RAISING THE ECONOMIC IMPACT OF FOREIGN AIRLINES IN NiGERIA

RAISING THE ECONOMIC IMPACT OF FOREIGN AIRLINES IN NIGERIA The foreign airlines started operating into Nigeria before we got our independence from the British colonial powers. The airlines have continued to increase in number while equally increasing frequency and gauge. The European and Middle- Eastern airlines are operating large and long haul aircrafts into the country, their counterpart in Africa often times deploy short and medium range aircrafts, due to distance, low intra Africa connectivity and commerce. These airlines with the aid of alliances, code-share and other commercial verves have opened the skies by reducing flight hour, improving connectivity and general cost of travel. Also alternate routing and warehousing of travel packages as added incentives have been of immense benefit and comfort to Nigerians. The foreign airlines have employed and trained a lot of Nigerians and should be credited for sustaining our vibrant travel agencies. Also they have assisted the country in handling issues of exigencies by providing charter for evacuation, religious obligation e.t.c. On cargo, these airlines have absolute dominance and have over the years been aiding the economy by airlifting goods and services while also investing in a local handling organization. They have also been paying taxes, tariff, duties and obligations for services rendered by the agencies; these payment often times serves as a lifeline for our cash strapped agencies that endlessly wait for the local airlines to pay their obligations. We have seen some of them financially supporting our charitable organizations while British Airways sometime ago gave two wet leased B737 to support the hosting of Nigeria 99 U20 world cup as part of their corporate social responsibility. They have also introduced different promos to ginger travelling among Nigerians, while also supporting the travel agents to excel by recognising and rewarding excellence. We have also seen some strong and potent international mergers among them that have filtered into our airspace. It has increased their frequencies astronomically and strangulated competition in the absence of antitrust law or an implementing organisation. Also some of these airlines are beneficiaries of multiple entry bonanzas that have reduced the local carriers to onlookers in their market. From the foregoing the foreign airlines have continued to improve and expand operations into and within Nigeria,generating and ferrying billions of naira to their home country, juxtaposing the revenue generated and contribution to the economy in general and aviation in particular, you begin to see an imbalance that needs to be addressed. In raising the economic impact of the foreign airlines in Nigeria and equally addressing the obvious imbalance in benefits we need to look inwards at the policies we have or have not introduced. Having in mind that the primary objective and probably the only reason, the foreign airlines fly into Nigeria is to make money profitably and not as a social responsibility or necessity, which is the difference between those that fly into Nigeria and those that fly through our airspace. Therefore we must begin to look at policies that will protect the itinerant and ever willing Nigerian passengers, our financially troubled local airlines and the travelling agents that deliver and coordinate these passengers. These set of Nigerians are the tripod that has been used to build the financial war chest of the foreign airlines and obviously need protection. The word protection is seen as archaic while freedom is the rave that is usually parroted even by the proponents of open skies and slot allocation. The American labour unions not the Chinese resisted the open skies agreement between China and the USA, because of perceived jobs losses and cheap wages that will accompany the agreement and the US government harkened to their call. It’s also important to note that Japan, India, Australia, Switzerland and EU with bigger economy and obviously stronger aviation industry, signed the open skies after us, using strong negotiating tactics that ensured commercial valves were sealed for their carriers. These countries have protected their carriers by not polluting their skies, slots, frequencies and most importantly commercial agreements. The South Africans have refused to sign the open skies with the Americans, same with Russia, Hong Kong, Mexico their neighbour and some other countries. Brazil signed earlier this year with full implementation scheduled for 2015 despite its closeness to America and stronger economy when compared to Nigeria. Slots transfer, including auctioning is meant to help airlines with little or no service gain a competitive foothold at airports with limited space, the airlines are encouraged to operate either with their own aircraft or through a code-sharing agreement, in order to ensure that a purchaser will be able to provide meaningful new competition, which will bring down fares. The British authorities and most EU countries have reversed this principle to protect legacy or flag carriers using factors such as fleet size, financial muscle, and nationality clause e.t.c, codified as grandfather rights to allocate slots. This protection has given them the impetus to discriminate and increase fare arbitrarily. The Government of Philippines through its central bank introduced financial instruments that made transfer of ticket sales less flexible; the foreign airlines grumbled and reduced frequencies while on the other hand San Miguel Inc an American investor is adding a billion dollar investment to a Philippines Airline, for the purchase of a hundred aircrafts. This country has CAT 2 certification and flight restriction into Europe, yet they were able to protect their flag carrier to attract such investment. The tonic for raising economic impact is commercial protection. We also need to protect the passengers and airlines from unfair fares, business practices and commercial muscling by introducing antitrust laws. The absence of an antitrust body and competition laws in the country is retrogressive to the development of the industry and other sectors of the economy, the legislative arm need to do something urgently. A company with significant market power and dominant position operating in a jurisdiction without standard competition rules and an overarching competition authority can in effect engage in any anti-competitive practice without fear, unfortunately, Nigeria is one of those jurisdictions. An economy like Nigeria is now overdue for a competition regime: a dedicated law and a competent authority to enforce it judiciously. A competition regime will protect the interests of millions of consumers as well as create a level playing field for all kinds of businesses to flourish. Crucially, it also provides businesses with the opportunity to compete on price and quality, in an open market and on a level playing field without anti-competitive restraints. The BASA funds are collected directly from ticket fares by the foreign carriers and remitted to government at a later date. We shackle our carriers and rob Nigerian passengers to build the fund. Why are the foreign carriers operating profitably into Nigeria with 85% load factor on B747,777,A340 and we are reciprocating with B737 or with 50% load factor on bigger jets and the passengers being predominantly economy seats? We must step up the operational prowess of our carrier by improving infrastructure, protective & competitive policies, fine-tune existing and opening new concession programmes while also beefing up our carriers to participate rather than wait to collect toll called BASA FUND We can go further by preparing a market for them, this market -is the public expenditure travel, it's a critical lifeline for the airlines and a stimulus for investment, and should be reminded that the first and business class seats on these foreign carriers are dominated by this category of travelers. The agents also need to be protected by ensuring their commissions are paid, foreign airlines restricted to sell tickets in their offices. The present trend where some airlines abuse their perceived dominance should be addressed by the authorities and NANTA. Do we need a national carrier to redress this imbalance ? NO. National carriers are usually formed to absorb employees of failed major carriers by providing employment and assuages nerves of restive unions or to act as a means of providing additional fleet, capacity, and frequency in support of other registered carriers or to fill a vacuum and avert the monopolistic tendencies of surviving airlines. We do not have these scenarios, what we have are carriers willing to fly but hindered by managerial and public policies that have made them financially weak. Also the timeline of this administration, present policy makers and the penchant of reversing or abandoning policies of previous government, even when they share the same political ideology are the inherent problems. The protection needed by the new national carrier will shackle and compound the problems of the local airlines. It is a better option for the government to buy into existing flag carriers, namely Aero, Air Nigeria and Arik We can only raise the economic impact of the foreign carriers in Nigeria, by strengthen our carriers through the introduction of protective polices and laws that will make them attractive for investment and commercial partnership. When they are strengthed employment ,professionalism,expertise and revenue will increase aastronomically while capital flight will reduce to the benefit of the economy.The foreign airlines are willing to work with our carriers they have done it with smaller airlines in Burkina-faso, Mali, Ghana, Morocco, Seychelles, South Africa why not Nigeria?