The President/CEO Top Brass Aviation, Roland Iyayi, who is also a former Managing Director of the Nigerian Airspace Management Agency, speaks on issues affecting the aviation industry, in this interview with Funmilayo Fabunmi
Nigeria Air, the proposed national carrier, got its air transport licence from the Nigerian Civil Aviation Authority, recently. Do you think Nigeria needs a national carrier or do you think it’s a misplaced priority?
It depends from which angle you’re looking. I mean, there are so many arguments for and against it, but I would stand on the side of those who don’t see a real need for it. I see the government’s role, particularly in the current dispensation worldwide, as facilitating trade and business. If the government took on that role, I would suppose that they should identify domestic carriers that have the wherewithal to run as flag carriers and assist them in acquiring the necessary equipment, the same way they would be doing for Nigeria Air. They can assist them to access cheap funding. They can assist them to ensure that Nigeria’s flag is carried worldwide and not necessarily about one carrier. So, the government’s role should necessarily be one of facilitating trade and business rather than being the business person. Government has no business being in business, except, of course, to facilitate. In America, you do not have any government-owned airline and they’re all successful. How’s that possible? It’s possible because the environment in which they operate has been made conducive to allow their businesses to thrive. So, I would expect the government to do exactly similar things to ensure that our domestic carriers are able to survive even in the face of all of this.
Do you think the Federal Government has been transparent enough on the national carrier project?
No, I don’t think so. We are supposed to have been told so many things every step of the way, but that hasn’t happened. For instance, we just heard in the news recently that the national carrier has been issued an air transport license. The air transport license is actually issued by the Ministry, more or less. Though, yes, they could have circumvented the required processes as required by all the airlines to facilitate it. I did not see anywhere adverts were done by the Ministry on behalf of the national carrier to indicate that they’re looking for no objection, because you’re supposed to take out adverts in a newspaper over a period of time so that people can come forward with their objections and they’d be reviewed. That didn’t happen. So, what essentially that means for me is that the government just decided by that to provide the necessary paperwork to ensure that this airline comes into being. So, obviously, going by what you said or by your question, it has not been transparent enough to allow people to see what they’re doing, to be able to decide whether or not it makes sense or otherwise.
Going by this, would you say Nigeria Air is a national carrier or a government carrier?
Again, they’ve called it a national carrier, so it’s a national carrier because the government designates who is who. I mean, to the extent that the government has said it’s a national carrier, so believe it’s a national carrier. My position is that if the government believes it needs to do things properly, then there shouldn’t be any double standards. If the government is saying it requires X number of days to do certain things for whatever reasons, they should go by the same standard for everybody. Nigeria Air shouldn’t be different from any carrier. But we know that the way things have turned out in this particular case, obviously, has been different. The national carrier certification process is different, engaging people has been different. I mean, a lot of things are different. So, I don’t know how else to say it but I do not think the standard set by the government has been adhered to.
Even though it is FAAN’s duty to secure the airside, as a former MD of the Nigerian Airspace Management Agency, why are we having issues like airside security breaches and collapsing runway lights?
Honestly, I do not have any visibility as to the structure of the security architecture at the airport at this point in time, so it will be a little difficult for me to comment. But the fact remains that if there are breaches, the root cause is what we need to establish. How have these breaches taken place? If we understand how they took place, then it might be easy to come up with the why and find a lasting solution to how these things can be sorted out in the long-term. I think that whatever it is, we will look at the structure of the security architecture, which needs to be reviewed. There’s a need to determine why there have been series of breaches. If we’re able to determine those things, then it’d be easy to provide a solution that will be a longer-term solution than what we have currently.
What do you think is really hampering the growth industry in Nigeria?
Simply put, policies. The policies we’re operating with in this country are policies that are not consistent with growth, that will not facilitate airline growth and will not allow profitability of the industry. And, once you have situations that are not consistent with growth, naturally, airlines will come and go like we have seen in the industry today. Most of the policies that are being operated or that exist are actually policies weighted against airlines. For instance, the airlines bear the brunt of all the unnecessary overheads being carried by the various agencies. If and when they need to make payments and they don’t have adequate funding, the next line of action is to increase charges for the airlines. Now, when you increase charges for the airlines, they would want to increase fares to cover their costs. Now when they increase fares, they suppress demand, which is a double-edged sword. Airlines are being pushed to increase prices to cover costs. At the same time, the market is diminishing; the market reduces every time they’ve done that. Every time they do that, it reduces the size of the market, so, ultimately, what you end up with is a situation where the airlines are caught in a catch-22 situation.
They’re not able to increase airfares so they don’t affect demand. At the same time, they’re not able to cover their costs. Sooner or later, they’ll go out of business. I mean the airline business is like a supermarket business, you know. For the time you have stock, you seem to thrive. When the airlines have airplanes that are serviceable and are not due for any major maintenance, they’re flying all over the place, but the moment they become due for maintenance and the airlines don’t have adequate funds in reserve for maintenance, they park the airplanes. So, sooner or later, you start finding airlines with 10 aircrafts being reduced to maybe three or four because there’s no money to cover the cost of maintenance for those airplanes.
So, the issue that is killing airlines in Nigeria is policy. By the way, it is something that is fashioned both at the Ministry and the NCAA. So, if the policies are not consistent with growth, airlines will fail and they’ll continue to fail.
Why have most Nigerians who own private jets refused to register them in the country?
That could be for a variety of reasons. Some of these owners actually leased the airplanes from abroad and one of the requirements may be that the aircraft is left on the register of the state from which they got the airplane. That’s simply because the leasers want to be able to have control over their aircraft assets. Now, on the other hand, some of these owners, even though they own the aircraft outrightly, their belief is that if they put the aircraft on the Nigerian register, it would lose value appreciably that when they want to sell it, they might not be able to get good value for it. This is not necessarily the case, but that is the belief. So, you have a variety of reasons why most of these owners actually leave their aircraft on the foreign register. In any case, the NCAA is still to blame because if they want to operate in airspace, you set the rules. If the NCAA does not set rules that favour the market, they’re, of course, at liberty to do whatever they please. If it’s foreign-registered, except you have Nigerians that carry foreign licenses, they’d most likely be flown by foreigners. So, essentially, what you’re doing by not having policies to help is to ensure that jobs are taken out of the country. In terms of foreign exchange, obviously, there’ll be capital flight. So, when you have all these situations and they are not addressed at the policy level, then anything goes. I think seriously that all of these boil down to the rules set by the NCAA. If the NCAA says you can have your aircraft in this country for X number of months, and if you want to have continued use you have to register, definitely, all these individuals with foreign-registered aircraft will have no choice but to comply. But as long as NCAA allows them for whatever reason, then, of course, they are not helping the local market because most of these people end up having foreign pilots and engineers and foreign cabin crew staff. In this case, what do you expect to happen? Nigerians are thrown into the labour market. Of course, there are some individuals who use Nigerians but the majority of them use foreigners.
Recently, local airlines cried to the government over the skyrocketing price of aviation fuel. The govt intervened but despite this, aviation fuel still goes for over N600 per liter currently. What does a high JET-A1 price portend for the domestic airline industry?
Simply put, that would wipe away completely any profit if at all there is any in the first instance. Ordinary, in the direct operating cost of an airline, you’d have fuel making up between 30 and 40 per cent. That’s for most airlines. Now, that depends on the aircrafts in the fleet of the airlines. Where the airline has eight fleets with very old airplanes, the cost of fuel may be up to 45 per cent of the direct operating cost. But if you have a very new fleet, like a modern fleet such as Air Peace and Ibom Air, then maybe your direct cost of operation will be between 30 and 40 per cent. Unfortunately, with this price hike, the cost of fuel vis-a-vis the percentage in terms of direct operating cost is almost about 60 per cent at the present time. At that level, it is inconceivable to imagine any airline will be profitable.
So, essentially, what it is doing is systematically killing airlines. I don’t know for how long airlines will be able to sustain this pricing but it is very difficult. Now, the argument will be that the reason for this is the Ukrainian war and some other factors around the world. Yes, it could be the case but, if, for instance, our refineries were working, we could actually produce Jet-A1 fuel locally because we have the capacity to produce at two of the refineries in the country. Now, if that is happening and we know that crude is local, that essentially means all the components required to produce the Jet-A1 fuel, 90 per cent of which is local, you can control those factors to a large extent. The 10 per cent element that probably will be international would be the turnaround maintenance and the spares to support the refinery.
Article first published on the Punch Website