What else can I say than to give thumbs up to the government for securing seven Abuja -London slots at the Heathrow Airport, the slots will be used by Arik Air.
The British authorities needed a bite, from a country that has been barking over the years, the bite was sudden and effective. to our surprise, the off-tone statement associating slots to an independent company in England was jettisoned, when we also jettisoned diplomatic language and dug deep with aerial arsenal that were deployed to sanctify the tenets of reciprocity as enshrined in the Bilateral Air Service Agreement (BASA).
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 grand father rights. This protection has given them the impetus to discriminate and increase fare arbitrarily
It's a new beginning and I hope the government will go ahead to review other lopsided BASA's. The NCAA has gone further with the issue of discriminatory fares on the London route, they have imposed fines on British Airways and Virgin Atlantic after a painstaking investigation, that's another plus for the country, while we wait for their responses, the NCAA should go further, by extending the investigations to other routes.
The beauty of this investigation is the proactive action of the regulator, who did not wait for the whistle blowing airline to come to them and were not fooled by the cheese-like bickering or is it rivalry that has been used to fool the public in the past, by these carriers. Their flamboyant chairman came, danced , wore our traditional cloths , got his airline the second designation with bogus promise of crashing fares on the London route, alas it's colluding to discriminate that we got from the dual designation. They have not been able to bring down fares; rather they bled Virgin Nigeria's London flight by sending them to Gatwick to feed the mother instead of vice versa and are presently angling for an open skies agreement with the federal government.
On our part we need to be cautious, the initial press release from the Ministry of Aviation, intimating the public of government decision to withdraw some BA flights was not properly handled, that must have accounted for huge criticism and negative commentaries from Nigerians that the government was trying to protect, this was later corrected by the ministry and Arik management.
Also, the Honourable Minister should begin to warm up to the unions and aviation correspondents to get the raw feelers in the industry rather than getting ambushed by self seeking experts or selected media guru. I also noticed that the government is now talking about a dual-hub policy, precisely the cities of Lagos and Abuja. This sounds more political than economic, considering we don't have carriers to implement the dual hub dream. If the government insists, implementation should be gradual with more emphasis on Lagos as his primary hub while Abuja becomes the secondary hub.
In furtherance, we need carriers to develop these hubs, these carriers will have an effective spoke policy to feed the domestic west coast routes, code share while also preparing to join any of the established alliance network. Virgin Nigeria was built on this platform before they were muscled out of MMA thereafter abandoned by the virgin empire with a mounting operational debt that hunts them till date. Therefore what can we do to get at least three strong airlines, that will attract credible investors?
We must as a necessity start a process of economic re-regulation of our domestic carriers with subtle regulatory mergers. 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, should we be reminded that the first and business class seats on these foreign carriers are dominated by this category of travelers.
If the Honourable Minister's promise of ensuring that aviation adds value to the country's GDP, is to be taken seriously then we must step up our operational prowess by improving infrastructure, fine-tune existing and open up new concession programmes while also beefing up our carriers to participate rather than wait to collect toll (BASA FUND) at the bus stop like NURTW men. The BASA funds are collected directly from ticket fares by the foreign carriers and remitted to government at a later date. It's the Nigerian passengers we rob to build the funds.
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 40% load factor on bigger jets? We need to keep this new BASA spirit and victory alive by supporting our carriers not parroting the support. I align with DG NCAA, that our skies our open for exploration not exploitation
Friday, November 25, 2011
Tuesday, November 8, 2011
BASA CONTROVERSIES: We Have To Be Cautious&Firm
It’s with great relief to hear and see that the government is finally listening and understanding the aspirations of the industry, but there is a need to be cautious with the implementation process.
The industry genuinely yearns for a general review of some Bilateral Air Service Agreement (BASA) signed with some countries which has been detrimental to the growth of our carriers and other facets of the industry while deceptively enriching our acrimonious and deeply secretive BASA account.
It’s unfair not to give our carriers landing slots in Heathrow or required to bid for it at exorbitant prices, if that is the situation then the government should factor the cost and other entry points in the next round of negotiation.
In reviewing the agreement the government should quite naturally involve all parties, by building a team comprising of requisite government agencies, departments, designated airlines and probably a representative of the other Nigerian Airlines.
Our carriers should not only be willing but must demonstrate their ability to reciprocate our own side of the agreements by either operating directly or through a code share. Arik need to look inwards and address the perennial delayed departure and other operational lapses which ultimately affects arrival time, disrupt operational activities in slot constrained airports.
Our flag carriers should know that the operational laxity being overlooked by MMIA management team will not be replicated by an airport owned and managed by private hands, whose only objective is to maximize profit while proving excellent service.
We need to renegotiate all unfavorable agreements, using diplomatic and legal timelines that will not embarrass the country, the corporate arrogance of British Airways as exemplified in the first press release while also using Nigerians who are highly placed BA frequent milers to push their selfish position in private and public to the detriment of the country, is irritating and condemnable.
The government should go further and investigate discriminatory fares on the London route and other routes, using fines as appropriate sanctions. We should manage this crisis well, so fares will not rise on the LOS- LHR route and also avoid a situation where the other European and the rising Middle Eastern airlines operating into the country will capitalize on the crisis by smiling to bank to the detriment of Nigerian people and carriers.
The alarm bell is ringing, we should start looking at how to heal our limping carriers by regulation and finance, so they can attract foreign investors, partners or carriers rather than wait for money launderers to deceive us again.
Are we still surprised that our carriers are not operating to the Middle East, other European cities and even abandoned the high yield ABV - LHR route. Well, it is glaring that our economy is financed by public funds and government travel constitutes a large chunk of upper end cabin. Its time to re-regulate our carriers economically which should be backed by a Fly-Nigeria- Act
The industry genuinely yearns for a general review of some Bilateral Air Service Agreement (BASA) signed with some countries which has been detrimental to the growth of our carriers and other facets of the industry while deceptively enriching our acrimonious and deeply secretive BASA account.
It’s unfair not to give our carriers landing slots in Heathrow or required to bid for it at exorbitant prices, if that is the situation then the government should factor the cost and other entry points in the next round of negotiation.
In reviewing the agreement the government should quite naturally involve all parties, by building a team comprising of requisite government agencies, departments, designated airlines and probably a representative of the other Nigerian Airlines.
Our carriers should not only be willing but must demonstrate their ability to reciprocate our own side of the agreements by either operating directly or through a code share. Arik need to look inwards and address the perennial delayed departure and other operational lapses which ultimately affects arrival time, disrupt operational activities in slot constrained airports.
Our flag carriers should know that the operational laxity being overlooked by MMIA management team will not be replicated by an airport owned and managed by private hands, whose only objective is to maximize profit while proving excellent service.
We need to renegotiate all unfavorable agreements, using diplomatic and legal timelines that will not embarrass the country, the corporate arrogance of British Airways as exemplified in the first press release while also using Nigerians who are highly placed BA frequent milers to push their selfish position in private and public to the detriment of the country, is irritating and condemnable.
The government should go further and investigate discriminatory fares on the London route and other routes, using fines as appropriate sanctions. We should manage this crisis well, so fares will not rise on the LOS- LHR route and also avoid a situation where the other European and the rising Middle Eastern airlines operating into the country will capitalize on the crisis by smiling to bank to the detriment of Nigerian people and carriers.
The alarm bell is ringing, we should start looking at how to heal our limping carriers by regulation and finance, so they can attract foreign investors, partners or carriers rather than wait for money launderers to deceive us again.
Are we still surprised that our carriers are not operating to the Middle East, other European cities and even abandoned the high yield ABV - LHR route. Well, it is glaring that our economy is financed by public funds and government travel constitutes a large chunk of upper end cabin. Its time to re-regulate our carriers economically which should be backed by a Fly-Nigeria- Act
Thursday, May 26, 2011
AGENDA FOR MR PRESIDENT
Mr President’s agenda for the industry will definitely be determined by the quality of personnel appointed to replace the outgoing minister, senior special assistant in conjunction with the new leadership of the various agencies. They should be professionals who have inclinations that align with the industry’s aspiration, definitely not raw or recurrent politicians.
They should drive the new aviation programme, in the absence of a position or policy trust for the industry during the last electioneering campaign, the onus lies on the new appointees and other stakeholders to push new programmes for implementation.
Therefore we must push policies and strategies that will operationally strengthen our carriers. Airline issues are viewed and operated as an instrument of national strategy and often times integrated vertically across commerce and tourism. It must also be integrated into the country’s foreign policy like the Middle Eastern government are doing with their carriers. Since the demise of Nigeria Airways and the still birth of its replacement, the government has practically abandoned the domestic carriers except for the bailout fund that was recently granted, which is difficult to utilise due to loan re-financing or toxic debt condition attached.
The govt should continue to encourage concession, should not be deterred by the messy agreements in place, rather than cancel them, they should be renegotiated .Concession is more enduring, improves capital accessibility and ensures public funds are directed at essential services.
We are preparing for ICAO audit, with feelers from the mock audit, the country will definitely come out in flying colours, and then we will clap and pat ourselves on the back again. We must go further by complimenting our safety achievement with making the airlines commercially viable and the airport self sustaining, that we must do by drafting and implementing a stand-alone aviation action plan.
The plan should address the rising tax burden, arbitrary fuel price increment, reduce the industry's regulatory burden, improve air traffic &airport management system and attract investments in our carriers.
They should drive the new aviation programme, in the absence of a position or policy trust for the industry during the last electioneering campaign, the onus lies on the new appointees and other stakeholders to push new programmes for implementation.
Therefore we must push policies and strategies that will operationally strengthen our carriers. Airline issues are viewed and operated as an instrument of national strategy and often times integrated vertically across commerce and tourism. It must also be integrated into the country’s foreign policy like the Middle Eastern government are doing with their carriers. Since the demise of Nigeria Airways and the still birth of its replacement, the government has practically abandoned the domestic carriers except for the bailout fund that was recently granted, which is difficult to utilise due to loan re-financing or toxic debt condition attached.
The govt should continue to encourage concession, should not be deterred by the messy agreements in place, rather than cancel them, they should be renegotiated .Concession is more enduring, improves capital accessibility and ensures public funds are directed at essential services.
We are preparing for ICAO audit, with feelers from the mock audit, the country will definitely come out in flying colours, and then we will clap and pat ourselves on the back again. We must go further by complimenting our safety achievement with making the airlines commercially viable and the airport self sustaining, that we must do by drafting and implementing a stand-alone aviation action plan.
The plan should address the rising tax burden, arbitrary fuel price increment, reduce the industry's regulatory burden, improve air traffic &airport management system and attract investments in our carriers.
ARIK’S TIMELY PLEA BARGAIN
The pains and agonies of our domestic carriers seem unending; luckily none have bitten the dust of late.
We were still basking in the glory of a new carrier, First Nation, which will be flying the Nigerian skies very soon with aircrafts that will puncture the dominance of the Boeing 737, increase competition and most probably improve service delivery, when the rumour or the news filtered that the government was planning to convert Arik to a national carrier. Barely five days later, a national daily informed Nigerians that the government has decided to buy the airline’s toxic debt through AMCON.
The airline has not come out categorically to deny the stories rather the spokesperson came out with a veiled statement, that “we are not aware”. It is an open secret that the carrier is indeed having liquidity problems, considering recurrent delays of staff salaries, debts or related issues with agencies and other service providers have become a norm rather than an exception.
It is also true that the industry is predominantly financed by different financial instruments, therefore owing and servicing these debt is a noble commitment of all organisations properly managed and willing to remain in business.
How did Arik get to this stage? Let me start with the government that has refused to enshrine policies and strategies that will operationally strengthen our carriers. Airline issues are viewed and operated as an instrument of national strategy and often times integrated vertically across commerce and tourism. It is also integrated into the country’s foreign policy. Since the demise of Nigeria Airways and the still birth of its replacement, the government has practically abandoned the domestic carriers except for the bailout fund that was recently granted, which is difficult to utilise due to loan re-financing condition attached.
Arik’s growth was too fast and equally too furious coupled with managerial and corporate arrogance. They started operations by being top heavy with expatriates from failed European airlines, and later got some ex -Virgin Nigeria mercenaries who had left VN with huge debts accumulated from operational and leasing expenses. Not surprisingly, the mercenaries and most of the first generation of expatriates did not last, as they were enmeshed in financial or social mess that haunt Arik till date.
The owner manager syndrome is another structural cankerworm inherited by the airline from our skies, the effects of this syndrome are: access to capital will be difficult and expensive; executive discipline lacking in the absence of a functional board; collaborative discussions are primarily trimmed to the owner’s wish list, rather than commercial benefits; mergers & consolidations are rare, except when they are legislated. It also whittles down public support or legislative backing as they are seen as Mr. A airline and not Nigerian flag carrier
Ironically, Arik opposed bailout for domestic carriers, by working assiduously to frustrate Capt Boyo led committee on bailout modalities, today the airline, is limping critically towards the fund, we should also not forget that, rather than battle foreign carriers for the control of the Nigerian market they wanted to completely annihilate the domestic carriers with grave monopolistic consequences .
Compared to other carriers’ world over, Arik is a small carrier but a behemoth in Nigerian airspace. It should not be allowed to die. Every option must be explored to save the airline with an exception, Nationalisation.
Nationalisation did not work in Greece, Argentina, Senegal Gabon etc; it will also not work here, with a bloated executive, an insatiable legislative arm and an army of ex this-ex that. It will send us back to the era of free tickets, flight diversion and aircraft commandeering.
Arik can also take a cue from Vijay Mallya, the CEO of Kingfisher Airlines in India, who has managed to convince banks to grant him a breather on the carrier’s debt of $1.55 billion, partly by converting some of it into equity, incidentally the A340 kingfisher ordered and later backed out at the point of delivery, was picked by Arik.
AMCON intervention is timely and necessary, which is tantamount to a plea bargain from Arik. The airline is admitting guilt and may be financially sentenced without serving the term, but the record will be there.
We were still basking in the glory of a new carrier, First Nation, which will be flying the Nigerian skies very soon with aircrafts that will puncture the dominance of the Boeing 737, increase competition and most probably improve service delivery, when the rumour or the news filtered that the government was planning to convert Arik to a national carrier. Barely five days later, a national daily informed Nigerians that the government has decided to buy the airline’s toxic debt through AMCON.
The airline has not come out categorically to deny the stories rather the spokesperson came out with a veiled statement, that “we are not aware”. It is an open secret that the carrier is indeed having liquidity problems, considering recurrent delays of staff salaries, debts or related issues with agencies and other service providers have become a norm rather than an exception.
It is also true that the industry is predominantly financed by different financial instruments, therefore owing and servicing these debt is a noble commitment of all organisations properly managed and willing to remain in business.
How did Arik get to this stage? Let me start with the government that has refused to enshrine policies and strategies that will operationally strengthen our carriers. Airline issues are viewed and operated as an instrument of national strategy and often times integrated vertically across commerce and tourism. It is also integrated into the country’s foreign policy. Since the demise of Nigeria Airways and the still birth of its replacement, the government has practically abandoned the domestic carriers except for the bailout fund that was recently granted, which is difficult to utilise due to loan re-financing condition attached.
Arik’s growth was too fast and equally too furious coupled with managerial and corporate arrogance. They started operations by being top heavy with expatriates from failed European airlines, and later got some ex -Virgin Nigeria mercenaries who had left VN with huge debts accumulated from operational and leasing expenses. Not surprisingly, the mercenaries and most of the first generation of expatriates did not last, as they were enmeshed in financial or social mess that haunt Arik till date.
The owner manager syndrome is another structural cankerworm inherited by the airline from our skies, the effects of this syndrome are: access to capital will be difficult and expensive; executive discipline lacking in the absence of a functional board; collaborative discussions are primarily trimmed to the owner’s wish list, rather than commercial benefits; mergers & consolidations are rare, except when they are legislated. It also whittles down public support or legislative backing as they are seen as Mr. A airline and not Nigerian flag carrier
Ironically, Arik opposed bailout for domestic carriers, by working assiduously to frustrate Capt Boyo led committee on bailout modalities, today the airline, is limping critically towards the fund, we should also not forget that, rather than battle foreign carriers for the control of the Nigerian market they wanted to completely annihilate the domestic carriers with grave monopolistic consequences .
Compared to other carriers’ world over, Arik is a small carrier but a behemoth in Nigerian airspace. It should not be allowed to die. Every option must be explored to save the airline with an exception, Nationalisation.
Nationalisation did not work in Greece, Argentina, Senegal Gabon etc; it will also not work here, with a bloated executive, an insatiable legislative arm and an army of ex this-ex that. It will send us back to the era of free tickets, flight diversion and aircraft commandeering.
Arik can also take a cue from Vijay Mallya, the CEO of Kingfisher Airlines in India, who has managed to convince banks to grant him a breather on the carrier’s debt of $1.55 billion, partly by converting some of it into equity, incidentally the A340 kingfisher ordered and later backed out at the point of delivery, was picked by Arik.
AMCON intervention is timely and necessary, which is tantamount to a plea bargain from Arik. The airline is admitting guilt and may be financially sentenced without serving the term, but the record will be there.
Monday, April 25, 2011
FUEL SURCHARGE: EFCC’S INVITATION TO BRITISH CARRIERS
Its kudos to the Economic and Financial Crime Commission (EFCC) for inviting te management of these airlines with respect to refunding fuel surcharge collected sometime ago on the Nigerian route just as they have done on some other routes.
I expect the NCAA to provide the commission with the needed support and information not just harassing domestic carriers that impose such charges.
Corporate travel managers, travel agents, stakeholders and the consumers themselves should coordinate and support the agency with necessary information.
The Central Bank of Nigeria (CBN) should also, look at the remittance history of these carriers if it conforms to the country’s foreign exchange management laws or start a process stifling the remittance process.
We should wake up and understand that, it’s not the passengers demand alone that attracts the request for extra frequencies by the foreign carriers but the ease at which they remit and ferry ticket sales and associated surcharges out of the country. If we cannot protect our carriers, we should at least protect the passengers and the economy.
The reserve bank of India an equivalent of CBN recently advised the foreign airlines to discontinue immediately the practice of using overseas banks for settlement of India rupee transactions on account of sale of air tickets in India, while the Venezuelan government strict remittance policy has discouraged request for extra currency.
It’s another wake up call for the government and relevant agencies
I expect the NCAA to provide the commission with the needed support and information not just harassing domestic carriers that impose such charges.
Corporate travel managers, travel agents, stakeholders and the consumers themselves should coordinate and support the agency with necessary information.
The Central Bank of Nigeria (CBN) should also, look at the remittance history of these carriers if it conforms to the country’s foreign exchange management laws or start a process stifling the remittance process.
We should wake up and understand that, it’s not the passengers demand alone that attracts the request for extra frequencies by the foreign carriers but the ease at which they remit and ferry ticket sales and associated surcharges out of the country. If we cannot protect our carriers, we should at least protect the passengers and the economy.
The reserve bank of India an equivalent of CBN recently advised the foreign airlines to discontinue immediately the practice of using overseas banks for settlement of India rupee transactions on account of sale of air tickets in India, while the Venezuelan government strict remittance policy has discouraged request for extra currency.
It’s another wake up call for the government and relevant agencies
Thursday, April 21, 2011
CONGRATS MR PRESIDENT: WHAT’S NEXT ?
Now that, Mr President has won the elections with a transparent and undisputable mandate and has also promised a single term. He has inadvertently shaken off the political baggage that impinges on effective decision making. I expect his policy thrust for the industry to be business like, radical, proactive and protective.
The politically motivated decisions and concessions taken in the months preceding the elections were not in the best interest of the industry. He must urgently start a process of developing the airport infrastructure without recourse to public funds which must be complemented by having vibrant flag carriers.
Therefore the government should immediately initiate a process of moving our airlines from individually owned to airlines owned by Nigerians. It’s a tonic needed for them to successfully key into public oriented palliatives and policies.
The politically motivated decisions and concessions taken in the months preceding the elections were not in the best interest of the industry. He must urgently start a process of developing the airport infrastructure without recourse to public funds which must be complemented by having vibrant flag carriers.
Therefore the government should immediately initiate a process of moving our airlines from individually owned to airlines owned by Nigerians. It’s a tonic needed for them to successfully key into public oriented palliatives and policies.
Tuesday, April 5, 2011
MAEVIS: The Rumoured Cancellation
The rumoured plan of the government to cancel the maevis deal is discriminatory and punitive.
The industry is plagued with messy concessional agreements that need to be reviewed and renegotiated not cancellation as recommended by the honourable minister of aviation.
The cancellation option will lure the industry into another prolonged litigation process, that will once again, take FAAN’s assets and bank accounts hostage, as witnessed in the past.
The president and his cabinet members will have moved on while FAAN and other stakeholders bear the brunt of the litigation.
I will like to reinstate that all parties must shift grounds and be prepared to renegotiate all agreements.
We must accept that at a stage in the concession process fairness and equity were breeched, which must have necessitated the rushed commissioning of some projects and the vehicles given as gift to top government officials for facilitating , approving and turning the blind eyes to the legal bobby traps in the agreements.
Maevis should not be singled out, all the concessions must be reviewed while also empowering the ICRC by updating the ICRC act rather than have the senate and house committees harassing everybody thru incoherent probes laced with selfish motives.
The concessionaires have added infrastructural value to our airports risking their assets through loans from our troubled banks, the reverberating effect if not properly handled will be a collateral damage to the nation.
Mr. President rather than cancel, please renegotiate the controversial concessions in the industry, this will nurture peace and stimulate the necessary infrastructural growth.
In concluding, let me quote a recent presentation of IATA DG to the Brazilian government that is preparing airport facilities for the next world cup, that “Concessions is the way forward, they must be accompanied by transparent, robust and independent economic regulation supported by effective industry consultations”.
The industry is plagued with messy concessional agreements that need to be reviewed and renegotiated not cancellation as recommended by the honourable minister of aviation.
The cancellation option will lure the industry into another prolonged litigation process, that will once again, take FAAN’s assets and bank accounts hostage, as witnessed in the past.
The president and his cabinet members will have moved on while FAAN and other stakeholders bear the brunt of the litigation.
I will like to reinstate that all parties must shift grounds and be prepared to renegotiate all agreements.
We must accept that at a stage in the concession process fairness and equity were breeched, which must have necessitated the rushed commissioning of some projects and the vehicles given as gift to top government officials for facilitating , approving and turning the blind eyes to the legal bobby traps in the agreements.
Maevis should not be singled out, all the concessions must be reviewed while also empowering the ICRC by updating the ICRC act rather than have the senate and house committees harassing everybody thru incoherent probes laced with selfish motives.
The concessionaires have added infrastructural value to our airports risking their assets through loans from our troubled banks, the reverberating effect if not properly handled will be a collateral damage to the nation.
Mr. President rather than cancel, please renegotiate the controversial concessions in the industry, this will nurture peace and stimulate the necessary infrastructural growth.
In concluding, let me quote a recent presentation of IATA DG to the Brazilian government that is preparing airport facilities for the next world cup, that “Concessions is the way forward, they must be accompanied by transparent, robust and independent economic regulation supported by effective industry consultations”.
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