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.