Nige­rian air­lines buf­feted

Business a.m. - - FRONT PAGE -

AT THE MO­MENT AS WE ALL KNOW, the econ­omy is not in a buoy­ant state. We just came out of re­ces­sion, ac­cord­ing to the Na­tional Bureau of Sta­tis­tics, so what is hap­pen­ing in the in­dus­try is that it is just pick­ing up

Nige­ria’s be­lea­guered avi­a­tion in­dus­try con­tin­ues to teeter along, stum­bling, fall­ing and get­ting up, but still stum­bling. From air­port fa­cil­i­ties to air­lines man­age­ment, every­where you turn in the avi­a­tion in­dus­try there is an is­sue to deal with. FO­LARIN ADESENOWO, the chief ex­ec­u­tive of­fi­cer of Maple Group, a one-stop shop for all is­sues per­tain­ing to the travel busi­ness, knows a few things about the in­dus­try, for apart from running a travel agency, he is also in­volved in pack­ag­ing of tours and in the lux­ury end of pri­vate jet travel. In this ex­clu­sive in­ter­view with busi­ness a.m.’s BUKOLA ODUFADE, he lets us into his take on the travel and tourism in­dus­try in Nige­ria, in­clud­ing the chal­lenges of op­er­at­ing in an econ­omy like Nige­ria; the dis­rup­tion caused by so­cial me­dia ag­gres­sive agen­cies, at­trac­tive­ness of tourist spots to young peo­ple, while also pro­vid­ing in­sights on the state of the Nige­rian avi­a­tion in­dus­try. As a ma­jor player in the Nige­rian avi­a­tion in­dus­try, how is the at­mos­phere like for your busi­ness?

AT THE MO­MENT AS WE ALL KNOW, the econ­omy is not in a buoy­ant state. We just came out of re­ces­sion, ac­cord­ing to the Na­tional Bureau of Sta­tis­tics, so what is hap­pen­ing in the in­dus­try is that it is just pick­ing up. Most of the peo­ple that travel need for­eign ex­change, so we are in a state whereby we have gone through the down­turn in the busi­ness, and we are just pick­ing up and hope­fully by the year 2019, we hope to see a bet­ter time in the travel in­dus­try.

Your com­pany seems to be into ev­ery­thing travel re­lated, from travel and tourism to train­ings on travel and tourism, can you talk us through what your busi­ness is about?

We are re­ally like a one stop shop for all travel re­lated is­sues. When I say a one stop shop, I mean we take care of your flight, of your ho­tel book­ings and also we pro­vide visa as­sis­tance. We do var­i­ous des­ti­na­tions pack­ages, desti­na­tion wed­dings, you want to get mar­ried in Dubai or Tur­key, and we do that as well. Also, we have an­other arm of the busi­ness, which is called Maple Avi­a­tion. What it does is it takes care of the lux­ury part, the pri­vate jet and he­li­copter char­ter. As you know, it is not ev­ery­one that wants to fly the reg­u­lar econ­omy, busi­ness or first class. Some peo­ple, be­cause of the de­mand for time and want­ing to fly in com­fort need the ser­vice of pri­vate jets. So the model we run on that is that we are a pri­vate bro­ker for pri­vate jets, which means we man­age our clients’ planes, and get pas­sen­gers to fly in them.

For the lux­ury part of your busi­ness, how lu­cra­tive is it de­spite the fact that most Nige­ri­ans are av­er­age earn­ers?

It is a big busi­ness but like I said, be­cause of the re­ces­sion, it af­fected a lot of our clients. Many of the planes we man­age have been taken back be­cause most clients can’t af­ford to pay the hanger fee, and so many other fees as­so­ci­ated with keep­ing a pri­vate jet. Also, some of the busi­ness men that used to fly in them, be­cause of one thing or the other, have stopped and have gone back to fly­ing the reg­u­lar first class or lo­cal ticket as it may be. How­ever, be­cause of the routes, the con­nec­tiv­ity of some of the air­ports, there is still need for pri­vate jet. For ex­am­ple, if you need to fly from Abuja to Warri, there is no com­mer­cial flight that flies that, and when you think about it, Warri is where most of the oil com­pa­nies are, so there would be need for the oil per­son­nel to move from Abuja to Warri; but no com­mer­cial air­line flies that, so there is still need for the pri­vate jet busi­ness.

Go­ing into the travel and tourism in­dus­try, Nige­ria seems to be pick­ing up in this re­gard, es­pe­cially amongst young peo­ple, they seem to be re­ally into travel and tourism, how do you tai­lor your ser­vice to meet their needs?

Yes, the young peo­ple are key­ing into it, but they still need to do bet­ter. With the emer­gence of in­ter­net and the use of so­cial me­dia among the young peo­ple, they are able to see that there are other things on the other side of the world; they are able to see what is hap­pen­ing on the other side.

In those days, there was no Google to tell you what was hap­pen­ing in Paris or Mal­dives or Dubai. But be­cause peo­ple can now see in pic­tures or video clips, it can drum up the in­ter­est in them to travel. So, I would say that we have a few pack­ages for the young peo­ple to places like Sey­chelles,

Mal­dives, Is­tan­bul, places that are ba­si­cally not for busi­ness men but for tour­ing and young peo­ple and we tai­lor it to what they want. They don’t have to re­ally stay at a five star ho­tel; we have two star ho­tels that can serve their needs.

Given the fact that the so­cial me­dia, like you men­tioned, has opened ev­ery­one’s eyes, and now there are so­cial me­dia ag­gres­sive travel and tourism agen­cies, and I’m sure that has dis­rupted the tra­di­tional travel agency mar­ket to a cer­tain ex­tent, can you speak to that?

Yes, it has. But what I be­lieve is that the mar­ket is big enough for every­body, and there are over 180 mil­lion peo­ple in Nige­ria. Some peo­ple are still not tech savvy and not com­fort­able with the in­ter­net and even those that are com­fort­able might be too busy with their day to day jobs, than sit­ting on­line and try­ing to plan their trip. So the role of the travel agency would still be there, they would still need some­one to speak to. Also, apart from that, most of the con­ven­tional travel agen­cies, like us, have an on­line pres­ence; so with most of th­ese on­line ones you hear about, there is a con­ven­tional one at the back­end. A se­ri­ous minded travel agency would still have an on­line pres­ence. So, we still have an on­line por­tal that when you buy from, you would not know that we are the ones you are buy­ing from. We have man­aged to struc­ture our busi­ness that way to meet the chal­lenge.

In your view, what is the mar­ket size of the travel and tourism in­dus­try in Nige­ria?

I would not want to be quoted but in terms of the hu­man re­sources, the per­son­nel be­ing em­ployed by the travel and

tourism in­dus­try, I think we are look­ing at 30 to 40 per­cent.

Do you mean of the en­tire work­force of Nige­ria?

Yes, be­cause when talk­ing about travel and tourism in­dus­try of Nige­ria, we are in­clud­ing places like the ho­tels, be­cause it is part of the tourism in­dus­try, the ho­tels, the air­lines, the ven­dors that cater for the air­lines, go­ing to the air­port and see­ing the num­ber of peo­ple there.

That seems like a lot of peo­ple?

And they might not be do­ing le­git­i­mate busi­nesses but one way or the other they are mak­ing an earn­ing from what­ever they are do­ing, from push trol­leys to car parks. Even at var­i­ous em­bassies, you would see quite a lot of peo­ple there, so putting that to­gether, we are talk­ing about a good chunk of the labour work­force in Nige­ria.

The avi­a­tion space in Nige­ria has im­proved quite a bit in the last few years in terms of safety as we have not recorded any ma­jor crashes. In your view how much has changed and how much work still needs to be put into it to make sure it is up to global stan­dards?

We still need to put quite a lot into the safety and the en­tire avi­a­tion in­dus­try, but I must com­mend the present ad­min­is­tra­tion, the ad­min­is­tra­tion of Pres­i­dent Buhari, led by cur­rent min­is­ter Hadi Sirika. They have done quite a lot of im­prove­ment in the avi­a­tion sec­tor, for ex­am­ple the Abuja air­port run­way, they have resur­faced it and it has been there for 23 years, so they have done quite a lot re­gard­ing that. Port Har­court doesn’t have an air­port, all the planes are fly­ing to the NAF base but the Port Har­court air­port would soon be opened [Note: This in­ter­view was con­ducted be­fore Pres­i­dent Buhari opened the air­port last week]

and look­ing at all th­ese in terms of the time they have been there, I think this ad­min­is­tra­tion seems to be se­ri­ous about avi­a­tion and know what they are do­ing.

Talk­ing about the safety of the air­line is an­other thing, you have no­ticed that there has been no plane crashes, which means the Nige­rian Civil Avi­a­tion Author­ity (NCAA) are do­ing a very good job in terms of au­dit­ing th­ese air­lines and there is a spe­cific log book they have to keep and if we have not no­ticed any is­sues in the in­dus­try that means the reg­u­la­tors have been do­ing their job, and the reg­u­la­tors are do­ing their job be­cause the government is en­forc­ing it, so it is a rip­ple ef­fect.

On the state of the air­ports, de­spite this present ad­min­is­tra­tion’s do­ing so much, the in­fra­struc­ture in the air­ports are still abysmal, re­ally poor, what has Nige­ria not re­ally im­proved on the state of in­fra­struc­ture in air­ports?

I think presently Nige­ria is suf­fer­ing from some­thing called in­fra­struc­ture deficit. The en­tire in­fra­struc­ture, not just the air­ports, the roads, rail are all in a state of deficit. So, that is why you would see the air­port in such con­di­tions. Things like the con­veyor belts, which have been there since the air­port was built decades ago, those kinds of things need to be changed but, un­for­tu­nately, peo­ple manag­ing the air­port have not thought it fit to im­prove on the state of the air­port. But I be­lieve that, if at the pace we are go­ing, and if we have se­ri­ous minded peo­ple, we would get there. For ex­am­ple, if you have trav­elled re­cently in­ter­na­tion­ally, out of the Mu­ri­tala Mo­hammed Air­port, we used to have the cus­toms, the stan­dard or­gan­i­sa­tion, like four law en­force­ment agen­cies check­ing your bag, it used to be very an­noy­ing and very te­dious, but what we have now is just a scan­ner at the main door, and once you go through the scan­ner no one checks your bag, which I think is an im­prove­ment in the process. It is still a work in progress, a lot still needs to be done to get to where we should be as an in­ter­na­tional air­port; so fin­gers crossed, and we would get there.

The Nige­rian government re­cently un­veiled the coun­try’s sup­posed na­tional car­rier, Nige­rian Air, but im­me­di­ately sus­pended it due to fund­ing. Do you think the coun­try would be get­ting a na­tional car­rier any­time soon and were there other rea­sons that could have caused the sus­pen­sion apart from fund­ing?

It is a shame where we found our­selves, which is a big em­bar­rass­ment to the avi­a­tion in­dus­try and the coun­try as a whole, be­cause what hap­pened is just a typ­i­cal Nige­rian at­ti­tude, a typ­i­cal thing we do. We go on air to an­nounce some­thing and we are not ready for it; we have done it in the past, we won’t do our thor­ough fea­si­bil­ity study and we just go on air and start mak­ing noise.

It is al­most as if they didn’t even source for fund­ing be­fore the an­nounce­ment?

If any­thing, I think they were try­ing to score a cheap po­lit­i­cal goal and it back­fired. We all know the elec­tions are com­ing up next year and the present ad­min­is­tra­tion is try­ing to put up some­thing like we have done some­thing that has not been done be­fore, so that was why the min­is­ter went to an­nounce it and at the end of the day, they had to call it back after 3 months.

Back to the is­sue of na­tional car­rier, it is a very vi­able thing; but be­cause of the level of cor­rup­tion in the coun­try, I don’t know if any­one would take us se­ri­ous. Be­cause we have tried all kinds of mod­els we can think of; we have done it fully owned by the government, it has crashed, we have done it through PPP, it has crashed, so we have done it through var­i­ous mod­els and they have all crashed. So, it is very dif­fi­cult for me to say if any­body would take us se­ri­ously to help us float our na­tional car­rier. Even air­lines that have tried to, like Arik, step into that shoe and forge ahead and rep­re­sent us – I mean, Arik used to have a La­gos-Dubai route, La­gos-Lon­don route, all the in­ter­na­tional routes have been can­celled so re­ally I would not know if we would have a na­tional car­rier in our life­time.

The num­ber of Nige­rian air­lines has dropped dras­ti­cally from 32 to less than 10 in the past years. In your view, what do you think is their big­gest prob­lem, what is caus­ing them

I think presently Nige­ria is suf­fer­ing from some­thing called in­fra­struc­ture deficit. The en­tire in­fra­struc­ture, not just the air­ports, the roads, rail are all in a state of deficit. So, that is why you would see the air­port in such con­di­tions

to fail?

The avi­a­tion in­dus­try or air­line busi­ness is not the most prof­itable one in any coun­try be­cause oth­er­wise, you won’t find air­line like Ibe­ria which be­longed to the Span­ish government strug­gling. Bri­tish Air­ways had to res­cue Ibe­ria, BA bought over Ibe­ria. So, it is not the most prof­itable busi­ness; how­ever with the sup­port of any se­ri­ous minded government, th­ese com­pa­nies are able to thrive. What is re­spon­si­ble for many com­pa­nies go­ing un­der is the same thing hap­pen­ing in the man­u­fac­tur­ing in­dus­try. It is the harsh con­di­tions of do­ing busi­ness in Nige­ria.

So the government is not en­cour­ag­ing them, no in­cen­tives in place to help th­ese air­lines, no favourable en­vi­ron­ment to op­er­ate?

I won’t say the government is not sup­port­ing; yes they are but it is not enough. Also, some of the own­ers of th­ese air­lines are too ex­trav­a­gant, if you un­der­stand what I mean. There was a bailout fund that was given a few years ago to a par­tic­u­lar air­line, but the owner of the air­line rather than pump­ing the funds into the busi­ness went to in­vest it in an­other coun­try. So, re­ally in that case, how is it the fault of the government, the government gave them funds at a re­duced rate and in­stead of pump­ing it into the air­line, it was si­phoned some­where else.

So, one thing is the government, an­other one is the own­ers of the air­lines as well.

Those are just the two things re­spon­si­ble. If own­ers are re­ally se­ri­ous minded peo­ple and know what they are do­ing, then we should not have a prob­lem. The government is try­ing but they need to do more.

They need to give ac­cess to cheaper forex, and the is­sue of mul­ti­ple taxes; some­times when the ticket comes, you see a lot of taxes be­ing added to the fare, and th­ese are some of the things killing the in­dus­try.

Also, on the ex­ec­u­tive or­der on the ease of do­ing busi­ness that was passed last year, has it had any ef­fect on your busi­ness?

For me, what I ex­pe­ri­enced from last year May to now, noth­ing has changed, you know when those poli­cies are made, it can’t just hap­pen like that, it takes time for the rip­ple ef­fect to trickle down. So maybe be­fore the end of the year or next year we would see the ef­fects.

Most cities in Nige­ria are not con­nected by air and most cities still don’t have air­ports, do you think we should have more air­ports in the coun­try?

Air­ports are not like bus stops, it takes a lot to run and to main­tain. I don’t think we would ever get to a stage where ev­ery state has an air­port. In Amer­ica, yes, vir­tu­ally all states have air­ports, some even have two, one for do­mes­tic and an­other for in­ter­na­tional.

But the is­sue is that even the ones that are avail­able are they be­ing main­tained? That is the ques­tion to be an­swered. Presently, the Warri air­port is shut, so you can’t fly to Warri. Also, the ques­tion is do we re­ally need to have so many air­ports? What we need to do is if we have five, we should look after them and make sure the fa­cil­i­ties are up to stan­dard and can be at par with any air­port in Europe.

What are your broad thoughts on the Nige­rian econ­omy in gen­eral?

Yes, the other thing we need to do now is to look in­ward and see how we can pro­mote our lo­cal tourism, be­cause a coun­try like Dubai thrives ba­si­cally on tourism. So, I think we need to look in­ward and see how we can pro­mote our lo­cal tourism, how we can make earn­ings from it. Be­yond oil, the whole coun­try can also sur­vive on tourism, we have a lot of places, we have the Obudu Cat­tle ranch, Olumo rock, Iko­gosi warm springs. Th­ese are some of the many places where in­vestors can come in to develop so that peo­ple don’t have to travel ev­ery year for sum­mer. An­other thing is the government t needs to in­ter­face with the in­ter­na­tional air­lines be­cause the fares are too ex­pen­sive when you are fly­ing out of the coun­try. I would give you an ex­am­ple. If you want to fly from Lon­don to La­gos, you would be sur­prised that you can do that for less than N200,000 but if you want to fly the same air­line from La­gos to Lon­don, it would be dou­ble that amount.

Why should it be so? Is it not the same dis­tance, same fuel, same air­line, same per­son­nel, why should I pay dou­ble? And even in com­par­i­son with other African coun­tries, it is more ex­pen­sive to fly from Nige­ria. If you fly from Ghana, for ex­am­ple to Lon­don, you are not go­ing to pay the same fare if you fly from La­gos to Lon­don. So, there must be some­thing wrong in our pric­ing, it is not nor­mal, I think it is a rip-off. I know what the prob­lem is. The government needs to make it a pri­or­ity, ei­ther through the se­nate or House of Rep­re­sen­ta­tives.

What then is the prob­lem be­cause I know that fly­ing to other African coun­tries is also re­ally ex­pen­sive?

It is a lot of prob­lems, but part of the prob­lems is some­thing I men­tioned dur­ing the course of this in­ter­view which is mul­ti­ple taxes. The other one is the for­eign ex­change. Now, we have the same ex­change rates for the air­line op­er­a­tors and all other sec­tors but in those days, we used to have a sep­a­rate for­eign ex­change rate for air­line, we used to have the IATA rate. For ex­am­ple, if you go and buy BTA for trav­el­ling abroad, there is a rate they sell to you, if you want to go on pil­grim­age, there is a rate they sell to you, so I think the government needs to look into it and see how they can bring down the rate of ex­change be­cause most of th­ese air­lines pay their bills in for­eign cur­rency, so they need to bring down the rate of ex­change. I know they are scared of peo­ple hi­jack­ing it, for ex­am­ple, if they re­lease $1 mil­lion to a par­tic­u­lar air­line, how do you know that they won’t sell half on the black mar­ket. I think they need to find a way around it and bring down the ex­change rate, be­cause it is af­fect­ing the trav­el­ers, if they are pay­ing so much on ticket, there are other bills to pay for, and that means most peo­ple would not be able to go on hol­i­day and you need to go on hol­i­day to have your body, soul and mind re­freshed. We need to go out of the coun­try to do busi­ness and meet peo­ple on the other side.


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