year. The intent like I said is to install these Cat 3 ILS in Abuja, and Lagos more as a starting point. It is not the end of Cat 3 capabilities, but we must start from somewhere. Firstly, they are expensive, secondly, we have to see the impact, because quite often you can ask for something and the impact might not justify the investment. If you go and put Cat 3 in my village in Akure, after the expense you ask yourself, was it worth it? In a good way we know that these are prime points, we want to find out the impact and how it enhances the flow of traffic and throughput. And it will also prepare us for the next phase. We intend to install Cat 3 ILS in other airports like Port Harcourt where the traffic is quite high too and among other things because of it closeness to the sea. Such airports close to the sea usually have low visibility. Like I said, these two (Abuja and Lagos) are just the beginning, so we will extend it also to Port Harcourt, we are going to extend it to Kano and possibly once some issues are clarified nothing stops us from going to Enugu. So, we have five airports we are looking at, Lagos, Abuja, Port Harcourt, Kano and Enugu.
To what extent is it going to improve or enable flight operations during the harmattan? Well, I will put it in a layman’s language. It will improve visibility during the harmattan. When an airplane is near an ILS approach, an ILS approach provides guidance to an airplane in three dimensions, it provides a lateral, which determines whether you are on straight line or not and in the vertical. So, if the airplane is coming in on an ILS, it is guided onto the centre of the runway in such a manner that it can land comfortably when the field is in sight. Now, depending on the category, the difference in category is that they will provide you with the centre line or lateral line. It is about the same.
But in the vertical, it brings you to a height. Category one will bring you to a height. If you see the runway at that point, when you get to that height if you see the runway you land. If you don’t see the runway you do a miss-approach. A cat 2 says, I am much more accurate, so it brings you to a lower height. In technical terms it is called decision height. So, decision height is if you decide. Now Cat 3 brings you to a farther lower level and Cat 3 is even split into many, there is a Cat 3A, 3B. Some Cat 3A can land the aircraft without the pilot seeing anything due to zero visibility. So, what I have told you here is that the closer you are to the field in height, the better your opportunity to be able to land. So, a Cat 3 essentially means that you will be closer in height to the field. So, it will enhance the pilot’s capability to land. And when you look at it, what is the issue with landing? You should be able to see the runway at a comfortable point to make a safe and comfortable landing. What terminates a landing is being able to see it, but a Cat 3 particularly; more Cat 3 could mean that you don’t even see the runway before you land.
But we are hoping that our weather never gets that bad, where we are not able to see the field (runway). The only thing is, if you can get closer to the field and at a lower altitude for you to make what I will consider a safe landing, in a more technical term it is called table approach. So, it is not the one in which you are rushing to land and you go and give heart attack to some people (by hitting the aircraft hard on the runway). So, like I said, you can have a category 3 ILS where visibility is zero, which means you can’t see the runway. The airplane will land without you seeing nothing. But in those situations, they are not hand flown, the pilot is not flying it. The aircraft is flown under auto-pilot. Two coupled auto-pilot will fly that airplane to the ground. And on touch-down, the modern airplanes will throttle back and apply breaks automatically. So, a Cat 3 in which you are doing zero, zero landing is not for Fola (the pilot) to be flying the aeroplane, Fola is not as precise.
Looking at navigational aids all over the country, pilots who fly in the airspace every day agree that there is improvement. Does it mean that advancement has been made, maybe, in the last two years? Well, if there are no complains it is kudos to NAMA and it is kudos to NAMA’s staff. It is our business to improve navigation in the airspace. Don’t forget that NAMA’s business is in three key areas: communication, navigation and surveillance. We will continue doing it. It is not a matter of saying, we have installed these navaids (navigational aids) and we don’t install and forget it. These navaids are equip- ment, so they need continuous maintenance. They can get bad, things can go wrong with them, we try to be more proactive and reactive. If something happens we quickly rush there but being proactive is much better. The major challenge we have on the equipment is power failure. So, what have we done to ensure the integrity of the equipment in terms of power? We have made significant effort in trying to put solar panels there. We have three levels of power supply: the national grid, our generators, but when that fails, we put solar panels. And because cost is an issue, if we can get solar effective all the time, it removes the issue of generators and where public power supply, which is the primary, fails, the solar will come in. If we can harness solar energy properly to provide power it is definitely going to impact on our ability to maintain efficient equipment. There are certain things that affect solar panels - you have to make sure that the surface is clean. It is supposed to take power from the sun, so cloud cover becomes an issue. So, if you have continuous rain sometimes it will impact on the amount of solar energy capture, but otherwise it is okay.
The major problem NAMA and other aviation agencies have is the debt owed them by domestic airlines. Has there been any improvement and what is your reaction on airlines’ protesting passenger service charge, which NCAA collects and shares with other agencies? NAMA is broke. Let’s segment your question. First of all, on the issue of debt, it is a very sad comment. The people we provide services to do not pay. Majority of them do not pay. You can say my charges are high but let us start with the basics, do you pay? You complain my charges are high, but you don’t even pay. Virtually greater majority of the airlines owe. Not only do we provide services to airlines, we provide statutory service to airports that are state or privately owned. They don’t pay. Recently, a government auditor came, and he was accusing NAMA of an increased debt profile. That is when what you are being owed is greater than what you earn.
We provide the services, but they don’t pay. Osubi owes us, Gombe owes us, Birini-kebbi owes us among others. So, on the question of debt; quite honestly, I will like to use this medium to appeal to people who owe us to pay. NAMA is not an entity created to make profit; it is a cost recovery agency. Now you want us to enhance the services, you want us to provide better radios, better communication, better navigation, better surveillance, knowing that equipment over time degrades, it has to be maintained, it has to be upgraded, for us to continue to do this, we need funds.
For us to maintain the status quo of the navaids, facilities that we have and to improve on it based on technology, how do we get the money to do that? Everybody is clamouring for better radios, better navaids and so on, nobody is saying how do we fund it? So, in the interest of safety, it behoves on all the people who use our services to do the least -pay.
Having said that, you talked about five per cent charge. The five per cent service charge is statutory. It is not paid by the airlines, it is the passenger that pays it. It is a passenger service charge. And the fund so recovered which are already paid, they are prepaid by the passenger, not by the airlines. It is shared among all the agencies. NCAA takes, NAMA takes a portion, NCAT (Nigerian College of Aviation and Technology, Zaria takes a portion, NIMET (Nigerian Meteorological Agency,
and AIB (Accident Investigation Bureau). So, I don’t think it is quite right to say that NAMA takes so much money. The cost of equipment, the cost of the provision of our services is not cheap. Like I said, NAMA is not a profit-making organisation, we are a cost recovery, we are supposed to provide, continue to provide services that enhance safety and that we continue to do and improve on.
We are talking about ILS Cat 3; it is going to cost money. There are states which airports don’t have ILSs that we are trying to help to ensure that we provide ILS. So, it is not just the provision of the ILS, there is a maintenance of it, there is installation of it and there is a calibration of it and then there are personnel to back it up.
So, talking about our charges, the charges we provide are covered by the International Civil Aviation Organisation (ICAO) standards; we didn’t just dream them up. And we file our charges to NCAA for them to approve, ICAO knows about it. If the charges are not in tune with what is obtained elsewhere, you can accuse NAMA of levelling exorbitant charges on airlines. But you can compare the charges with what obtains in other countries.
Pilots say radio communication has improved in the airspace. How have you enhanced your communication system and how do you charge over flyers? Our charges to over flyers are in the realm of enroute charges. Now, in enroute charges if somebody talks to you fine, then you know he is in your airspace. But it is not just talking to you that is the issue; if you are going from point A to B but in between there is point A1, A2, A3, A4, B1 and B2 that you must go through to be able to navigate safely to get to your destination. Those points, those facilities provide navigation guidance to you, so you pay for those enroute charges. So, we provide services such that they can navigate properly and, of course, we talk to them. So, we maintain these facilities, we communicate with them and provide them services as required. And like in Kano and Lagos we have CPDL (Controller-Pilot Data Link Communication) linking the controller and the pilot over a digital system. This reduces voice communication, particularly in areas where direct communication, by voice it is difficult. So those are things that we provide to over fliers. Now the question is, yes are we getting better? Oh yes, sure we are, and we still have room for improvement, we are working on it day and night.
What is your evaluation of the West Coast travel market (West and Central Africa sub-region) and what do you think Nigerian airlines should do to benefit from the market? Well, the West Coast is high yield market, so it is up to you to take advantage of it. You remember when we talked last year, I told you I was coming from Sierra Leone, from Free Town. In the aircraft a passenger was complaining about the high cost of flying between the West African countries and it is still high. And I also remember that at one time in Virgin Nigeria we had 41 per cent of the market.
It is a high yield market, so it makes sense. Some of the payments are made in foreign exchange, so it makes sense. By share population alone and the fact that you must look at the market, who are the people that travel more? Nigerians travel more. Firstly, we have the population, secondly, by our nature we travel and by our nature we are very aggressive as traders. It is not something that anybody invented, it is a natural thing. We are highly mobile, we are good traders and you find that throughout the West African coast. Tell me where Nigerians are not in such numbers as dominating some of the economic activities.
Way back in Lome, Togo even before airplanes started operating, go and ask how many Yoruba people were there. Now look at Ivory Coast, see how many people from the eastern side of Nigeria that are doing business there. So, what I am trying to say is that it makes sense for Nigerian airlines to really look at that market. We have no excuse of not dominating the market. Aviation wise, we have been in the leadership for so long. Take the number of airplanes in Nigeria today, tell me which West African country that has that number of airplanes? In terms of capacity, who is offering that capacity? Is it Sierra Leone that has the capacity? Is it Ghana that has the capacity? So, if we have this capacity what are we doing with it? It is not that I am trying to push any other country down, but we have the capacity.
So, if we have the capacity and the market is there why are we not utilising what we have? Emirates sees that there is traffic here and they have the capacity, they have the aeroplanes, so they increase their flights. If the capacity was not here, they will not be able to deploy two airplanes a day if they didn’t have the number of airplanes. But we have the capacity.
Indirectly the International Air Transport Association (IATA) is trying to do interlining for domestic airlines, but it anchored it on somebody in Nigeria who is gathering the airlines to make them work together. IATA wants to introduce something like Billing and Settlement Plan (BSP) for domestic carriers. Do you think it can work? The issue should not be, do you think it can work, but that it should work. Why I change it the way I did in that perspective is that everything is possible under God. Everything is possible with good human intent and endeavour. So, is it possible? Sure. Should it happen? Yes. Let’s say I had bought a British Airways ticket, if I now travel by Lufthansa, it is a ticket that was paid to British Airways. The provider of the service is Lufthansa, so the provider needs to be paid. Once there is an IATA clearing house the person who operated it will get his or her own money.
Of course, if there is a portion of it that supposed to go to the person who issued the ticket, who originated the concept; of course, he gets paid. So, the clearing house makes it easier. However, if I bought a ticket from Air Peace if there is no clearing house I can’t go to Arik or Aero. Unless they signed a MoU but then it means that if I fly on another airline, I have to take the ticket to the other airline for payment. But if there is a clearing house, we will all submit our numbers, because they get all the figures, they collate, and they can say, okay yes you travel by Lufthansa, you bought a British Airways ticket, but you flew by Lufthansa. Even in different segments, so for me should it happen? I believe it should happen. Can it happen? Of course, it can.
There are suggestions that Nigeria is really losing the international market and Nigerian domestic carriers have not been able to compete effectively. So, they argue that the proposed national carrier, when it becomes operational should concentrate on international and regional routes. Do you agree with that? It is not quite as difficult nor is it quite as simple as you put it. I think the starting block on this argument should be, okay everybody says we need a national carrier. That is what the demographic study showed. We need a national carrier or national airline. But there are underlining factors on the need and the opinions I expressed are personal, based on what I think, and they are not infallible.
The aviation business is one that requires a lot of money. When you have the money, you need good governance. When you have the money and good governance, you need good management. These are the things that are missing. If those three things in my opinion are available, nobody is going to be asking for a national airline. So those are the things that we need to address. A brand-new Boeing B737, depending on how you negotiate it will cost you $40 to $50 million. It can cost you $100 million.
Do we have airlines that have this kind of money to play with? Do we have financial institutions that have this kind of money to play with? Generally, the airline business is a business in which you need long term funds but the funds available around in this neighbourhood are short term funds. So, you find the airlines using short term funds to address long term business. It will always result into problem.
You go to a bank; they say you must pay back your loan within five years; whereas your competitors in the Western world will get a 10 years or 15 to 25 years long terms loans. Those are the things that impact on us. So, the funds are not available either by individuals or by institutions.
So, on the issue of whether we should have a national carrier or not does not arise because, number one we have seen the failure rate of Nigerian airlines, number two, we have seen the lack of funding. For an airline to be successful it is going to be difficult for you to succeed on two airplanes.
To hit critical mass, you need minimum of 13 to 15 airplanes. If you start with two airplanes as minimum requirement by government, you improve to four; you know you are far from 13 or 15 airplanes.
In terms of service provision by airlines, there is lack of consistency in the number of existing aircraft seats. Today there are enough seats, tomorrow there will not be enough seats and this impact on fares. Can we continue to do business like that? There has to be some consistency and reliability in this business. And that means that we have to have an airline, it might not be national, that can provide reliability and capacity in what is available to so that we can plan our lives.
It is not government intent to run an airline; it is going to be a PPP, Public Private Partnership, which will involve private money. What this does, is that it begins to answer the three questions we started with. It increases the pull of access to funding, because it is not only government now, government is there at the background; they have some little contribution. And like you said everybody thinks that if government is involved they feel a bit more comfortable. So, funding should be there. Now management, we know that private enterprise is good in management, they are not going to put their money there are see it go to waste.
Corporate governance can be enhanced by having shareholders. And look at the end of the day Nigerians will own a good percentage and become shareholders. If the management does not perform well the shareholders will kick them out. So those are the things that this kind of arrangement can bring. As much as I think that we don’t want to stifle, or we shouldn’t stifle the existing carriers that have started but we also have to recognise what are our needs. Major mega carriers today started with government’s support or as national carriers owned by government.
You complain my charges are high, but you don’t even pay. Virtually greater majority of the airlines owe. Not only do we provide services to airlines, we provide statutory service to airports that are state or privately owned. They don’t pay