RE: SENATE COMMITTEE ON AVIATION TOUR OF AGENCIES: ''The Good, The Bad & the Ugly''

NOV 26 Comment from Olu Ohunayo The former Director Of Airworthiness Standard was mumbling incoherent standard procedure on national television the last time the committee called them and the General Manager that was called to assist did not really impress, now it’s the Director of Finance who would have approved some funds for the Performance Based Navigation (PBN) programme without understanding the meaning. It’s a nauseating fact in the industry that foreign courses offered as developmental and educational programme are often-time seen as a business trip to heap forex and prepare for little buying and selling on the sideline. No wonder there is a roaster and a bitter squabble to get and remain on courses with longer days even when it’s not too relevant to their area of specialization. On another note, the committee in their report also found a director in the Ministry culpable for the bungled Lufthansa MOU agreement. Its real shame for professionals in the industry, something must be wrong somewhere and we must be ready to correct them even if we have to go fishing for new egg heads. The word cancellation being brandished by the Ministry for a four year deal signed in 2008 and cancelled in 2012 after running its full circle is simply ludicrous. I will rather align with the Senate Committee report asking Lufthansa to refund $14.8 million. The same report ended with a top official saying it is wrong to collect royalties using Ghana as referral; the official should be reminded that Ghana has only one point of entry and much lower frequencies and gauge. The problem is our management of the royalties. Is re-modeling viable and un-viable airports a critical safety issue when they are quickly inaugurated with dysfunctional equipment? Should we continue to encourage royalties or endeavour to participate? May be, before we appoint the next Minister ,we should confirm if they are frequent flyers on any of the foreign airlines. The Lufthansa deal was done when Engineer Omotoba was heading the Ministry. He was at the time on Lufthansa ‘frequent miles’ programme while Mrs. Chikwe showed same bias for Virgin Atlantic. Senator Uzodinma’s interview has opened a cankerworm that has been hunting the industry and the government should take a critical look at it, if it is eventually submitted by the hallowed chamber. The Senate should go further by reducing the 14.2 billion naira travel budget of MDA’s as presented in the 2013 budget. It should be reduced by 50% while a certain percentage of the travel should be on Nigerian carriers. This will aid reduction in fares, increase employment and liquidity within. On the recent visit of British Airways CEO to the Vice President, I say beware of ‘Greek gift’ coated in sweet messages. It’s another re-modeled Lufthansa MOU. The aim is to increase frequencies and offering nasty slots outside Heathrow. If we must increase frequency let it be for 5th, 6th and 7th freedom not for the British carriers while also strengthening our carriers to compete. Virgin came to Nigeria promising fall in air fares on the LHR-LOS route, today they virtually compete with BA in milking us dry. The foreign carriers are owned by individuals but strongly supported by their respective government. The prime motive of operating into Nigeria with large aircraft, increased frequencies and entry points is profit, profit and profit. They are not aid agencies. Whatever will be offered will be placed in profitability either in the short or long term. They only develop facilities that will ease their operations not our aviation. If they really want to help, they should partner with our carriers commercially or by investment. Better still set up a feeder airline in partnership with Nigerian investors. Government shine your eye !

Arik Air in ''Macabre'' dance over Air Nigeria predicament

------------------------------------------------------------------------------------- In an interview with Punch Newspapers published on Wednesday, 10th June 2009, I described the de-branding of Virgin Nigeria as “good riddance, for Virgin Nigeria to fork out almost N1billion per-annum from its revenue to keep a brand in a melted environment is simply excruciating. The new Management should take it in its stride and move on. It should continue the cost reduction process, while improving the West Coast and domestic route networking. They should as a matter of necessity shop for a core investor that will inject funds, preferably an international airline.” That was my dream for the carrier. Thereafter, the media was awash a couple of months later, with the news that NICON Group had bought Virgin Nigeria after being renamed Nigeria Eagle. I expressed my reservations in an article titled “Virgin Nigeria and The New Owner” published in Business Travel weekly newsletter on the 10th of May 2010. I said “It is with trepidation that the news got to the industry that NICON group has bought Virgin Nigeria Airways. Considering the calamitous entry of the group some years ago through the liquidated EAS Airlines, In welcoming the group back to the industry, they need to understand the new dynamics as exemplified by Virgin Nigeria, which is the impeccable systems, processes and human capital that needs some air of freedom in order to continue to maintain, sustain and retain the necessary benchmark put in place such as IOASA certification, IATA membership, AFRAA membership seamless electronic ticketing etc, which has made the airline the willing bride of foreign airlines. It is not UHURU for thecarrier except necessary running funds are immediately injected, ownership expanded to reflect the national carrier status of its founders, anything short of this will make us a laughing stock in the virgin empire and beyond”. I was prophesying may be. Air Nigeria’s predicament is a culmination of errors, government did not do enough groundwork before giving the go ahead for the transaction. I was expecting questions to be asked with respect to the liabilities of the liquidated Nicon Airways and how ownership will reflect nationalism. The clearing agencies deliberately put their oversight functions on override thereby sweeping red flag issues under the carpet. NCAA was a bit hasty in grounding the airline when it had issues with staff. India’s Kingfisher Airlines had more problems to contend with yet, the Indian government and regulatory body provided the critical support till this day. The NCAA need to ensure by monitoring closely that board members of airlines are truly able to function independently without undue influence from the owners, which is presently absent in our airspace. The Federal Inland Revenue Service also takes a share of the blame. Virgin Nigeria’s expatriate managers left this country unhindered even though there was a backlog of unpaid taxes. It may have been more effective if they had used the armed men they used to raid Air Nigeria offices at that time, rather than wait for a whistle blower that only remembered he had a whistle when he was arrested for financial malpractises. That Mafioso move was a bad press for the airline and the country at large. The over 800 members of staff and their families are the greatest losers in this cut off my nose to spite my face game. They adopted a strategy of taking on the owner rather than the airline, forgetting that the only authority you can appeal to is the owner, not management or public sympathy. They should have taken a cue from some DANA staff that started blabbing after the crash only to realise their folly and later rally round the management. Also, leading voices in the industry looked the other way, while the AON, a body purportedly set up to defend Nigerian airlines simply cried for DANA and left Air Nigeria to her fate. The owner and his management team are not abreast with the present aero –political manouvering, and the penchant to stay aloof with some semblance of arrogance has brought the airline to its knees. They did not give the requisite air of freedom to sustain the airline rather they kept flagging inherited certifications. It is so disappointing that an airline that was handed to us with the best systems, processes and certification has been reduced to nothing. We are all guilty and should be ashamed of ourselves. I sincerely hope AMCON can step in and look for an international airline to partner or invest in the carrier. Let me reiterate, that an international low cost carrier is going to be based in Ghana, while South African Airways is also planning to set up a low budget carrier in that country. The Chinese have just set up a regional airline in a joint venture with Ghanaian investors, yet the Chinese feel we are only good for loans that will be accompanied by their contractors even with our flamboyant road show. The pains increased with the phenomenal fares introduced by the local carriers at the demise of Air Nigeria, which was spear headed by Arik on the local and west coast routes. The senate committee wishing to benefit and to reap without sowing, quickly recommended Arik as the new national carrier, which literally means government should absolve all liabilities real or imagined while top government officials were at the same time angling and arm twisting the airline to sell shares to them. The unions started the agitation for the archaic national carrier project, suddenly woke up from their slumber with the covert support of the hapless agencies that have tried and failed, using all conventional methods of retrieving debts owed it by Arik, by forcefully taking over the airline’s counter as a last resort in saving the sector from crippling debts. Arik naturally stopped flying and ensured they were begged to return to flying considering it’s over bearing dominance in our airspace.The body language of all participants at the Secretary to the Government of the Federation reconciliation meeting with the exception of the convener shows that all is not well, even with the hurried interview granted by the DG NCAA and the airline’s MD. The airline did not disappoint thereafter, by issuing a list barring certain Nigerians from boarding their aircraft, topping that list is the MD FAAN. The macabre dance is on going, I will not be surprised to see my name on a revised list, all I need is for government to clear Lokoja –Abuja road and I will get a newer car to take me to my destination since NCAA can’t protect us.

RAISING THE ECONOMIC IMPACT OF FOREIGN AIRLINES IN NiGERIA

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

SEASON OF ABSURDITIES

Since the DANA crash of June 3rd, 2012, the country and populace have been drawn into an unbelievable hysteria and anti-aviation phobia. The phobia has continued to run in all facets of the country despite assurance and support of the international community and organisations that have been steadfast and strongly believe in our system and processes. The government bowed to the hysterical pressure by quickly setting up a committee that was not necessary and whose report cannot be taken seriously beyond the realms of its initiator. Thereafter the publicity seeking House Committee came up with their version of investigation by quickly suspending DANA’s licence and directing the DG to proceed on suspension. They went further to describe our aircraft as being too old and intend to initiate laws that will lower minimum age to fifteen years. The MD aircraft series were virtually labeled sick and old aircraft designed to kill Nigerians in spite of their safety records and statistics. It should be known that the MD series used by DANA was the same aircraft that gave that airline the best on time airline in Nigeria over the years without disappointing their esteemed clients, who also voted the airline as the best customer friendly airline. Also, a version of that aircraft is parked on the tarmac of Abuja airport by UN to lift Nigerian and other troops for peace keeping missions up till this moment. Air Burkina and Air Mali use the same aircraft to ferry Air France passengers going to points beyond Ouagadougou and Bamako. Yet Nigerian carriers with younger aircraft and certification have not been considered fit for code share agreements. Accident Investigation Bureau (AIB), the body saddled with the responsibility of investigating, reporting, updating and publishing incident or accident reports, but chose to make them look more like classified espionage reports, had to be pushed by industry activists to release the preliminary report of DANA accident and unbelievably in an anti-AIB speed released the report of the recent Arik Air incident at Jos Airport. Though it is a norm because it is from AIB, it is obviously a departure from the usual. The aftermath of DANA accidents also led to the regulatory and voluntary grounding of some carriers, while it is better not to go into details, it is really sad to see that the other airlines flying have cashed in on it by increasing fares phenomenally and annoyingly loading it, under fuel surcharge column, which makes it easy to fleece passengers and government agencies. Fuel surcharge is usually loaded on international fares based on sector length, while on the domestic fare the charge is minimal. Our carriers have reversed this rule in this season of absurdities. Bomb detectors are meant to enhance safety and reduce to the barest minimum any incident that may arise using IEDs or related devices. FAAN has two detectors stationed at the entrance to their staff quarters, one stationed at the gate leading to the Corporate Head Office, while entry to GAT and other airports that generate the revenue used in purchasing the detectors are left bare. Air Nigeria is going through a trying period and we must not forget that at conception, it was our national carrier. It was funded and managed by the privileged private placement heroes and a foreign technical partner. Today, the foreign partner has fled, while the private partners have ceded ownership and management. The airline is in crisis with aircraft being repossessed and airline staff who are Nigerians are being thrown out in droves. Air Nigeria should not die, we must endeavour to get the airline back in the skies irrespective of the fury and annoyance towards the new owner. The absurdity here is for the first time the industry is willing and working assiduously to throw away the baby and bath water. It is simply unacceptable. The NCAA recently reiterated the need to positively identify a passenger before boarding an aircraft, which is also a fall-out of the DANA manifest. Memos have not worked, and will not work if the appropriate sanctions and monitoring instituted are not elevated. I boarded a flight from Yola last week; my identification was not needed nor requested till I got on board. The comfort of flying was also tainted by our standing at the Abuja airport terminal for 1hr.45mins because Arik station manager was not empowered to purchase FAAN PSC tickets on our way to Yola while on our return a miserable N30 cake and ¼ glass of water was offered in this phenomenal fare regime. Nigerians will travel and continue to travel. What is important is the share that comes to our carriers. How do we get our carriers positioned to partake in the feast? Is it fair for foreign carriers to keep increasing guage, while we are left to collect tolls called BASA? Is it so bad, that Nigerians now fly to Dubai on Rwanda Airlines? I repeat, RWANDA AIRINES!!

ALARMISTS OR WHISTLE BLOWERS

The industry has always encouraged and still encourages whistle blowing to bolster safety, good governance, improved service level and competition in that order of priority. The regulatory authority has encouraged this by providing a non-punitive reporting platform which is still operating till date. Alas, I was taken aback when some DANA staff behind the curtains appeared on national TV and on the pages of newspapers to allege that aircrafts in their fleet were not safe. Thereafter, Air Nigeria’s former Director of Finance opened his own can of worms which bordered on tax remissions and certification. To attract our attention, his team quickly keyed into the depressed mood of Nigerians by declaring Air Nigeria’s aircraft and operation as not being safe by writing to lessors, agencies etc. These allegations were hyped and timed to instill fear in the flying public when the country was and is still mourning with great pains. Air Nigeria and Dana management need to review their Industrial Relations policies that make staff turn against their organisation with unbelievable venom and hatred. In my article, “Virgin Nigeria and the New Owner” written two years ago, I expressed my reservation at the new team based on their performance at EAS Airline, while the jury is still open, the alleged fraudulent method of acquiring the airline are too weighty to be discarded. On tax evasion I would openly say almost all Nigeria airlines are guilty of tax evasion and remittance, and have always manipulated the government and relevant agencies by deliberately refusing to pay for services or remitting taxes collected on their behalf. Therefore Air Nigeria must remit to government whatever is due to them, but should not be singled out; fairness must be seen to be applied. We all look forward to the day we will get over the owner –manager and money-miss-road syndrome bedeviling our airlines and sincerely pray for aviation minded investors such as Tony Fernandes, Ryan O’Leary or a Sir Haji-Loannou, who is bringing Fast Jet - a new low cost carrier that will change our will to fly in the sub-region. Sadly, he has decided to anchor the carrier in Accra, not Abuja or Lagos despite our giant of Africa status. It is not late; we can still lobby his team to have a change of heart if we actually want aviation to contribute the projected quota to the GDP. Air Nigeria should not go down. We must as a country do everything to save and pull it out of this crisis while also encouraging more investors. It is our only IATA member carrier and the first airline in West&Central Africa to hold the cherished IATA operational safety audit certification. We need to encourage competition because it is healthy for the airlines and more beneficial to the flying public. When Air Nigeria announced their intention to start the London route, fares in the economy class that had been unfavourably high began to drop without any government ultimatum or legislative public hearing. Also the Lagos - Banjul route which Air Nigeria offered for below N70, 000 before the multiple industrial crises will now cost Nigerians N170, 000 on the alternate Nigerian airline. The airline has capitalised on their absence, replicating their excessive high fares on the Lagos-London route when they encouraged price discrimination by benchmarking the British carriers. I know the NCAA is presently being heckled due to the mood of the nation, but they must statutorily also look at the fare exploitation by our carriers. The Directorate General of Civil Aviation in India, an equivalent of our NCAA, recently reprimanded the airlines in that country for charging phenomenal fares when aviation fuel price only increased by 16% in the past year. The airlines thereafter jointly agreed to cut fares between 5 -20% based on route and airport analysis. The Government should please understand that viable and strong carriers will only evolve from sound policies, protection and regulated stimuli, not by opening our skies. Air France operates into Port Harcourt, Lagos and recently Abuja all in one country in West Africa, while the same airline signed a code-share agreement with non starters like Air Burkina and Air Mali to take their passengers from Ouagadougou and Bamako respectively to cities within the sub-region. These airlines will be using MD 87 aircraft, a relation of DANA’s MD 83, yet AERO’s unblemished safety record, Arik’s young fleet and Air Nigeria IOASA certification & IATA membership were not enough for the government to use to negotiate with Air France while signing this and other agreements. The foreign carriers are asking for more frequencies, designation and increasing gauge into Nigeria when Virgin Atlantic is withdrawing from the tourist filled Nairobi route, because Kenya Airways is giving them a run for their money. The aviation bailout fund has achieved its aim - refinance and save the banks. What next?

RE: IT’S TIME NATIONAL AIRLINE IS PRIVATIZED

The Tanzanian experience in the article published on www.nigerianaviationnews.blogspot.com has further proven the futility in liquidating and starting national carriers all over again when factors such as government ownership, protection of the skies and other competitive issues are not properly factored before taking emotional decisions that will hunt the country financially and reduce operational efficiency of other domestic carriers. Countries such as Greece, Ghana, Cote d Ivoire, Belgium, Switzerland, Cameroon, Senegal, Zambia e.t.c have gone through the painful process and have bitten the dust like the Tanzanians are doing presently as reflected in the article. The disparity in fares saga has again woken the passion for a national carrier with our unionist making quick reference to airlines in Ethiopia, South Africa, Egypt and other Middle Eastern countries as models of vibrant national carriers. Ethiopian Airlines was managed by foreigners for 25 years before reverting to the Ethiopians who have doggedly maintained and improved on the operational standard, same for South African Airways. The Middle Eastern government, chair a functioning board while competent professional are recruited from all over the globe to manage these carriers without any interference. Also, some of these countries have protected these carriers by not polluting their skies, slots, frequencies and most importantly commercial agreements. The South Africans have refused to sign the open skies with the Americans, same with Russia, China, Hong Kong, Mexico their neighbour and some other countries. Brazil signed earlier this year with full implementation scheduled for 2015 despite its closeness to America and stronger economy when compared to Nigeria. For China it’s the American labour unions not the Chinese that are resisting the open skies agreement because of perceived jobs losses and cheap wages that will accompany the agreement, yet some of our agency heads told the senate committee that opening the skies is the way to go. It’s also important to note that Japan, India, Australia, Switzerland and EU with bigger economy and obviously stronger aviation industry, signed the open skies after us after using strong negotiating tactics that ensured commercial valves were sealed for their carriers. The Philippines government through its central bank introduced financial instruments that made transfer of ticket sales less flexible; the foreign airlines grumbled and reduced frequencies while on the other hand San Miguel Inc is adding a billion dollar investment to its flag carrier, Philippines Airlines, for the purchase of a hundred aircrafts. This country has CAT 2 certification and flight restriction into Europe, yet they were able to protect their flag carrier to attract such investment. The tonic here is commercial protection rather than enriching BASA fund. A new national carrier from the scratch will require protection and route exclusivity which is a requisite subsidy, for it to survive the first decade. We will shackle our present flag carriers for the new carrier to survive, if it will even survive. A regulatory consolidation process like the Chinese and Thai government have done will allow a viable national carrier or carriers that will have a functioning board to evolve naturally while funds meant for this risky business that will probably come from some 6000 pounds gorillas (a term used for sub-optimal investors), who will make government stand as guarantors can be invested in the consolidated carriers.

WHY WE HAVE HIGH FARES {Let look inwards}

Presentation by Olumide Ohunayo Director Research & Strategy Zenith Travel & Tours The Chairman Senate Committee on Aviation Distinguished members of the Committee Distinguished Participants and Stakeholders This presentation is from our organisation Zenith Travel & Tours with warm regards from the CEO Ayo Olonilua and other members of his team. We need to look at the issue from the following perspectives: Regulations: Administration & Implementation. Supply: Inadequacy of Nigerian Competitors. Demand: Public Travel Expenditure. REGULATIONS: An Airline Protection Unit should be set up in the NCAA to protect our carriers. They should participate in BASA, SLOT and other competitive issues. The unit should liaise regularly with the recently establish economic protection department of the CBN, to monitor revenue transfer by foreign carriers while ensuring strong competitive regulations. A company with significant market power and dominant position operating in a jurisdiction without standard competition law rules and a competition authority can in effect engage in any anti-competitive practice without fear, sadly Nigeria is one of those jurisdictions. We are giving ultimatums and running from one public hearing hall to another when the British anti-trust body called Office of the fair trade (OFT) has fined and collected the fines from BA and VAA for the same offence committed in Nigeria. The senate should expedite action on the anti-trust law and the establishment of a complimenting body, the document is presently, gathering cobwebs somewhere in the hallowed chambers. The Fly Nigeria Act should also be looked into by the legislative arm of government. It’s a critical market bailout law employed by countries to keep public funds within the economy and shore up market capacity for home grown carriers. It will ginger competition and bring down fares. Air Nigeria is in IATA clearing house which has given them commercial leverage with other foreign carriers .We can start the act with charter flights and point to point flight rather than ignore it in totality. Financial Instruments: the CBN’s newly created economic protection unit should consider introducing policies that will discourage ferrying of all funds generated by foreign carriers. That policy will be a negotiating instrument if it is well implemented. This may sound draconian but what can be more draconian if it cost Nigerians twice the fare offered to our Ghanaian counterpart. The CBN can talk to their counterpart in Venezuela and the Philippines, when they implemented this policy the foreign carriers buckled. The ministry of Aviation should also begin the process of reviewing the bilateral air services agreement [BASA] , these agreement are not only skewed in favour of the foreign carriers, they inherently do not protect our carriers principally at airports with slot allocation issues, considering the ease at which we offer multiple entries. We need to review the Nigerian Civil Aviation Act: the recent decision of the administrative panel set up by NCAA to review decisions taken against the British Carriers with respect to Passenger fuel Surcharge is another sour remainder of the irritating cease and desist order. Alleged High Cost of Operation in Nigeria: When the cost of operation is high in a country or to a particular airport in that country, the options open to airlines world over is to reduce frequencies, capacity, close their bases or stop operations pending review of those cost. Also, IATA an international body responsible for coordinating commercial activities of the industry usually issue alerts and advice countries with such problems to quickly make amends or review. Nigeria has not gotten that alert. Rather the foreign carriers have been increasing capacities, frequencies and points of entry yet they cling to cost of operations as an excuse for high fares. The A380 is the biggest passenger aircraft in world; it is not operating into Nigeria because we do not have facilities to handle it. The new B747-8 which is second biggest aircraft will be operating into Nigeria very soon through a foreign airline, which shows how juicy the Nigerian routes can be. We need to facilitate competition and must ensure that facilities and legislations provided are not diverted or given to non scheduled operators whose appearance, equipment and ownership are opaque. We should not be deceived into increasing frequencies for the foreign carriers as encapsulated by BA country manager; rather we must empower our carriers and fast track the national carrier project without recourse to public funds. SUPPLY: LACK OF COMPETITION: Government intervention in commercial aviation is usually built on the following pillars: Tax policies. Infrastructure provision. Civil and Labour Regulations. Aviation Security. Protection and Encouragement of domestic carriers in a competitive environment The lack of protection which is one of the pillars has shackled our carriers’ ability to compete on the international route and has also made them unattractive to foreign investors. Government should urgently consider a regulatory consolidation regime; reduce duties paid on aircrafts, spares and other critical operational needs. Low interest loans should also be considered for these carriers, while aviation fuel which is a major cost component of the industry though de-regulated needs to be guided as obtained in some countries like Argentina or expanded to incorporate airline participation. [India recently gave approval to their carriers] Who should benefit and the conditions? Airlines with active AOC’s. Schedule airline operators. Submission of a verifiable business plan. Submission of a verifiable financial statement. Strict compliance and monitoring by the regulatory or appointed agencies. Distinct separation of passenger and corporate jets. DEMAND: Public Travel Expenditure: We need to address the high propensity to travel at all cost for the most rudimentary reasons; therefore we should reduce public travel expenditure in line with present day realities and as a palliative support to the fuel subsidy removal. We should place a ceiling on fares approved for public officials by warehousing public travel. We should also plan our travel well ahead with requisite approval given on time. Our orientation of having retreats, capacity building over sight and other Social Programmes that are non essential outside the country should be reduced or completely discarded. In conclusion the foreign carriers are guilty and have over the years exploited Nigerians, legislating or forcing it down their throat will be give temporal relief, to have an enduring relief we need to look inwards, or else will be aiding and abetting the clandestine plan of making Accra the hub West Africa.