THE JODA COMITTEE REPORT

The media was recently awash with the Joda Committee report; key decisions were taken and forwarded to the presidency for implementation. The committee asked the Federal government to merge all airlines owing AMCON to form a major carrier or is it a National carrier .I do not agree to that submission because the debt to asset ratio of Arik Air is obviously higher than its liabilities,binding it with other carriers because of indebtedness will not be appropriate . Also I am not impressed with the management of Aero by AMCON ,the airline rather than improve in services has been reducing in operations and fleet with an abysmal staff strength. The resuscitating medication is not working ,therefore AMCON should lookout for other options such as advertising for buyers or shop for turnaround airline experts not unemployed expatriates to help the recovery process before a merger ,an outright merger now will be counterproductive and a subtly subsidy for families who mismanaged their airlines using funds from banks owned by Nigerians. The committee also wants the government to address the under -utilisation of routes, this is a good initiative if we can address this problem .The airlines are fixiated on the trunk routes leaving other domestic routes to a flight or two per day. These famished routes can be improved upon if the Airport facilities are tweaked to extend operational hours,by drastically reducing charges and fees at such airports and by also giving interested airlines some Incentives. It’s the joint responsibility of the Federal and State government to attract flights to those airports, with the Federal government taking the lead.If we improve facilities and increase operational hours it will benefit our airlines, passengers and the economy at large. The committee also requested that the NCAA should enforce the capitalisation requirement of #2.5b and #5b naira respectively, for domestic and international operators that are registered in Nigeria, within three months. I totally disagree, we will continue to progress in error if the emphasis is on capitalisation . We should use fleet as the barometer of measurement by moving it from the ridiculous minimum of two aircrafts to ten aircrafts for domestic/west coast and twelve for international route . An airline with two aircraft will have commercial integrity challenge that cannot attract partners ,financial institutions or schedule integrity. Capitalisation is mere documentation in Nigeria they will all recapitalise on paper while the rot increases in reality. The committee also requested that government should upgrade facilities at our airports for the improvement or passenger services and comfort . I totally agree with this position provided public funds will not be used because of the indebtedness of FAAN and the multiple unfinished projects in our airports spread across the country. The transformation ship hit a financial iceberg when the BASA funds was completely extinguished, taking 22 airports at a go was a political decision not economic. Therefore the government should rather get a reputable airport management organisation to manage and restructure FAAN for a minimum of 10 years .They should be given a free and an uninterrupted environment to work,while efforts will be geared at reducing the debts accrued from the uncompleted or is it failed transformation agenda. To digress a bit I am taken aback by the conflicting position of the government with respect to the presidential fleet, during the campaign period the CHANGE TEAM promised to dispose aircrafts in the presidential fleet which will be used to start a national carrier project, after the inauguration the tone changed. My simple take on it, is that aircrafts in the presidential fleet are divided by civil and military registration, those with the military registration should not be touched but remain with the air force to be used to support and protect the country and the presidency in particular. Those with the civil registration should be disposed off . Mr. President and Vice president Aircrafts should be retained , a third aircraft can be on standby for a year or two to ascertain its relevance. The government should also urgently look at our bilateral agreements and multiple entries ,if Ethiopian Airlines commences the Port-Harcourt route as planned that will be the fifth entry point into Nigeria. Here is an airline that has chosen to invest in other countries in Africa bypassing Nigeria that has given them the highest number of passengers. I also will want us to address the issue of Saudi owned carriers lifting pilgrims from seven Nigerian states , how they arm twisted the government to partake in lifting Nigerian pilgrims are quite baffling. The issue of reciprocity has to do with scheduled passenger and cargo flights which at the moment are being operated by the Saudi national carrier alone unchallenged. Our airlines and passengers pay the requite duties and taxes on each passenger taken to Jeddah, which should be enough for their government. To force our pilgrims into Saudi carriers and also short changing our airlines and tour operators is tantamount to aero political bulling. IT MUST BE REVERSED. This government should realise that Nigerians voted for them not for their unrealistic promises but the realistic failures seen therefore the target is correction not promises our aviation is failing and needs some corrections.

BELATED LAMENTATIONS OF CHIEF CHIDOKA

The outgoing, and hopefully, last Aviation Minister, if our aspirations for efficient administration and cost reduction in the industry come to pass, was in his usual arrogant and passing the buck mood at his valedictory session with selected stakeholders. During the session, he carefully tabled assignments that he could have addressed while in office unhindered for the incoming administration to tackle. On his appointment, the outgoing President said he was bringing him in as a striker to score dying minute goals and also defend the perceived lead in a game that had not ended. The Chief himself told us that he is not in a hurry and has enough time to achieve and surpass the expectations and aspirations of the GEJ Administration. He therefore attended several executive aviation programmes and mini training courses in Canada to get acquainted with issues in the industry. On his return, he met industry stakeholders and dictated instead of listening during the multiple sessions, and in line with protocol, the agency heads nodded in agreement. Thereafter, he proceeded to assert himself perfectly by setting up committees to look at the various safety recommendations and other operational glitches. He went further to introduce various IT applications to complement existing processes and systems. Down the line he manifested the traits of a typical minister, flying chartered flights sponsored by the agencies. He failed to address structural and personnel defects in the agencies, which was a cardinal point of his programme. He followed the trail by introducing and imposing family and friends on the agencies, and also promoting and confirming the inner circles that were handed over to him as untouchables. The unions rose and wrote against some of the appointments, but he got away with some, such as the recent and obviously very flawed recruitment exercise in FAAN. It is amazing that he asked the incoming government to implement the 2006 Paul Dike Committee Report, which he described as a solution to the mirage of problems in the sector. So our dear Chief, why did you allow the report to gather more dust while you were in office? He also asked the incoming government to go after the remodeling and transforming contractors who collected money and did not do their jobs and those that provided sub-standard material. These contractors had numerous meetings with the Minister during his eight month reign and at no point did he raise this issue. Rather, in tandem with the agencies they either sponsored his trips, chieftaincy ceremonies or other engagements tabled before them. He never asked for refunds, neither did he criticise job quality. He kept promising to source funds for the completion of the projects. He also canvassed the setting up of an airport management company to manage FAAN which is a good idea. Unfortunately, he did not work towards that throughout his tenure. He preferred to impose his cronies and aides on the agency. The master plan that was handed to him by Ms. Stella Oduah was jettisoned for an Aviation Commit programme that was equally jettisoned by those to implement it. Suddenly, he is asking for a master plan for the industry and a transparent aerotropolis project. The icing on the slippery floor is barely 48 hours old. He appeared on NTA decrying the appalling technical staffing in the Ministry and agencies under his watch. He canvassed that a 60/40 ratio would have been ideal. Chief, it is too late to cry. Just leave us, while we earnestly wait for the incoming administration to clear the industry mess and rot.

TRANSFORMATION OF THE AVIATION INDUSTRY IN NIGERIA (PROSPECTS&CHALLENGES)

2015 MAY DAY LECTURE Presented by Mr. OLUMIDE .O. OHUNAYO (Head Research Travel: Zenith Travel&Consult) TRANSFORMATION OF THE AVIATION INDUSTRY IN NIGERIA: PROSPECTS & CHALLENGES Transformation of the industry was a cardinal campaign promise of the PDP under the leadership of President Ebele Jonathan. Thereafter, Ms. Stella Oduah was appointed as the Honourable Minister to lead the transformation flight. The flight will terminate at Eagle Square in a couple of weeks, under the headship of Chief Chidoka, who incidentally is the fourth Aviation Minister within the last four years. I will not dwell on the past or present, but will focus on the future and to do that we need to look at issues in the industry that should be addressed, reviewed and if possible annulled to give the incoming administration the necessary pedal to push for the ‘change’ that was voted for by Nigerians. The change in the industry must start with the scrapping of the Ministry of Aviation and all aviation related Senior Special Assistant positions. The Ministry and the SSAs to president have increased the cost of service delivery, bureaucracy, processing time, and are irritating interlopers. They have over burdened the agencies with personnel and bills to the detriment of efficiency, safety and profitability. (Agencies are forced to pay for their chartered flights and tickets of family members till date). Governance is a continuum, so I advise that the adjusted or is it updated version of the Steven Oransanye Committee Report on the industry should not be trashed, but tweaked to the benefit of all. The Presidential Air Fleet (PAF) is too large for a country bleeding financially due to prolonged mismanagement and recent low crude oil price. The fleet should be reduced to the barest minimum, and the remaining aircrafts should either be sold off or used as the bedrock for a new aircraft leasing company not to start a national carrier. Gray market popularly called illegal charter flights are operated by civil and military aircrafts. This hydra headed monster remains unresolved in spite of the rhetoric on the matter. Military participation in civil charter is illegal and detrimental to commercial charter operators, and also encourages romance with politicians, which will affect security and professionalism. The incoming government must show leadership, while the regulator needs to educate end users about the dangers of the gray market. Illegal flights put insurance coverage in jeopardy, create unfair competition and hinder the growth of legitimate operators. The luxury tax introduced recently for charter and private operations by the ministry of finance is a bit late, but commendable. As expected, implementation has always been the bane of the industry. The norm in other climes is that non aeronautical services and general aviation revenue are used to oil the wheels of operations and improved profitability. It is on these bases that the incoming government should devise new strategies that will effectively capture and increase revenue from these sources by increasing the deployment of IT facilities and removing all waivers and subsidies granted to non schedule operators/ private operators who have deliberately latched on the umbilical cord of scheduled operators. These waivers and subsidies are robbing Peter to pay Paul. Appointments, employment and elevation in the agencies saw the worst politicisation in the last four years. The organograms are improperly structured and top heavy. FAAN is worse off and its union members need to brace up by protecting career professionals and public servants. The agencies need reforms and reorganisation to ensure improved service delivery and revenue generation. The consolidation of the industry will be the best transformation therefore we need to stop the rot and the foot dragging of the operators, regulator and government. A REGULATED FLEET CONSOLIDATION PROCESS should be initiated immediately to strengthen our carriers, improve safety and attract partners. I propose a minimum of 5 schedule commercial jets for domestic operators, 8 for regional and 10 for international operators. Thereafter strong flag carriers in national outlook will blossom, while a Fly Nigeria Act should be used to complement the consolidation process. WE DO NOT NEED TO START A NEW NATIONAL CARRIER, LET IT BLOSSOM NATURALLY BY OWNERSHIP AND OPERATIONAL PROWESS. What we lack are policies to strengthen and encourage new investors. It is no secret that most infrastructural investments and foreign carriers are natural monopolies or have monopoly-like characteristics. To offset the negative impact of monopolistic behaviour, the independent regulator must keep the consumer interest paramount both in terms of price and service levels. Therefore a credible independent robust economic regulator should be considered. This is a refreshing innovation that will curb and punish predatory activities, ginger competition and most importantly protect domestic carriers and consumers from companies and airlines with significant market power and dominant position. The NCAA should focus on technical and safety oversight, their core competence. Incidentally, the idea of an independent regulatory body tallies with the new Civil Aviation Policy, IATA position on effective governance and the World Bank Report presented to stakeholders last year. If the unit is not politicised or made an appendage of any Ministry, it will be the most important legacy of the incoming administration, and will also act as a purveyor of an encompassing antitrust body that will protect Nigerians in other sectors of the economy. Open Skies is another area that needs change, we hurriedly signed the open skies and other unfair bilateral agreements that has increased frequencies, gauge and entry points. Some couple of months back the ministry committed us to African Single Sky project. We need to tarry a while before joining the single sky project. They want to operate our lucrative routes directly it’s a pseudo cabotage. The change we need is FAIR SKIES. The government owned Sky Power Catering is rotten due to neglect and cannibalisation of its assets and properties, since the demise of Nigeria Airways. The incoming government should sell the firm or lease to a reputable catering organisation. THE ROT MUST STOP. In conclusion, transformation now means CHANGE. On the 29th May of 2015, there will be a change in government and governance, hopefully it should reflect in our industry if we address the issues highlighted.

AVIATION COMMITS: implementation and sustainability are key to delivery

A couple of days ago industry players were gathered at the Oriental hotel Lekki, at the instance of the Honourable Minister Aviation for the public presentation of Aviation Commit Initiative. In his words "It is a compendium of the industry commitments and initiative aimed at repackaging, rebranding and redirecting the industry towards enhanced service delivery and customer satisfaction". In achieving these objectives he directed members of the committees on accident report and aeronautical charges to liaise with the requisite agency heads and institutions for an accelerated implementation of their findings. The minister went further by highlighting some decisions he has consented to before proceeding with the public presentation of the aviation commit manual. The minster in his presentation said he had directed NCAA to publish the list of private operators who should not operate commercial flights, while all commercial flights being flown in the country must have a Nigerian in the cockpit irrespective of aircraft type. He went further by promising to address the issue of foreign registered carriers and the disparity in different charges on fares offered by the local airlines. He also talked about airline recapitalisation and liberalisation subtly tagged African single sky. Most of the issues relating to private jet, foreign registration and Nigerian content are enshrined in our regulations, acts and policies. Why have implementation and enforcement been difficult all these while? Why has the NCAA deliberately looked the other way? What has made the private jet operators so powerful that every minister comes with the same threat and become selective or partisan in implementation? What is new this time are the word "Commit", and a timeline which is not necessary for those who have commercially raped the system. The committee on aeronautical charges was on point on the issue of multiple and overlapping charges which the different agencies must address to improve and attract carriers. The agencies will have some distortions in the anticipated revenue since they have to reduce or eliminate some of the multiple charges while in the same breath commit to a 100% increase in internal revenue generation in a timeframe of less than a year without giving a base figure. The mathematics here is suspicious considering the huge overhead burden inherited by all the agencies and the gross excitement of impressing the minister. Even AIB the investigator is making such commitment. On recapitalisation, I will want to reiterate my humble disagreement on the issue of recapitalisation as a panacea to the problem of our airlines. It will only ensure we once again progress in error and deceit, these airlines in-conjunction with their bankers will prefer to see the airlines limping than being taken to the theatre for surgical operations. We must abort the fanciful flight of recapitalisation and board the fleet consolidation by regulation flight that will move minimum fleet from two to ten. Fleet is a physical asset that can be seen and verified it will sanitise operations while improving safety and profitability. On liberalisation and single African sky, the minister needs to thread softly, slowly and diplomatically. Liberalisation in the skies is a different ball game entirely. It is usually parroted, documented and encouraged but opaque in implementation. The US proponents of open skies have refused to sign with china, while the unions and airlines are asking them to review that of the gulf carriers. The pressure from American carriers has delayed the take off Norwegian low cost carrier from Dublin to New York despite meeting all the regulatory laws and conditions. We signed open skies with the US and had a five year head start which we fritter away till this moment because the decision was hasty with no carrier(s) to capitalise on it. The African single sky being proposed is a baby of Ethiopia airlines (ET) and government and the target is to operate to Europe, Far East and America from Lagos and Abuja. It's a subtle cabotage that we will make us the usual sitting giant. ET claimed the conditions are not ripe to invest in Nigeria but the same conditions have given them the highest frequencies and points into the country. Rather they have chosen to invest and partner other African countries such as Togo, Rwanda, Malawi, Congo and Zambia. In some recent publications in Nigeria, the CEO buttressed his call for single African sky because it has worked well in Europe but deliberately side stepped the ownership structure of those airlines. The caveat in liberalisation is collaboration; those airlines that are benefiting from the single sky policy are not solely owned by a government or person though protected by their respective government. If ET wants a single sky policy ownership structure must be diluted therefore, they should offload a certain percentage to countries that contribute to their total payload rather than grandstand using our politicians and selected media outlets. Nigeria is simply not ready neither do we have an airline that can represent us at the moment, we should tarry a while and learn from previous mistakes. In concluding, the Aviation Commit was a good initiative but implementation and sustenance are the key attributes that may hinder its objectives. I also noticed the chief executives signing the documents gleefully while their subordinates were committed to be sanctioned in the manuals and in some cases not carried along in the new initiative.

Fleet Reregulation not Recapitalisation

The committee set up by the honourable minister to look at charges, fares and other factors militating against the development of the industry have submitted its report, with the minister directing the agencies to ensure immediate implementation. The committee did a good job and brought to the fore some of the issues that has been raised in the past by industry watchers which includes but not limited to the dubious fuel surcharge hidden in our tickets by operators while also avoiding the tax regime. Other recommendations among others include the unnecessary retention of agency funds by operators while the poor performance in quality, service and operations was hinged on poor capitalisation and a need to urgently recapitalise the airlines. I humbly disagree on the issue of recapitalisation as a panacea to the problem of our airlines. It will only ensure we once again progress in error and deceit, these airlines in-conjunction with their bankers will prefer to see the airlines limping than being taken to the theatre for surgical operations. The bankers want to keep the window of loan repayment open, in tandem with lawyers employed for the preparation of documents by the airlines. They will only recapitalise the accounts of Corporate Affairs Commission and the lawyers engaged to process the documents. Thereafter the recapitalisation will be achieved. Flashing back to the twilight of the Obasanjo government, Chief Fani- Kayode was the minister of aviation with a marching order to stop the concurrent air mishaps and unsafe operations. He gave the same directive to all airlines to recapitalise based on their operational certification, the deadline was May 30 2007, barely 24hours to handing over to the new government. The airlines knowing the rudiments of presenting and processing documents got their legal team to work and they all recapitalised and also effectively beat the deadline set by the federal government. Looking at the list of airlines that recapitalised and satisfied the aspirations of the government as it were, at that time, only Arik has increased in equipment and operations while others have shrunk in size and operations or simply vanished or in coma. So what has recapitalisation achieved? The regulatory body recently issued AOC’s to Azman, Discovery, Hak and Air Peace airlines using the archaic two minimum aircraft rule, these airlines with the exception of Air Peace are either grounded or struggling to overcome the vagaries of operation. Air Peace airline the strongest fleet wise of the new entrants, is walking with the crutches of the amnesty office time will tell if they will be able to drop the crutches and walk with their two legs. On the other hand Medview airlines appears to be doing well with route expansion on the domestic and international routes with an increasing fleet, they have also promised to take the airline to the market which literally translates to ownership with other Nigerians and willing investors. It’s a good gesture that must come to fruition which will serve as a tonic for other carriers and also help stimulate the Fly Nigeria Act Project. The expansion and fleet size of Medview airlines is nothing compared to the size of Arik Air whose dominance of our skies is unpararelled in recent time. Sadly, the dominance has been used to benchmark foreign airlines crazy and exploitative fares on the international route. How do you justify Arik Air charging N94, 000 one-way on the Accra –Abuja route, a flight of less than 45 minutes and N360, 000 on the Lagos- London route a flight of less than 7 hours, just to latch on the Christmas season? We need to build at least two carriers to fly the flag and a third to compete well on the domestic route; this will ginger competition, attract investors, expand ownership and increase enplanement. To achieve these objectives we must abort the fanciful flight of recapitalisation and board the fleet consolidation by regulation flight that will move minimum fleet from two to ten. A stitch in time saves the industry from prolonged agony.