No succour yet for airlines in Nigeria

The Nigerian airline industry defies any known solution. The problems are huge with no hope in sight of rescuing the airlines.

They keep on going under years after showing some element of promise. The take-over of Arik penultimate week by the Asset Management Corporation of Nigeria (AMCON) shows that until airline managers under the murky waters of aviation show good corporate governance, the sector would continue to witness failed airlines.

The take-over of Arik Air is not the primary focus of this write up, it is about sorting issues that have made airline operations in Nigeria cumbersome.

Arik was on self destruct from day one when the carrier was formed. It lacked good corporate governance and was steeped in mind blowing debts.

Anyone with connections with a bank or persons of financial influence in Nigeria think they can run an airline, only to find that it is not that easy.

First, they are not good mangers to start with, let alone the challenges of running a sophisticated business such as an airline.

Airline is a very costly business. You have to be on your A+ game to return profits. The business is not meant for lazy people – from the CEO to the last drop of people who clean the interior of the aircraft.

Once you step in the door of an aviation business, better pull out your best brains left in the bag or be toasted out the perimeter of the enclave. It is that simple!

Not much support is given to the aviation industry, despite its slow returns on investment. The International Air Transport Association (IATA)’s study some years ago revealed that the global aviation sector recorded 0.1 per cent profit in 40 years.

This is a true reflection of the workings in the industry. Government’s sacred responsibility in creating a palatable environment for the industries to thrive cannot be over stated.

Commercial aviation is a critical industry in any country because of the capital and resources generated or lost by it.

The implicit and explicit costs can go each way, only in this case, Nigeria has been at the receiving end of all the losses.

In the developed world, they respond in kind to curb the changing “terrain” in their economic cycles. For instance, key words are regulation and deregulation.

Typical examples as witnessed in the United States of America will tell everyone watching how tactical law makers fight to combat rising and falling economic standards not only in aviation matters but generally for the best welfare of their people.

The huge capital outlay aside,it is a fragile industry that requires expertise, not grandstanding, to operate successfully. The aviation sector is the pivot on which global businesses revolve.

Operating in Nigeria is quite expensive because charges are high and compulsory. Experts have urged the Federal Government to grant the operators waivers on spare parts imported into the country and also help them with the training of fresh hands needed to replace the ageing workforce in the sector.

It is becoming imperative that unless they merge, the carriers would continue to suffer the same fate as Arik. All over the world, strong airlines are merging and consolidating to remain in business.

Let us look back at some of the few most recent airline mergers recorded in the United States alone: US Airways/American Airlines merger in 2012; Southwest / AirTran Airways in 2011; United Airlines / Continental Airlines in 2010 and Delta Airlines / Northwest Airlines among the many listings have consolidated and merged into one airline because the economic state of each airline was unsustainable.

All these airlines were considered one of the biggest 10 airlines in the United States of America. One wonders why then would these airlines merge?

These airlines had good managers who look at the bottom line and once that is not attainable, tactical reasoning come into play.

The search for partner begins. The government doesn’t push them to do this because the airlines realize that if they don’t merge, each will have to face their individual demise.

Government or law makers only give its blessings when the two airlines in question decide to merge, making sure that are no anti-trust laws broken in the process.

Aviation Safety Advocate, Captain Dung R. Pam told Woleshadare.net recently that it is not the business of regulators to try to make airline owners consolidate with other diminishing airlines.

He said the airlines make decisions to consolidate with other airlines like it is done in the developed world especially in the USA.

The expert added that since the Nigerian airline owners can’t seem to figure this out themselves, the Nigerian Civil Aviation Authority (NCAA) can fish out airlines that are below the “radar” – meaning who aren’t performing well and could easily lose their operating licenses.

He explained that periodic seminars or symposia should be organized by the government operatives for CEOs of airlines demanding them to think like their counterparts in the western world.

“This of course should be followed with the stick and carrot approach where incentives not lavishness be stipulated.

The reason why this is important in Nigeria is because there are some airlines that have no business being in the aviation arena, and all they cause is a drag on others with genuine passions to return profit, the expert said.

He disclosed that there is nothing wrong in having between five to six reputable airlines competing with each other in the Nigerian airspace.

His words, “Out of these seven will emerge the first three national carriers that can pursue the CATI status from ICAO from International flights?

It is about time our government gives up nursing the national carrier idea because that has not worked and there is no reason why the government should keep wasting money on mission impossible”.