COMPELLING NEED FOR A “FLY NIGERIA ACT”

(article written November 2008)

Having considered the inability of our carriers to command presence on the international routes, withdrawal of designated flag carriers on some viable but highly competitive international routes and stranglehold on some of these markets by foreign carriers with the accompanying capital flight vis a vis quality of service on the Nigerian route when compared to other routes, I strongly feel the time for a “Fly Nigeria Act” has come.

The act will protect and give market share to Nigerian airlines and most importantly public funds will not be filtered and ferried away by foreign airlines but ploughed back into the country by Nigerian airlines. This will generate more employment and revenue in the industry, access to capital, foreign investment, career projection for core professionals and most importantly ignite a dash for code share and alliance with Nigerian carriers.

Presently the USA has such an act – LAW 49 US code 4118 while some other countries have it as executive directive (real & subtle). The US act basically states that US carriers shall be used for all commercial foreign air travel of employees/property, dependants, consultants, contractors and grantees when air travel is being funded by the government.

General provisions of the Act require that US flag carriers be used regardless of added cost or travel time implications to the traveler. Interestingly, it should also be noted that, according to the US State Department (DOT) the Fly America Act applies equally to non-US nationals and non-US companies or their representatives both within the USA and ex-territorially, regardless of enforcement difficulties or possible infringements of international law and personal liberty that this could represent.

The Act provides balance against some of the existing, largely obsolescent and, in many cases, inequitable bilateral US/non-US Air Transport Agreements. The Act also accepts Code Sharing (Airline Alliances) of flights by US and non-US flag carriers utilizing the equipment of the non-US flag carrier. If a US flag air carrier has an arrangement to provide passenger service in international air transportation on the aircraft of a non-US air carrier under a “code-share” arrangement with a non-US air carrier, Federal regulations have been revised to indicate that the ticket (or document) must identify the US Flag air carrier’s two letter designator code and flight number. In a nutshell that ticket must be purchased from the US member airline in that alliance.

This act was introduced in the 70s and has regularly been updated in line with present Civil Aviation realities with some permissible exceptions being introduced recently. Some exceptions to the Act include if total travel time is 10 hours or more than would travel by non-US carrier; if the airport abroad is an interchange point, and use of a US Carrier would require the traveler to wait six (6) hours or more to make connection or would extend the total travel time six (6) hours or more than would travel by non-US carrier; if travel by non-US carrier would eliminate two (2) or more aircraft changes en route.

Also, for all short distance travel, regardless of origin and destination, use of a non-US carrier is permissible if the elapsed travel time on a scheduled flight from origin to destination airport by non-US carrier is three (3) hours or less and service by US carrier would double the travel time. Other exceptions are emergencies, budget constraint e.t.c.

In Nigeria there is nothing in place to protect our flag carriers either in policy or agreement, be it bilateral or multilateral. Rather we are eager to give away more frequencies and capacities and collect royalties otherwise known as “BASA funds”. It is no secret that our economy is heavily dependent on the government which is the biggest spender at all levels.

The Private Sector is still being tied by our socio-political structures that have given so much power primarily, to the government at center and secondarily to other tiers of government.

The strength of the public sector and financial benefits can be X-rayed by looking at legislative arm of government which is composed of Nigerians who have lived or benefitted from the best of education outside the country, but have hopped into the lucrative political business. Also, the executive arm is resplendent with core professionals in education, science and technology who have literally abandoned such developmental sectors for the juicy political lifeline.

Listening to the Senate President and the former Minister of State, Air Transport lately and their sympathy, hopefully not apathy, the industry needs a change in attitude and altitude for our carriers to fly. Quoting the Senate President at the unveiling of Embraer 190 aircraft, “On our part as legislators, I want to assure you that we will make sure that we put in place legislation that will ensure competition within the airline industry, very healthy competition and we will bring in as many legislation, as we can to make sure that whatever investment you make is also guaranteed; that you don’t go down in areas of making the profit that you deserve to make. It is all designed to make sure that we provide safety inclined conditions for Nigerians”, also the Honorable Minister of State (Air Transport) in his presentation to Senate Ad-hoc committee “that government was making efforts to empower local airlines to reduce the virtual monopoly of foreign airlines”, he reiterated further on his visit to Kano Airport “that three (3) UAE airlines will operating into Kano and the ministry was working towards creating an enabling environment for local airlines to compete and operate profitably”.

Good Talk!! The industry is used to it and needs action, which should include but not be limited to the review of, all commercial and some Bilateral Air Services Agreements (BASA) that grant extra frequencies, multiple entries in addition to a “Fly Nigeria Act” or an executive directive in the interim. The airlines have shown the zeal to compete, having moved from the era of old aircrafts to new aircrafts and are now providing personalized in-flight entertainment (IFE) on board which will definitely influence and change the way we fly. The operators need to be encouraged and supported policy wise.

Government policy tilts towards multiple entries for foreign airlines. one of the Middle Eastern airlines that benefited recently from the government largess and operates to Johannesburg in South Africa had to interline with five South African based airlines, a statement on the airline’s website says “the interline is offering passengers easy access to other South African destinations following arrival in Johannesburg. Would those SA carriers have benefited from that revenue stream if that airline had multiple entries into South Africa?

I was an IATA scholarship candidate for an Airline Management programme in Singapore some years ago and coincidentally NCAA sponsored two principal staff that is in the Department responsible for these agreements to that programme. In our case study, we managed a new airline (Air Mercury) situated off the coast of Africa with Bilateral Air Service Agreements with some countries. To our surprise, it was only Nigeria, I repeat only Nigeria in that case study, granted extra flights provided the airline pays $200 per passenger for the extra frequency which is sometimes called commercial agreements. We were teased by our colleagues from other countries who quickly prayed for Nigeria to grant them such facilities. This is no joke; the NCAA officials are living witnesses.

Let me state it categorically here, that the money realized from BASA over the years which was recently transferred to the custody of NCAA and is exciting some cash strapped agencies is nothing when compared to the monetary benefits and accompanying multiplier effects of empowering our airlines by giving them that prized “Government travel Market”. The foreign airlines will hurry to invest, discuss and partner our flag, local and struggling airlines.

The present agreements encourage foreign airlines’ hub-and-spoke policy, while a review will encourage a head to head competition. The difference you may ask. Nonstop flights increase head to head competition, whereas hub-and-spoke systems increase market power and the ability to price discriminate.

To our operators, who presently lack a fiery O’Leary of Ryan Air or a bold Branson in their midst, should endeavor to work together through consolidation. It is time to speak up as individuals and inform the government and the public of policy pains in the industry. The Airline Operators of Nigeria (AON) is not giving the desired aggression. Also, the airlines have to put in place some facilities that will encourage partnership such as e-ticketing, BSP Portal, IATA membership, navigable & friendly websites and an IOSA certification is an added advantage.

Finally, in the absence of a liquidated national carrier, the country has four flag carriers and the foreign carriers are willing to partner with them when we think “NIGERIA” first before others. The government should consider the amount ferried to foreign airlines when traveling with government funds considering the travels are in upper classes with stops sometimes associated to personal retreat, by officials in the three tiers of government for conferences, seminars, capacity/pocket building programmes.

Also the country’s participation in different sporting cultural programmes that have more officials and supporters than participants is another area we can keep with us, therefore the country should sincerely ruminate and support the industry with a “FLY NIGERIA ACT”.

The government owned service providers crave for bailout while the airlines crave for market. If these are provided, our industry will be unparalleled in Sub –Saharan Africa.