Arik Air: Long on promise, short on delivery

The rescue of Arik Air by the Asset Management Corporation of Nigeria (AMCON) led to panic in the aviation even though many saw it coming. It further raises anxiety as to whether the airline would join others which lifespan were less than ten years, writes, WOLE SHADARE

Call it a specular fall and you won’t be wrong. Nigeria’s biggest airline came with a lot of promise when it was floated on October 30, 2006. Not a few thought that it would be there for just few years going by the brand new aircraft it bought at inception.

Before then, no Nigerian carrier except the defunct Nigeria Airways bought or acquired brand new airplanes. Among the aircraft Arik acquired were B737-700, B737-800, A340-500, Embraer and a host of Next Generation aircraft.

Arik recruited some of the best aircraft pilots, cabin crew, engineers and other support staff. The carrier engaged the best aircraft maintenance firm, Lufthansa Technik to provide technical assistance to it.

Lufthansa Technik was also to assist Arik Air in the area of personnel training and the establishment of a Maintenance, Repair and Overhaul (MRO) facility in Nigeria. These were ambitious projects for an airline that planned to stay very long on the scene. It was seen as a replacement for Nigeria Airways which went into extinction.

It was indeed the symbol of Nigeria’s aviation industry. The airline hit the ground running by acquiring more than enough airplanes that it needed. It quickly expanded its operations by opening routes in London, New York, Dubai, and Johannesburg and quickly established itself on the West Coast, bringing smile to the faces of many who were for long denied air services. It provided the succour for teeming Nigerian air travellers.

It brought about a choice as many saw it break the duopoly of the London-Lagos route by British Airways and Virgin Atlantic Airways.

Arik had all the promise in the world to excel as many Nigerian travellers patronised the carrier and enjoyed the services it provided on the long haul in its first three years. Many blue chip companies, global bodies adopted Arik for their staff because it pride itself as the safest airline because of the high level of safety and trust to take passengers to their destinations. Their success was phenomenon likewise their failure years after that showed glaringly the inability to manage success.

Signs that the airline was ailing showed three years ago. Although, the management of the airline and particularly its chairman, Chief Arumemi Joseph-Ikhide tried severally to deny the obvious, but the cracks were visible as mounting debts, flight delays, cancellations started rearing their ugly head. Much as they tried to deny the obvious, the Arik brand suffered terribly.

It got to a stage that passengers preferred to travel by road if Arik was the last option they had. To them, it is as good as not ever making the trip as they were synonymous with delays and cancellation than the hope that the airline would take them to their destinations.

This however came to a head when Asset Management Corporation of Nigeria (AON) last week Thursday intervened in the taking over of the carrier to save over 2,000 jobs as the carrier is seriously ailing.

The problem of Arik underscores a well-known fact that Nigerian carriers carry so much promise but very short on delivery. It also confirmed what people know that the average lifespan of Nigerian airlines is ten years.

For John Ojikutu, an aviation security consultant, most Nigerian airlines run their businesses like a grocery store. “They just want to make profit,” he said.

The result is that airlines in Nigeria generally have a short lifespan: in 35 years more than 40 operators have gone bust, including Nigeria Airways, which collapsed in 2003.

Ojikutu said the airlines were heavily in debt, and taking advantage of the country.

His words, “People are operating without paying the fuel marketers, without paying their staff, without paying for the services they are given including insurance and maintenance.

“If they are not making profit, the question is what do they really do with all this money? They are selling tickets every day. As long as we don’t have a strong, credible, independent regulatory agency we cannot have a viable aviation industry in this country.

In their defence, the airlines blame a lack of foreign currency that has left them unable to pay fuel suppliers or, in some cases, landing charges at airports outside Nigeria. Nigeria is one of Africa’s main oil producers but is forced to export crude and import petroleum products because of a lack of domestic refining capacity.

The fall in the price of crude on international markets has seen the naira currency lose value against the dollar and Nigerian banks no longer have enough liquidity.

Although, Arik still operates, sign is going same way of Virgin Nigeria, IRS, Bellview, ADC, Okada, Chanchangi were visible before AMCON’s intervention.

An AMCON source, who spoke with New Telegraph, put the conservative indebtedness of the carrier at over N300 billion.

Besides, the Federal Airports Authority of Nigeria (FAAN) recently claimed that the carrier owes it N12.5 billion, adding that the airline has consistently failed to pay up. But the airline had consistently denied owing the aviation agency.

Arik is also said to owe the Nigerian Civil Aviation Authority and the Nigerian Airspace Management Agency (NAMA) debts running into N10 billion, while oil marketers are also said to worry about the airline’s indebtedness said to be humungous.

Late last year, aviation unions directed the commencement of a joint strike at Arik Air over the airline’s failure to pay seven months’ salary arrears and other anti-labour practices.

Mr. Jude Nwauzor, AMCON’s spokesperson, justified the takeover of the airline. He said the government decided to intervene because Arik Air is immersed in heavy debt burden that was threatening to ground its operations.

“For some time now, the airline, which carries about 55 per cent of the load in the country, has been going through difficult times that are attributable to its bad corporate governance and erratic operational challenges”.

Aviation think tank, Aviation Round Table (ART) said treating the Arik Air’s case in isolation would be to trivialize the magnitude of the problem, saying they all saw it coming.

President ART, Elder Gbenga Olowo said going back to almost 40 years, Government airline Nigeria Airways failed, Pioneer Private airlines Okada, Kabo, etc failed, third generation ADC, Bellview, Chachangi, Sosoliso, etc failed, 4th generation Richard Branson Virgin Nigeria, Air Nigeria, etc failed.

“Believe me, given the same Nigeria operating environment the National carrier yet to be born will fail.

We all saw it coming to Arik and may be others more than a year ago. ART Q1 breakfast meeting in 2016 appraised the very poor situation of Nigerian airlines and rose with unambiguous communique on the way forward.”

He described the cause of problem of Arik as essentially Nigerian business environmental factor, adding that business and government are permanently at variance.

“Cost is permanently higher than Income. Tax overburden and infrastructural deficit erodes revenue steadily. Gazetted policies that will enhance performance are not implemented. Credit is not in the Nigeria business dictionary. Yet aviation is prone to the minutest situation in the economy ranging from weather to politics.”

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Wole Shadare

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