Liquidating Nigeria Airways Was Big Mistake - Aligbe

Why do you think airlines falter these days given that many private airlines have collapsed?

Their models were not right. They used wrong models and some of those who entered the airline industry early were not professionals. They were pure business people and they also used the airlines not directly as airlines, they used them for other purposes. Some of them used it to get cheap foreign exchange and did round tripping, they brought the foreign exchange back and used it for other things. But the fact of the matter is that the greatest challenge they have were themselves, the owner-manager syndrome, they were owners-managers. The owner-manager syndrome is a major thing that has collapsed airlines in this country. When they own it, they want to manage it, they don't want to engage those who know how to manage it.

They don't know how to manage an airline but they want to manage airlines themselves. So owner-manager syndrome is there, wrong model is there. Yes, they complain of some harsh environments, there are harsh environment may be policy environment, operating environment, multiple charges, heavy fines but those are on the government side but when they talk about harsh environment, they tend to forget themselves that they, themselves are a major problem to themselves. Much of the reasons why airlines collapse can be found in the operators themselves. Also, what you find in the operators is that their capital base is very low, their investment, their start-up capital is very low.

They used only one or maybe two, three aircraft to start the business and they don't have fund outlay to run the business for maybe one or two years before they start reaping whatever benefit. So we have low capitalization, wrong model and owner-manager syndrome and then you have harsh operating environment. The failures could be accounted by these four factors. But also the airlines don't want to help themselves in terms of merging, they don't want to merge, they want to operate alone. A Nigerian operator prefers to have an airline business by himself alone even if its fortunes are dwindling. He wants 100 per cent of an airline instead of owing 20 per cent of such an airline in a situation where the fortunes are dwindling. So ownership structure is a major problem. Many of them don't want to accept investors on their airlines, they don't want to accept merger, they prefer 100 per cent ownership; that's not how airlines should run.

Once you start running that way, you have no control, you are not reporting to anybody, you are reporting to yourselves, nobody would query you however you are managing, nobody is overlooking you, you are overlooking yourself and that is the easiest way of collapse because there are no checks and balances. There are no controls and the employment they offer; many of them don't go out to look for quality staff, they employ people from anywhere, maybe from other businesses and put them there to manage an airline.

If you don't have experience in managing an airline, you don't have experience in managing an airline. Those who have experience in managing airlines, you would see them managing airlines with a different kettle of fish, those are professionals who have been there. We have two airlines today that we can be looking at carefully because they are peers who have had long experience in the airline industry. This is Med-View and Air Peace. If you look at them, they have been in the airline industry, they know what it is. We had two such airlines before- ADC and Bell View. And for many years they held sway in the industry.

How do you think government can provide the enabling environment for private airlines to thrive?

What I think is that we must take a holistic look at the entire aviation industry. I sincerely believe that private airlines have a lot of contributions to make. They do make contributions but I sincerely believe that they have a lot of contributions to make and therefore we should see them as part and parcel of the Nigerian economy. What I think and sincerely recommend is that government should declare the airline industry an infant industry because in spite of 32 years of existence or thereabouts because the industry was deregulated in 1985/86 under IBB (Ibrahim Babangida administration) when private airlines came into being and since then up to 32 of them have collapsed. The major one, Nigeria Airways, government liquidated it by itself unfortunately. There was no justification because at the time government was liquidating it, the assets of the airlines were three times more than the liability. If you have such a business, you see what you do with the assets to clear your liabilities and keep your business going.

Do we have the kind of infrastructure that would enhance the growth of our airports?

That's why I said we should take a holistic look of the industry, in all ramifications, not just the airports. None of our airports is world - class, not even the Murtala Mohammed International Airport (MMIA), not even with the terminals that the Chinese are helping to build, those are tolls, small terminals. They may not put us where we should be. If we want to be where we should be, we should immediately, in the next one or two years, concession our airports in order to develop the airports and the concessionaire, those who would come to take it on concession for 30 years, 40 years, 25 years, may be given an Airport Development Programme so that if you are taking it today, this airport has a capacity for 2 million, you are giving it to me on concession for the next 30 years, in 10 years, we expect that this airport would have capacity for about 8 million, from 2 million to about 8 million.

You would have developed it and by the time you manage it for 20 years, you expect that this airport should have capacity for about 16 million. By the time you are handing it over, you are expecting an airport with the capacity for 20 million. That would be built-in in the concession agreement, looking at their revenue, looking at the possibilities. So they will develop it to that point, they will think out of the box to see that they are forming an efficient business, making money for themselves and making money for government from developing the airport. That's what we should do.

The government has a lot to do in terms of fixing infrastructure at the airports. Today, there is no Nigerian airport with a reasonable passengers transit lounge that can accommodate almost 1000. We don't have. That's where money is made by the airport, people buying things. It is only in Nigeria you see meeters and greeters, people coming to meet and greet people who are travelling, they stay outside, you can't enter the terminal building except you are travelling. There is no airport worth its sort that has such a thing. There must be entry into the transit lounge. If there is no entry into the lounge where you can sit, wait or meet the passengers...So we need to take a holistic view of the sector, there are so many challenges. I pity the minister coming and I wish him great luck because the challenges are enormous.

Do you think the present government has the will to actually address these challenges militating against the growth of the sector?

They have the will. This is a government that came on a slogan of change. I have no doubt in my mind that they would do something but I am praying that what they would do would be depth, would be quite incisive.

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By 9jatravel / Administrator, bbp_keymaster

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on Nov 08, 2015

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