Abdullahi: AirlinesWillServePassengersBetterwithInterlineArrangement

The Director of Consumer Protection, Nigerian Civil Aviation Authority, Adamu Abdullahi, in this interview, says flight delays and cancellation will affect passengers less if domestic airlines cooperate through interlining. He also speaks about other issu

The challenge we usually have in Nigerian is how airlines can be run profitably. Some blame the airlines and the airlines in turn blame government’s unfavorable policies. From your experience so far, what do you think is the problem?

It is really a hydra-headed problem. We can’t blame one side. Let’s start from the regulator’s perspective; the airlines complain that they are over regulated and that they are over charged. When it comes to payments that they make to airports, they say that what they are charged are over and beyond what airlines pay in other climes. I don’t think that is true because the five per cent ticket sales charge that NCAA collects, which the agencies distribute among themselves, is not really from the airlines, it is more from the passengers. So, if your ticket is N100, you are supposed to charge your passenger N105, so the N5 goes to NCAA. That is the way regulations are crafted. That airlines should collect the 35 per cent on behalf NCAA. When that money comes to NCAA it is distributed, the NCAA gets only 58 per cent of it, NAMA (Nigerian Airspace Management Agency), NIMET (Nigeria Meteorological Agency) and even AIB (Accident Investigation Bureau) gets some certain percentages also. There is distribution process already that takes place whenever those payments are made.

A part from that five per cent, airlines have to contend with landing and parking charges, which as you know, the Federal Airports Authority of Nigeria (FAAN) has been complaining that over the past seven years those charges have not been reviewed. So, it means that the airlines are really paying less than they would have paid if FAAN were allowed to review its charges. I will also look at what the airlines are paying for: counter space where they sell their tickets and also checking in their passengers as well as other services in the airport. Passenger service charge that goes to FAAN also, also comes from the passenger; not from the airline. So I wouldn’t say that airlines are being charged more than they are charging in other climes. It is just the factor of the way we do business in Nigeria. Nigeria is a very difficult clime if you want to make your business and in the airline business, there are factors that are really beyond you. If you take even weather, for instance, you will see that not all airports have the needed equipment that you can use to land at zero visibility, which is the current trend in the world over. Here, it is a major issue when it rains or the Harmattan period, which we have now started experiencing. The airlines cannot operate to their ultimatum because they cannot get the right conducive weather for them to operate. The government is looking at that. I know that Instrument Landing Systems (ILS), have been introduced in almost all the secondary airports now. The four international airports have already been taken care of, I believe. And I would say the airlines themselves still have a long way to go because it is beyond just having the instrument landing systems in your airports, the aircraft must also have corresponding facilities so that this instrument landing system can now yield the optimum result. I don’t think labour is such an expensive venture here. I know in our recent history there is an airline in which the chief executive never allowed blacks to work for him so he preferred expatriates because he believed they are more experienced. He said they were experts in the field of maintenance; therefore, no black person should touch his aircraft. So if an airline chooses to do that; that means you have to pay for those services in dollars. So you have to take the exchange rate into consideration. If you are paying them $1000, which was just N150, 000 years ago, now you will be paying them N360, 000. You will convert that naira into dollars because people buy their tickets in naira and they pay in naira. But if you can do with what we have here, we do have a lot of pilots and engineers hanging about with all the qualification that are needed but don’t have the opportunity to work. So, if you can do with black pilots and engineers, then I believe that the cost would will come to you much, much cheaper than depending on expatriates.

At a point, government even went to the extent of trying to ensure that our people get employed so that in any cockpit, if the pilot is an expatriate, then the flight officer must be a Nigerian, in as much as that aircraft is a Nigerian registered aircraft. I don’t know how far that policy has gone but that was how it was intended. Other factors also come into play. When you look at fueling, all the fuel that you use in airline operation which about 40 to 50 per cent is fuel. And that fuel is being imported into the country. So, they have another factor again in foreign exchange. In as much as we can start to refine Jet A1 here, which has been in the pipeline for a very long time, I am sure it will crash some of the prices that we are facing right now. It will also crash the operational cost of the airlines. So, these are some of the issues that we have to contend with. It is really a very difficult climate in which we operate here and we are paying for the consequences.

The airlines also say they pay more insurance compared to other countries and lament the poor fuel distribution and the arbitrary prices that can change any time. Is there nothing the government can do in terms of pricing and insurance?

The issue of pricing for Jet A1 as I stated earlier really depends on how fast we can get back some of our refineries into operation and into refining of Jet A1. Kaduna Refinery and Warri used to refine aviation fuel. But for a very long time now they have not been producing Jet A1. At a stage the Minister of Aviation took some airlines under the auspices of the Airline Operators of Nigeria (AON), they went to see the Group Managing Director of NNPC, Minister of Petroleum Resources all in the effort to get the refineries to start operating in that aspect so that Jet A1 can be refined in the country. So far, that process is still on and has not happened. If it happens; then, things are going to really look up for both the airlines and passengers. The issue of insurance, as I said earlier, this is a difficult environment in which we operate. Look at Maiduguri, for instance, when Medview Airline wanted to resume flight operations into Maiduguri, of course, a high security alert area, the airline’s insurers expectedly would demand higher premium. So generally, the Nigerian environment is taken to be like that, the business environment here is high risk as far as investors are concerned, it also the same way that the insurance companies also look at it. In insurance policy that airlines have to take for their aircraft, it has to come in two different perspectives: there is a portion of the insurance that is reinsurance, that one comes at a high premium and insurance companies from abroad have to come in to reinsure because cost of aircraft is really on the high side. Maintenance of aircraft is in dollars, spare parts, everything comes in dollars; you have to look at the high cost of the foreign exchange itself as you insure your aircraft in foreign currency in dollars. So that dollar aspect is what is really taking its toll also on the airline industry. But I am positive that government will also look into that with the view to redressing it. Now that most of our insurance companies are to be recapitalised, I know that they may have the capacity fully insure equipment used for air traffic services. So let us see how things go and I am sure it will be for good of the industry.

Will you suggest that government intervenes in the area of financing, and also a policy whereby development finance institutions such as the Bank of Industry or even the commercial banks can reach an agreement with government to lend money to airlines in single digit interest rate?

I will support that because that is what governments do for their airlines in other parts of the world. As big as British Airways is, it still gets assistance from the British government. All the airlines that you can think of owned by governments, South African Airways, Kenya Airways, Egypt Air, Emirates especially the Gulf airlines, all the operations you see them doing, they are doing with the full backing of their government. And that full backing is full financial backing. We all know that airline business is really very capital intensive yet the gains come in pittance. So, it is something that you have to invest a lot in the initial period of setting up the company and with time it will now start yielding fruits. That is part of the reason why an aircraft leasing company is one of the issues in the front burner of the Buhari administration. The current Minister of Aviation has been pursuing it, the issue of MRO (Maintenance, Repair and Overhaul), aviation leasing company are things that he has been looking into seriously along with the establishment of national carrier. So if these three aspects can really come in; then, of course, leasing of aircraft maybe much, much cheaper to airlines than it is now. The current situation where everyone has to go on his own and go and discus and agree on rates they are going to pay for the leasing of aircrafts is usually high for Nigerian airlines. If there is an airline leasing company here, I am positive that it will