Sanusi: Many airlines’ll go under post COVID-19

he Managing Director of Nigeria’s oldest airline, Aero Contractors, Capt. Ado Sanusi, in this interview with WOLE SHADARE paints a grim picture of situation Nigerian carriers are most likely to face post-COVID-19 as airlines are running out of cash and could find it difficult to restart operations amid uncertainty they are faced with

There are indications that Nigerian carriers are at the brink of bankruptcy following COVID-19 outbreak as the cash reserves are fast drying up. How true is this?

It is like somebody is starved of oxygen for a long period of time. He is now given the oxygen. Most of his vital system is gone down. The main revenue line has been closed and there is no revenue coming into the company. All other cost has remained constant. The only cost that has not remained constant is fuelling, which is very big. Fuelling is close to 30 per cent and in some cases 40 per cent. You can imagine all personnel cost that is there. Leasing is there; other operational cost is there. Ticket sale is the main revenue of the airline and that is what sustains the organisation. You deprived that organisation of that liquidity, it will be very difficult for the airline to survive. It is not that it cannot survive; it will be very difficult for the airline to survive. Even to start the operation, it will be very difficult because there is no traffic. The airlines depend on the revenue gotten from ticket sale.

Does it mean that the airlines will still find it difficult if they are to restart their operations today?

You can imagine the entire supply of revenue has been shut down and all other costs are not shut down completely. Of course, some operational costs of have reduced but personnel costs are still there. Equipment cost is still there, office rentals and other costs are still there. If you have had some commitment of payment, you must oblige to pay for it and all other contracts that you have entered; you are obliged to pay for it. Some subscriptions are monthly that you have already made payment upfront. All those things are costs that are going to be absorbed by the airlines.

Does it mean resuming flights won’t necessarily guarantee survival?

Not at all. Resumption is just like say; ok, down the line; say four to six months, we may be lucky to survive. Even if we start today, in the next 90 days, we will still be struggling. It is not start today and everything comes back to normal. It is just like you come into a room and turn the light on and everything is fine.

Is resumption going to look like the airlines never existed just like a start-up airline?

That is why when you hear that an airline has shut down operations and it is starting up, it is very difficult because it is almost the same energy you require to start up again. It is like you are going to start the airline all over. The only thing that you have that a startup does not have is the clientele of the passengers. That’s all. It is the same process that you are going to go through and of course winning the confidence. You have the experience that is what is going to go for you.

How possible is it for airlines to make refund to passengers in the face of cash crunch?

You have to look at it from two different or three categories. There are categories of tickets that were bought through the International Air Transport Association (IATA), which we call IATA clearing house. I heard some people say N10 billion and so on. There is no way we will sell N10 billion tickets in two, three months for local airlines. It is not possible to do that for local airlines. What IATA is looking at is the entire tickets sold comprising international or IATA billing house, national airlines because we have what we call Billing Settlement Plan (BSP) Nigeria, BSP West Africa, BSP World. There might be different people that bought tickets, which probably has departure out of Nigeria or all destination to Nigeria and which happens to be.

So, how do you get your refund?

Of course, you go through the airlines, the agent that you bought the ticket from. I think some people don’t understand the dynamics of how it operates. If you bought a ticket or an agent bought the ticket, that means the agent issued a ticket and because the agent has issued the ticket and has collected the money already from you, may be he has not remitted the money to the airline. Remittance to the airline is in two weeks; sometimes it is three weeks or a month. It depends on the BSP that you have. That is very simple. You go to your agent that you bought the ticket from to ask for the refund. It is in the IATA billing system. So, money cannot be missing. It is either IATA has already transferred the money to the airline or the agent will transfer it to the passenger. I am not talking about local airline; it is a different ball game. We are already talking about Aero, other local airlines that use system do not have to go through BSP or IATA clearing house. That means what they need to do is that they have direct agreement with travel agents. Travel agents may have put bank guarantee or cash or something else. That one is very simple. It is a one on one thing. If I have already paid the travel agent, I will go to the travel agent to refund my money. The travel agent will look at it, has he transferred the money to the airline? They will refund the money to the passengers. If the passenger feels like leaving the ticket the way it when we open up that he can use it, so be it.

Will the ticket come with another condition?

No. How can it? It cannot come with any condition because it is not the fault of the airline or the passenger that this thing happened. In this circumstance, you come and make your request as far as the ticket you bought is the same. The airline will only make it flexible. You can reroute, you can do anything you want to do with it inasmuch as; let me give you an example. If I bought a ticket from Lagos to Warri and want to reroute from here to Sokoto and may be to Sokoto, it is N5, 000 extra that is the only thing you will pay. But if you decide to go to Warri, even if you decide to travel today, you will not pay anything It is a very simple thing. I am seeing a lot of write-ups and people say it is a big deal. It is not a big deal. The world is not looking at the ticket. The world is looking at how do we come back after coronavirus. That is what we are looking at because nobody has experienced it. The only time it has happened was during the Second World War and after the Second World War was when the International Civil Aviation Organisation (ICAO) was created. I think that is the only way forward. We need to come back stronger to see how we can bring back the industry. It is a global problem. I have seen AON say let us be given palliative or bailout. It will not help. Anything that is coming unilaterally from a country will not help, it must go global. If we have not agreed that we can do this do that, it won’t work because aviation is global. We will get the bailout and we will end up paying it to government or the leasing company. It has to be a holistic approach. It has to be regional approach, continental approach and global approach so that by the time we roll out, it will be a new aviation industry.

How do the airlines reposition after this period of COVID-19 even if we are to end COVID-19? Passengers will still be scared of flying. How do you boost passenger confidence?

I believe the post-COVID-19 is going to be a bigger challenge than the COVID-19 itself. As you said, passenger confidence will definitely go down and how we are going to make passenger confidence come back. It is going to be very difficult to get the passengers to start flying. Yes, it is going to be difficult but I believe we have an opportunity to reset the aviation industry globally and even our country. Now it is the time for us to pay more attention and reset it and get it right because all the other countries in the world are setting up their aviation. Some are thinking of nationalizing some carriers.

Some are saying we are going to give you money to continue. We are not left behind. We are almost at par. We must decide what we are going to do with aviation to rebuild aviation industry in the country and then invest wisely and make it a sustainable venture at the end of the day. Many airlines will go under because the revenue they will get from ticket sales will not be able to sustain them.

Wole Shadare