How to stop crises in airlines, by Tukur

Recapitalisation and provision of good aircraft financing framework are the twin factors that would help airlines to remain strong and profitable, former Assistant Secretary General of Airline Operators of Nigeria (AON), Mohammed Tukur, has said.

He said the ability to meet these requirements would help to sustain airline’s operations for a very long time.

Tukur said these in a chat with Woleshadare.net in Lagos. He said speculations of a possible merger of some domestic carriers have refused to abate. Rather, they are gaining momentum in the aviation sector.

 He noted that most of the airlines were faced with multiple taxation and difficulty in sourcing foreign exchange for their operations. According to him, the problem is compounded by unhealthy competition among the airlines, which makes them unable to earn enough revenue to cover cost.

He said: “The competition in the place is suicidal. There are about seven or eight airlines doing Lagos- Abuja and Lagos-Port Harcourt routes. “So, most of the time, they fly their airplane half-filled or empty.

Thus, they are not earning enough because of the unhealthy competition. “We don’t need more than two or three airlines in this economy. If you have two or three, that is what economist call duopoly or oligopoly.

There will be healthy competition and all the benefits of competition. “So, the first solution is that they should form strong alliances to become two or three so that we can minimise competition that is preventing them from charging adequate fares.’’

He noted that some international airlines were already involved in such alliances, adding that Nigerian airlines should take a cue from them. Alliances between airlines on international markets have become a dominant feature of the airline industry in contemporary times.

The national carrier of Egypt, Ethiopia, Kenya and South Africa are in various alliances, which has enabled them to play in the global market and remain strong and financially viable.

In order to enter an alliance, an airline must fulfill some parameters of quality. Smaller airlines must be invited by a bigger airline to join and have to start a long process of adapting to the quality standards of an alliance.

In these cases, there is an intensive exchange of know-how and experience from the bigger, more professional airlines. This is also a very important reason for airlines to join an alliance.

Tukur noted that Nigerian carriers also stand to benefit immensely if they are able to step up their game to meet the requisite criteria that allows them be members of these global alliances.

The code share agreements are definitely the main reason for an airline to join an alliance. But, besides that, there are several other benefits both for the airlines and for the passengers.

He stated that there is now substantial evidence that existing alliance relationships have led to significant consumer benefit for passengers on interlining trips, both in terms of improved service and lower fares.

To him, the alliances allow airlines to share marketing costs and have a unified presence. For example, Sky- Team has a service called “SkyTeam Global Meetings”, which means that if you are a big company and have a world meeting with people flying from different parts of the world, you can let them all fly with SkyTeam airlines and save money.

This concept is marketed in trade fairs, websites, etc., and is paid for by all airlines together. This is much cheaper than having your own marketing effort separately.