Arik’s problem is man-made –Akinfenwa

Capt. Shina Akinfenwa is the Managing Director, Merchant Express Cargo Airlines Limited. He is one of the big players in the airline cargo business in Nigeria. In this interview with WOLE SHADARE, he speaks on bad policy formulation by government, self-destruct of airline operators and high taxes on cargo, among other issues affecting aviation in Nigeria. Excerpts

How do you rate the aviation industry in terms of policy formulation?
Policies over the years have not been beneficial to the industry. In terms of passenger operation, the domestic operation, which is the one I’m concerned with, there has not been much encouragement by government considering the fact that the international airlines are encouraged and assisted to have multiple designations to Nigeria.
Normally, we expect international operators to land in one major airport while the domestic operators interline with international operators to take inbound passengers to their destinations, but that is not the case with Nigeria. Most of the operators, I mean the international airlines operate to Abuja, Port-Harcourt, Kano and Enugu.
The only passengers available to domestic operators are just those from within, whereas in other countries, in Africa and beyond, the operators are allowed one destination, more especially when we do not have reciprocating airlines to serve those destinations. Domestic operators are only confined to patronage from domestic passengers. I am not part of Airline Operators of Nigeria (AON) because we are into cargo.
The AON has been putting pressure on the Federal Government, but unfortunately, they have not made any headway. If they had, all these would have been reviewed. To go further on this issue, we know what Bilateral Air Services Agreement (BASA) is.
It means, I go to your country, you go to my country. When they had Nigeria Airways, the countries that Nigeria could not serve because they don’t have airline to go to their country, they were paying a kind of royalty and the royalty they pay was supposed to be used to assist the domestic airlines and the aviation industry, which is not the case anymore. It is expected that the fund would come in handy to assist the local airlines or to mitigate what they face.
Akinfenwaaa
 
Looking at the airline industry, the airlines are shrinking by the day, some of them are closing shops, what does it portend for the sector?
The industry is capital intensive. If you do not have your eyes on the ball, you are not going to succeed and that is what has been happening. That you are an engineer does not make you a successful airline administrator.
The airlines that are set up in Nigeria have not been set up the way airlines are supposed to be set up. Somebody that has money, the next thing he wants to do is to set up an airline and be recognised as a big shot in the society.
What has been happening over the decade is that there are people with little or no knowledge about aviation. They do not know that aviation and administration are two different ball games. Setting up airline and running an airline are different.
They always make the mistakes and do not learn from the mistakes. Airline management is a degree course they run abroad. It is not as if we don’t have people to do it. Why are we still trying to use the same material that is not capable of delivering the goods to run the airlines?
 
There has been a development in the airline industry where the Asset Management Corporation of Nigeria (AMCON) came in to take over two carriers, Arik and OAS Helicopters, what is your view on this?
In the first place, there are two issues. Borrowing money to run an airline is different from operation of the airline. If you borrow money from a bank or wherever or from financial institution to run an airline, you should know that you are supposed to be paying the financial institution and when you default, there is a default clause.
If you default to a point, there is the danger of repossessing your equipment, taking over the airline as it in the agreement you entered into with your creditor.
That is on one side. If you default, they are going to take over your operations. That is a different thing because the default could come as a result of inability to successfully run the airline.
 
What is the implication for the country’s aviation industry and how can one get out of this recurring problem?
Well, we have to do what we have to do. We have to run the airline the way it should be run. I know that the profit margin in Nigeria’s aviation industry is 3.5 per cent to five per cent. Only in Nigeria that I see somebody going to borrow money at 15 per cent, 20 per cent to run a company whose profit margin is 3.4 and five per cent. How does he expect to succeed?
The concept of setting up that business is already in default right from the beginning; then you will now have to put yourself in a difficult situation. As a contractor that has made money elsewhere, you come to the sector, bring your son who is probably a chemist to come and be the managing director to manage the company. It does not work that way. You got it wrong right from the beginning.
There is no airline that has been run in Nigeria according to the way it should be run since the demise of Nigeria Airways. Only Nigeria Airways had the resources, the manpower that they groomed right from the beginning and they rose through the ranks to the top. For those who set up airlines thereafter, it was just an ego thing.
 
When these airlines start, they come with a lot of promise. Look at the case with Virgin Nigeria and others and now to Arik. We assume that they do their feasibility study, how come they go a few years after operations, what is that thing that has affected them apart from what you just stated? If you are to handle Arik, what would you have done?
Arik came in with a lot of expectations and we all looked up to it because at the beginning they came with experts from everywhere. But then, the challenge was that the top management, the decision making body brought that problem. If they had ceded the final decision to the experts, they wouldn’t be where they are today. It would have been a success story.
In the beginning, they started on the right footing with the correct aircraft and maintenance partner. They started the way normal airlines would start.
They started with the small aircraft and later the bigger ones. For them, somewhere along the line, somebody from somewhere, the decision making body sadly started making wrong decisions. Where are the experts today? They have gone.
That is the challenge. Generally in this country, we fail to admit we do not know something. We say why do you bring expatriates to do the job, but we do not have the expertise. So, why shy away from doing the right thing?
To address the second part of your question on what would I do if am asked to come and manage Arik. I won’t accept the offer because I am not an expert on that.
So, I expect government to ask the simple question, like what can we do? Why don’t they ask Lufthansa through the German High Commission to send you one or two experts to come and look at Arik and see how they can bail it out or ask British High Commission or British Airways to come and assist.
If care is not taken, by this time next year, it will be worse than it is today because what we need is an ex-pert t h a t c a n come and sit down, do an operation audit, administrative audit and management audit.
This is how to do it. I am not saying it would happen in one year, it could take two to three years, but this is how it should be done. AMCON putting N10 billion into Arik is not the solution.
Arik collected aviation intervention fund, what happened to it? At that time when they were collecting intervention fund, they said this is how much we need to bail out.
What happened to the money today? That is gone. How many years ago now? We are not talking of N1 billion here, so many billions of naira went to Arik and all other operators collected aviation intervention funds. Where are they today? Arik’s problem is primarily man made because if you are doing the right thing and you have hitches, it cannot be permanent loss.
If you are doing the right thing, government will be willing to encourage you, but as it is now, how do you expect government to support you when you owe the same government so much money?
 
If it is man-made, don’t you think that the regulatory body should have taken severe actions against erring airlines?
These airlines have political clout. The regulatory body cannot just push them here and there because they were close to the top. Which of these airlines was not close to the Presidency? If the regulatory body tries to stop it, they would go to the top to report the regulator.
 
A top official of Arik that was taken over by AMCON has been sent to manage another failed airline, what does this portend?
I really don’t understand the rationale behind it. That stands logic on the head. You took somebody from a failed airline, failed administration and you now put him in another failed organisation and you expect result? I don’t have to be a genius to know that that is a terrible decision. It is double jeopardy. If the guy knew so much, why then did the organisation fail?
 
Looking at the revenue figure released by NCAA recently, the sector was said to have generated N800 billion in two years. That raised issues because others put the amount at a little over N1 trillion. Is this not a contradiction that we say aviation is going down, but we make enormous amount from ticket sales alone, then what is the problem of the sector?
I do not know where they got that statistics from, but with that type of resources, I see no reason why the industry should continue to be in this situation because if we have access to that kind of resources, it should actually be made available to genuine operators at reasonable interest rate in order to boost their flight operations.
Yes, you are making the money, but where is the money? I don’t see FAAN doing any maintenance on the runway; I can’t see FAAN doing maintenance on the infrastructure they have. FAAN is collecting toll gate, car parks, PSC, TSC. FAAN collects three different charges on cargo alone. The cargo apron that has been there has not been fixed till now.
It has not been expanded to accommodate additional B747 and other larger aircraft. When a cargo aircraft comes in, after two or three aircraft park there, it is congested. Some go to passenger areas to park until one finishes discharging its cargo.
It is the same thing that is going on all over the country. People are paying money for all these services, but they are not getting it. What is happening to the money, nobody knows. You talk of runway closure; I am surprised.
Gatwick airport has only one runway. It is operational all year round. It is maintained all year round. It closes at 12 midnight for about six hours’ maintenance.
They know what portion of the runway they are going to maintain. The traffic to Gatwick airport is more than ten times the traffic you have in Abuja airport per day. London Gatwick is the second biggest airport in the UK after London Heathrow Airport. Why can we not maintain our own runway in Abuja for 32 years? FAAN should be asked this question.
Who is going to pay for all these billions for relocating all airline operations to Kaduna? It is shameful that we use something and we don’t maintain it and it is costing so much money to relocate facilities, personnel and equipment to Kaduna and to the rest of the world. It makes a mockery of us.
Wole Shadare