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.
Thursday, May 26, 2011
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”.
Monday, March 7, 2011
HAJJ FLIGHTS: IT’S A RECKLESS SUBSIDY
HAJJ FLIGHTS: IT’S A RECKLESS SUBSIDY
The recent decision of the government to grant additional waivers to airlines and organisations that lobbied through a shredded bidding process for Hajj flights despite getting regulatory waivers from the National Hajj Commission(NAHCON) and the NCAA is another unnecessary presidential intervention and a concurrent political misstep in the industry, which has gradually become the hallmark of this administration.
The NCAA issued a statement that only airlines with Air Operators Certificate (AOC) will be eligible to bid for the hajj flights, while NAHCON barely two months ago, issued a statement that, only airlines that have cleared financial backlogs with the government agencies will operate those flights. To our chagrin, It’s the same agencies Mr. President have now given directives to grant a whopping 65% discount on operational charges, what a policy somersault. A curious look at the list of would be Hajj operators, shows that the two bodies have either reversed themselves policy-wise or have granted an executive induced waiver.
The government should be notified that airlines publicly owned or substantially owned by Nigerians are the only ones qualified for public subsidy not airlines owned by individuals. Also airlines operating national or emergency assignments are also considered for such subsidy or those operating public service obligation routes.
The government weakness or is it panicky frame is due to the coming elections and the unending Zoning brouhaha of the ruling party, which has necessitated this hajj gift, at the expense of public income. If they have to grant such subsidy, it should support weak routes on the west coast and in Nigeria, such as Makurdi, Bauchi, Akure e.t.c.
This waiver is simply reckless and unwarranted, the government should be prepared to give this wasteful gift to Christian pilgrim operators whether owned by Nigerians or not. Also the management of the agencies will be put under pressure to meet operational expenses that might breed industrial disharmony which may have grave safety implications for the industry.
The government should please, realise that the operators of Hajj and Christian pilgrimages were not decreed to operate these flights but voluntarily participated in a process that has been generating substantial revenue for them despite the poor allowances being paid to overworked operating Nigerian crew compared to the operating crew of wet leased aircrafts used often times to augment operations that have grown larger than their operational capacity.
The government recently evacuated Nigerians from Egypt and Libya using foreign airlines even from countries that do not have Cat 1 certification like us, they went as far as Bangladesh to get aircraft, yet Nigerian operators would have been given night and day flights to spilt thereby keeping the critical and necessary funds with our carriers rather than granting waivers
If the government feels they have solved all our problems and can afford to give foreign carriers charter flights and domestic charter operators’ waiver, I will like to quote, the president of the black mayors who visited Oshogbo, the western part of Nigeria, recently for the black Mayor’s conference. He said “as we drove around we envision not the reality of clean water, lack of consistent electrical power, lack of smooth highways and street, lack of sanitary sewer system, severe poverty, the missing educational systems, lack of proper health care, lack of housing, but what we see is the enormous opportunity to work together and solve these problems”. Do I need to add any other thing?
Finally all stakeholders should get up and be counted in the struggle for a Fly Nigeria Act just as they have given it to shipping industry in section 33 of the NIMASA act, while the operators must as a matter of urgency expand ownership to reflect Nigerians before keying into public support and facilities.
The recent decision of the government to grant additional waivers to airlines and organisations that lobbied through a shredded bidding process for Hajj flights despite getting regulatory waivers from the National Hajj Commission(NAHCON) and the NCAA is another unnecessary presidential intervention and a concurrent political misstep in the industry, which has gradually become the hallmark of this administration.
The NCAA issued a statement that only airlines with Air Operators Certificate (AOC) will be eligible to bid for the hajj flights, while NAHCON barely two months ago, issued a statement that, only airlines that have cleared financial backlogs with the government agencies will operate those flights. To our chagrin, It’s the same agencies Mr. President have now given directives to grant a whopping 65% discount on operational charges, what a policy somersault. A curious look at the list of would be Hajj operators, shows that the two bodies have either reversed themselves policy-wise or have granted an executive induced waiver.
The government should be notified that airlines publicly owned or substantially owned by Nigerians are the only ones qualified for public subsidy not airlines owned by individuals. Also airlines operating national or emergency assignments are also considered for such subsidy or those operating public service obligation routes.
The government weakness or is it panicky frame is due to the coming elections and the unending Zoning brouhaha of the ruling party, which has necessitated this hajj gift, at the expense of public income. If they have to grant such subsidy, it should support weak routes on the west coast and in Nigeria, such as Makurdi, Bauchi, Akure e.t.c.
This waiver is simply reckless and unwarranted, the government should be prepared to give this wasteful gift to Christian pilgrim operators whether owned by Nigerians or not. Also the management of the agencies will be put under pressure to meet operational expenses that might breed industrial disharmony which may have grave safety implications for the industry.
The government should please, realise that the operators of Hajj and Christian pilgrimages were not decreed to operate these flights but voluntarily participated in a process that has been generating substantial revenue for them despite the poor allowances being paid to overworked operating Nigerian crew compared to the operating crew of wet leased aircrafts used often times to augment operations that have grown larger than their operational capacity.
The government recently evacuated Nigerians from Egypt and Libya using foreign airlines even from countries that do not have Cat 1 certification like us, they went as far as Bangladesh to get aircraft, yet Nigerian operators would have been given night and day flights to spilt thereby keeping the critical and necessary funds with our carriers rather than granting waivers
If the government feels they have solved all our problems and can afford to give foreign carriers charter flights and domestic charter operators’ waiver, I will like to quote, the president of the black mayors who visited Oshogbo, the western part of Nigeria, recently for the black Mayor’s conference. He said “as we drove around we envision not the reality of clean water, lack of consistent electrical power, lack of smooth highways and street, lack of sanitary sewer system, severe poverty, the missing educational systems, lack of proper health care, lack of housing, but what we see is the enormous opportunity to work together and solve these problems”. Do I need to add any other thing?
Finally all stakeholders should get up and be counted in the struggle for a Fly Nigeria Act just as they have given it to shipping industry in section 33 of the NIMASA act, while the operators must as a matter of urgency expand ownership to reflect Nigerians before keying into public support and facilities.
Tuesday, February 22, 2011
GAT:FAAN GOT IT WRONG AGAIN
The recent directive of FAAN is puzzling and dictatorial, considering these airlines have tenancy and operational agreements with FAAN, also operational issues are not with immediate effect as directed, they are well planned with both parties coming to an agreement that will give the least operational and disruption cost.
I just hope the directive is not sequel to the recent reconciliatory and interactive session of ICRC board in Lagos. That is a body saddled with the responsibility of monitoring and regulating concession agreements, which definitely cannot bite due to the delay in amending the ICRC Act; it has also lost the barking prowess to the house and senate committee on aviation respectively.
It was also alleged that some of those carriers board and park their aircraft at MM2, while they only sell tickets at GAT, in a nut shell generating revenue for Bi-courtey through and at the expense of FAAN owned ,GAT. Well, that brand of marketing is not new to the industry, it’s an age long marketing strategy employed by the local carriers. It’s not a bad idea provided they pay for those counters; FAAN can only refuse to rent out the counters at the expiration of their tenancy not using the forceful eviction mode.
It is also a sad realization that all concessions in the industry have been very messy which is a reflection of the process from begining, therefore all parties must be humble enough to accept that at a point in the concession process fairness and transparency which is the hallmark of an efficient concession process was breached.
We have come to the realisation that the managers of FAAN and the Ministry at the period, when these concessions were signed, compromised and also exhibited little knowledge of the legal booby traps in the agreement, which has come to haunt us now, like the Virgin Nigeria agreement, when an Honourable Minister dozily signed an addendum to the agreement, that was drafted in London on a Virgin Atlantic letter head.
The industry needs to move forward and all parties must be ready to shift ground and negotiate, looking for legal interpretation will give the concessionaires a tarred highway at the expense of a continuous sabotage from stakeholders and "under the table" concessionaires. If they refuse to shift ground or negotiate, then the entire industry “will be caught right dead fighting for their right of way".
Curiously, why was Arik a private carrier without any form of public participation excluded from the decree issued by FAAN ruling council to other privately owned carriers? Was it due to a pending court case, instituted by Arik? Or is it an attempt to surreptitiously hand over the GAT terminal to them? Whichever way fairness and transparency must be paramount or the attempt will join the industry's ever increasing messy concession statistics.
I just hope the directive is not sequel to the recent reconciliatory and interactive session of ICRC board in Lagos. That is a body saddled with the responsibility of monitoring and regulating concession agreements, which definitely cannot bite due to the delay in amending the ICRC Act; it has also lost the barking prowess to the house and senate committee on aviation respectively.
It was also alleged that some of those carriers board and park their aircraft at MM2, while they only sell tickets at GAT, in a nut shell generating revenue for Bi-courtey through and at the expense of FAAN owned ,GAT. Well, that brand of marketing is not new to the industry, it’s an age long marketing strategy employed by the local carriers. It’s not a bad idea provided they pay for those counters; FAAN can only refuse to rent out the counters at the expiration of their tenancy not using the forceful eviction mode.
It is also a sad realization that all concessions in the industry have been very messy which is a reflection of the process from begining, therefore all parties must be humble enough to accept that at a point in the concession process fairness and transparency which is the hallmark of an efficient concession process was breached.
We have come to the realisation that the managers of FAAN and the Ministry at the period, when these concessions were signed, compromised and also exhibited little knowledge of the legal booby traps in the agreement, which has come to haunt us now, like the Virgin Nigeria agreement, when an Honourable Minister dozily signed an addendum to the agreement, that was drafted in London on a Virgin Atlantic letter head.
The industry needs to move forward and all parties must be ready to shift ground and negotiate, looking for legal interpretation will give the concessionaires a tarred highway at the expense of a continuous sabotage from stakeholders and "under the table" concessionaires. If they refuse to shift ground or negotiate, then the entire industry “will be caught right dead fighting for their right of way".
Curiously, why was Arik a private carrier without any form of public participation excluded from the decree issued by FAAN ruling council to other privately owned carriers? Was it due to a pending court case, instituted by Arik? Or is it an attempt to surreptitiously hand over the GAT terminal to them? Whichever way fairness and transparency must be paramount or the attempt will join the industry's ever increasing messy concession statistics.
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