TASK BEFORE THE NEW MINISTER OF AVIATION

(Article written Dec 2008)
Our Industry welcomes the new Minister of Aviation, Mr. Tunde Omotoba. it is gladdening to see aviation return as an independent ministry, as events in the last two years as shown that the civil service is not matured enough to absolve all transport related agencies and parastatals under one ministry coupled, with the multiple and cross-functional legislative committees.
The young Minister is coming at a time when the airlines are expanding, using state of the art equipments. This is a contradiction when compared to the infrastructure on ground (with the exception of MMA2).
I humbly wish to sidestep the issue of technocrat or aviation professional as the last professional appointed to head the Ministry’s only achievement was moving Nigeria Airways pilot’s salary band from the archaic Civil Service Salary Structure to a professional band, while their colleagues in the Private Sector were left out. It became an ‘apomi’ (pocket) affair thereafter.
The problem in our Industry is not peculiar. India had the same problem some years ago, but had to dig deep in thinking and planning before crossing the Rubicon with the determination of the government and the encouragement given to the Private Sector.
Below are some issues in the Industry that need the attention of the Minister:
Ministry’s Budget: The Ministry’s budget should be implemented as proposed, while a supplementary application be made, if the need arises. The new Minister should stop the present practice of arm twisting parastatals and agencies to fund the Ministry’s travels, training and other out-of station expenses. This is not right and puts a lot of pressure on the cash strapped agencies. Why should FAAN be buying tickets for Ministers and other officials, when the terminal buildings are a caricature? Also all Legislative Committees coming for oversight function in the Aviation Industry should not leave Abuja without funds for transportation and accommodation. The Minister should give sanction to any agency that provides “free lunch”, he should take the lead.
Aviation Fuel: The price of aviation fuel is not commensurate with the international market price. Granted it is deregulated. The international price of the oil is just shy of $45 from a scary $150 some time this year. Airlines have responded by removing fuel related charges, while the government of India and China also intervened in lowering the cost of Jet A1 in their respective countries. Unfortunately the government of Nigeria has allowed the major oil marketers to have a field day. The implication here is that our airlines are being stretched to the limit financially while foreign airlines tanker up from base or move to neighboring countries to pick fuel, which results in loss of revenue for our country. The loss is not limited to fuel, but other associated operational expenses such as landing, parking, navigational charges and late night stops that would require catering, handling, hotel etc.
Consolidation: This is an area that needs the Ministry to take the driver’s seat with the assistance of NCAA. Chief Fani-Kayode tried to do something like that in the twilight of the last administration, simply termed re-capitalization. Unfortunately, the clock was ticking for the second term and the still born third term which was an impediment and a wishy-washy consolidation was attempted. The greatest beneficiary of that exercise was the Corporate Affairs Commission, which simply smiled to the bank reaping hefty taxes from the financially constrained Industry. The consolidation should be revisited. Airlines will be the greatest beneficiary as this will encourage interest from foreign carriers in areas of alliances, code share and investment.
Commercial Agreements: All commercial agreements and unfavorable Bilateral Air Services Agreement should be reviewed. It is important to develop our airports and our flag carriers. Stifling their growth with these agreements just because we get some foreign currency that are quickly shoved into an escrow account is definitely not better than empowering Nigerian carriers.
Fly Nigeria Act: The Ministry should liaise with Legislature for an act that will provide market for our flag carriers. The Act is to ensure that any travel being funded by the government or expressly with tax payers fund must be purchased from a Nigerian Airline. The Act is presently operated by the USA. Considering it will take some time for the Act to see the light, a subtle directive via a simple memo can be passed to test run this idea. The US Act has been in operation this since the 1970s and reviews are made regularly to fit the realities of the day.
BASA Fund: The acrimonious BASA Fund which was the subject of numerous memos, media hype and legislative declarations, is now in the coffers of NCAA, waiting to be disbursed. The Fund must be used for safety critical issues and equipment. It is likely that the Minister has many memos and proposals waiting or ambushing his table right now. He should please tarry a while before approving and ensure due diligence using safety as a priority.
Airports: FAAN as presently structured cannot meet the challenges of the industry neither can it cope with the prospects of the future. To avoid a looming infrastructural and operational chaos, the Minister should endeavor to seek a reputable and internationally recognized airport company to partner, manage and restructure FAAN. The cherry picking policies of the former Minister whereby only viable airports were given preference is retrogressive for a developing economy like Nigeria. A holistic approach involving all the government owned airports should be adopted. We should look at the models used by the Argentine and Indian governments and develop a suitable one for our airports.
The government of Argentina sometime in 1998 started by awarding a 30-year, $5 billion concession for all thirty three of the country's airports to a group led by Milan airport operator, Societa Esercizi Aeroportuali (SEA). It is noteworthy that only eight of the thirty three airports sold in Argentina are profitable, therefore it is suspected that international airlines operating in and out of Argentina may have subsidized the rest.
The Indian government invited foreign investors to develop their airports on public and private participation basis (PPP). They started by dividing the airports into Greenfield (new airports built from scratch) and Brownfield (modified or upgraded from existing facilities) Airports. Government retained 26% shareholding in these airports (either through the Airport Authority of India or through the State Government).The government took these actions to save the industry from collapsing as the airlines were expanding in the face of decaying infrastructure. Recently, the Parliament passed the Airport Economic Regulatory Authority (AERA) into law to support the quick implementation and supervision of the programme.
Ground Handling: An immediate and successful privatization of SAHCOL is the only option for now. A core investor that is an internationally recognized ground handler should be invited or nominated. Please no hastily arranged or a CAC “quickie” registered consortium should be allowed.
Also, all recently disengaged staff of the company must be paid their entitlements whether it is SAHCOL or Ex-Nigeria Airways Staff.
Catering: ASL has monopoly and this is not good for competition, service and price. The only competitor is the government owned Skypower Catering. That organization with assets spread around the country is a glorified ‘bukka.’ The organization is more of an ‘owanbe’ venue, which was not the dream of the original owners. The government should take a decision on the company, the staff and assets, which are simply rotting away. The industry needs a competitive catering arm that will pass IATA Catering Audit, which is underway and Nigeria will not be excluded. Skychef and Servair are reputable international catering organizations and can be invited to manage Skypower Catering. Servair already has a strong presence in Africa.
Training: Government should either put NCAT in the market or get a technical or investing partner. This idea was proposed by the last government but it evaporated almost immediately. NCAT has lost her glory and needs more than Government subvention to get out of the woods. Fortunately, Kwara State Government is looking at our training needs and is on the verge of setting up a world class training school.
This is encouraging and the new Minister should encourage the establishment of more schools. Presently South Africa is reaping bountifully from our resources as Nigerians flock there for training and our precious foreign currency is being converted to South African Rands just because they have close to 30 training schools that are recognized and technically competent. We should encourage individuals and organizations to set up these schools here so the funds can remain here boosting the economy and the Industry at the same time. BASA funds should not be sent to these schools but invested in safety sensitive infrastructure.
Navigational Aids: The Industry is in dire need for an upgrade of navigational instruments and equipment. NAMA was able to join the rest of the world in implementing the Reduced Vertical Separation Minimum (RVSM) and for now cannot be privatized as obtained in developed economies. The government will have to fund the purchase of the equipment while at the same time ensuring a re-organization of the agency. The air traffic controllers are stretched to the limit using outdated and broken down equipment in an era of increased air traffic.
The airlines have borne the associated expenses of these delays on land and in the air, such as schedule disruption, burning of fuel, crew and passenger fatigue etc.
Passengers & Users of Aviation Services: The Minister should ensure Nigerians are treated well by foreign and domestic airlines. He should concentrate on the diplomatic front, while NCAA applies and ensures compliance with the rules. The persistence of Chief Fani-Kayode is sometimes needed when unfavorable rules and policies are placed on the Nigerian route and passengers by the dominant foreign carriers. The Minister should see the Office as that of the Chief Customer Services Officer.
Yamoussoukro Decision: The much misrepresented and parroted decision and declaration without action should be a priority for the Minister as he joins his colleagues in Yamoussoukro next year to deliberate on the way forward. Let us pray it will not be another “Meeters and Greeters” conference.
He will need to spear head it through our regional group, ECOWAS so our flag carriers can continue the dominance and expansion of the West Coast, which by and large should cover almost all the countries in West Africa. The present liberalization on the Lagos – Accra route should be extended to other cities in West Africa, which will improve connectivity, competition, tourism, service and reduced fares. ECOWAS should take a cue from the Southern Africa Development Coordination Conference (SADDC) states which will implement YD in their region from January 2009. An executing agency and Joint Competition Authority has been set up to achieve this objective. Also, the Minister should look into the Essential Air Service & Tourism Route Development Scheme (ESTDR) as espoused by ICAO, so implementation can start within the sub region with Nigeria taking the initiative. Lastly an airline should quickly be designated on the Kampala route as agreed with the Uganda Government recently with marketing and route development support.
Welcome Honorable Minister the industry is growing with the Principle of Variable Geometry. Take a good lead role and history will do the rest.