Mr. Gbenga Olowo is the President/Chief Executive of the
Sabre Network West Africa and the current President of the
Aviation Round Table the body
that drives Aviation safety and
professionalism in Nigeria. In this
interview, he bares his mind on the status of Nigeria’s domestic carriers and
their challenges.
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| Mr. Gbenga Olowo |
Q. A national carrier by definition is the airline that
flies the flag, as at now. Can you tells
us the total number of domestic carriers in Nigeria and mention them.
A: The domestic airlines we have presently in the country are eight in
number and they are: Arik Air, Aero Contractors, Dana Air, First Nation,
Medview Airlines, Air Peace, Azman Air and Overland Airways.
Q: It is noticed that there is decrease in the number of
carriers since 2013,
according to your report during the a conference held in
Ghana , (The variation in the operating airlines between 2010 to 2013 is -57%,
i.e. in the year 2010 the operators is 14 while in 2013 is 06) can you please
tell us the reason behind the reduction of the carriers?
A: Airline mortality rate in Africa especially Nigeria is relatively
high usually 10-15 years but often less for so many reasons. Very difficult
operating environment resulting from government policy inconsistency and lack
of direction or focus to absolute lack of support from what the bible describe
as dull hearing. The airlines are faced with so many operational issues without
government attention. That is not all. There is no corporate governance in most
of the airlines. One man owner calls all the shots and takes a lot of
unwholesome decisions. The airlines are relatively small, weak and vulnerable
to competition.
Q: With this high rate of reduction, has government ever
notice this? If yes, what have they done to curb the reduction?
A: Government is yet to take holistic decision to address the situation.
The debate on whether to float a national carrier a la Nigeria Airways is still
on going. We strongly believe however, that given the prevailing operating
condition no new airline can change the face of aviation in Nigeria. Early
years will be glamorous but about 5 years after; same story of woes will
follow. The necessary and sufficient condition for strong carriers in Nigeria
is through collaboration and cooperation that should be midwifed through policy
by CAA that will result to the emergence of 3-4 mega operators through pooling
of resources.
Q. Still on the lecture you delivered at Ghana in the
year 2015, you listed the variation of decrease in fleet between 2010 and 2013
to less than 28%, that is, in the 2010
the number of fleet is 54 while in 2013 is 39, can you explain the rationale or
reason behind this result?
A: With declining fleet size,
route expansion will be limited and robust schedule very difficult. Down time
for maintenance will impact negatively on schedule.
Q: Talking about airlines’ insolvency, what is your take?
A: Insolvency simply put is when an individual or organisation can no
longer meet its financial obligations. Do an x-ray of our airlines today; this
is precariously what you find. All the airlines are owing huge debts to
fuellers, workers, government and trade partners. Arik Air / FAAN indebtedness
was celebrated this past week in the face of endless reconciliation and dispute
of accounts with huge flight disruptions. Government should set up revenue collection agent either individual
firms or banks to collect user charges of TSC, PSC, Vat, etc being collected on
tickets and eroding airline revenue with several debt burden and conflict with
government agencies.
Q: In some other part of the world, aviation industry
contributes a large part of nations’ Gross Domestic Product GDP, but in Nigeria
the reverse is the case, Can you narrate in brief the major challenges of
Nigeria airlines?
A: President Muhammad Buhari should task Transport / Aviation ministry
to deliver at least 1% of the GDP by 2020. It is presently 0.4 %. A grossly
underperforming sector, by implication the sector will be required to grow
annually at 25/30% and this is achievable. If we apply 5:20 rule to our
airlines requesting them to grow fleet by 20 aircrafts every five years, it means
three airlines by 2020 will parade a minimum of 60 operational aircrafts each,
provide job for 15,000 workers and 30,000 workers with 120 aircrafts by 2025 at
the rate of 250 workers per aircraft. By this rule only Arik can stand alone at
the moment. Airport, Airspace and catalytic activities will also grow
simultaneously. This is the only way to rescue market share from foreign
airlines who must repatriate up to 95% of their income back to their home
country in USD and continued weakening of the Naira. Truth be told, 5-10
aircraft airlines as we have it today cannot be described as strong schedule
players. All the existing 7 operators should pool their resources together,
operate under one AOC, harmonize their schedule and,stop the stupid on going competition
among themselves. Then we will be having two near strong players.
Q: Some experts and stakeholders have also attributed the
problems of the nation’s aviation sector to government in the area multiple
taxation, political intolerance. As a stakeholder, do you also support their
claims?
A: Nigeria airlines problems are duo in nature. Firstly, Government lack
of policy focus & hostile operating environment. Airline user charges for
example is as high as 15 % .User charges are revenue collected for other
organisations factored into the fare ( without commission ) whereas airlines
are not revenue collectors. Hence IATA DG described airlines as Cash Cows. High
cost of Fuel, High cost of Funds, Exorbitant Airport Rent , Airspace movement
charges at home require government serious attention. On the other hand, Poor management decisions
and corporate governance by the airlines owners have resulted to high mortality
rate in the industry.
Q: In building a strong carriers, some analyst have
recommend consolidation, do you subscribe to this? If yes, can you tell us the
reason?
A: Stand-alone operation cannot stand the test of time. We have seen
these in the past
three decades that mortality rate of our airlines is 5-10 years. A very
poor rate.
They are usually weak, limited and unable to compete.
Q: Tell us the role of IATA, and other international
governing bodies and how would they make impact in building a strong carriers
in the country?
A: IATA / IOSA member airlines operate under standard and recommended
practices that are measurable and guaranty good quality service every time and
all the time. A lot of synergistic benefits are also derived through
interlining, code sharing and price hedging. The domestic airlines will benefit
immensely if they can plug into these programs to further strengthen their
operations. Some are already members such as First Nation, Arik and Aero.
Others should follow suit.
