We ‘ill continue to support airlines to ensure they are profitable-Sirika

Text of the Minister of Aviation, Hadi Sirika’s presentation at the Aviation Breakfast Meeting Thursday last week, with the theme, “Aviation in Nigeria: What Next? held at the Eko Hotels organized by Phillips Consulting Limited (PSL) where experts in the industry like the Chief Operating Officer (COO), Mr. George Uriesi, and a former Secretary-General of African Civil Aviation Commission (AFCAC), Ms. Iyabo Sosina kept the audience spellbound with presentations on the state of the aviation industry in Nigeria, Africa and globally, interconnectivity challenges in the continent and other issues affecting the growth of the industry. WOLE SHADARE was at the ‘Breakfast meeting

The Murtala Muhammed Airport was built in 1979 to take about 200, 000. The airport processes 8 million passengers per annum. It is like a place where you have one room, one toilet, and one kitchen and you suddenly married three or four wives, and you have to bring them into such a facility. Suddenly, from two people, you now have 15 people and become 20 people. This is the story of our airports of how they have become dilapidated, and unsafe because if there is any emergency in these airports, even an outbreak of fire, there will be a problem. I was scared in 2015 when I visited the airports and saw the position of the Murtala Muhammed International Airport, Lagos, and other airports. I said to myself no no no, the government does not have the quantum of capital, the finance to maintain these airports to the standards that they need to be.

We started the concession programme and as I said we are going through the Infrastructure Concession Regulatory Commission (ICRC). It was step-by-step. We developed the Outline Business Case (OBC) all the way to getting those who won and this was announced yesterday (Last week Wednesday); those who won and the reserved bidders for the airports. The plan is to push it to the private sector and give them all the incentives that they need to make our airports better. When we came in, in 2015, we found out that a few terminal buildings were being built, about four of them and they were about 10 percent completed by the time we came. My gut feeling as Minister was, stop this and let us go ahead and concession the airports and allow people to put in their money. There were a lot of uncompleted airports, we completed them. I am very happy that we have completed and commissioned them. If you look at Lagos now, when the airport was built, it was cited far away from the city but today it is what is. We now said you know what, we will develop all the master plan of the airport and keep it as sacrosanct like the Quran or the Bible. We commissioned consultants who are now developing all the master plans of all the airports and the initial document will be out this month. We have said no more allocation of lands until the master plan is in place. In Abuja, they have given us 12, 000 acres of land. It is going to be the biggest airport in the whole of Africa in terms of land size to allow people doing business including airlines, MRO, and leasing companies, all these airport plans including Abija, Lagos, Kano, PH, Enugu are all Trade Free Zones. This is another support the government has done which I think is in line with what the government has done for aviation including the removal of VAT for aviation, Customs Duty on aircraft and spares, and making all airports free zones.

Another aspect of the roadmap is to have cargo facilities in such a way that we would be able to move both perishable and non-perishable cargo goods around the world and around the country which is being developed. I am happy to say that four of them have been completed, Abuja and the rest of them. We are also building seven more. The contracts have been awarded in Ekiti, Kaduna, Jos, Katsina, Yola,  Calabar, Port-Harcourt, and Enugu. We are attending to that and all of these are being developed under the roadmap. You can imagine the ability to ferry out of let’s say Katsina 40 tonnes of tomatoes into England. The amount of foreign exchange you are going to earn is enormous. You can imagine flying tomatoes chilly and pepper or onions to Port-Harcourt from Kano because if you go by road, you will spend 28 hours and they will perish before you get there but flying 45 minutes or one hour will take them there fresh and you will have them there. This is also part of the roadmap. The airport city in Lagos has been designed to link the old airport with the new airport by rail and also to develop all the areas where FAAN, NAMA, and others have those structures to completely give them out and to put a private sector initiative there for offices, hotels, cinemas, spars and what have you. Inspite of the roadmap, all the plans have been developed, all the consultancy services have been given and all the works have been done and given to the private sector and for those of you that are interested.

George Uriesi in his presentation said we need to organize ourselves because the market is big

If people outside Nigeria can come inside Nigeria, we are not going to find airplanes to fly them. That statement is very true and the airlines do need to organize themselves. They need to provide robust, efficient service delivery. We are about 200 million people. We are at the center of Africa. We are at the center of all locations. So, I agree with him.

Airlines donations

I don’t want to say this. George brought it and responded to what he said. It amuses me when I see airlines donating aircraft for humanitarian purposes. It gets me very worried because I know that if you give an airplane to go and pick some people in China, Rwanda, and South Africa from anywhere. Really and truly, what you are doing is taking from the earnings of the profit of that airline. Philanthropists’ are encouraged to do so but please do it from the point of the airline business. If you do it very well, the profit margin is about five percent. So, any donation for patriotic reasons will be eroding the profit of that airline and you working for the airline to come down. Any entrepreneur in civil aviation should please donate, should please be patriotic, and please bring our people home but should please do it in a humanitarian way and not from the airlines’ money because he will be preparing the road for disaster. We have seen Okada, Kabo, Harka, and a lot of them. If airlines should begin to believe in the roadmaps, to begin to believe in what we said we can do; infrastructure, for instance, it is not easy to fund. We went through recession twice in the life of this administration. Even in a recession. We have brought funds of $484 million to foreign airlines. We paid for it. Even in the recession, we found the money to fix the Abuja airport runway that was a death trap. Even in the recession, we found money to fix Enugu airport; even in the recession, we found money to fix some other airports.

Why national carrier came about

Because of the gaps we suffered, we said there should be a private sector-led airline; an airline that can be called an airline, not a one-man show. There is nothing wrong in one man’s business if it is done very well, what matters is to do it very well. We said we wanted to achieve a private sector-driven airline with the government owning five percent or less. When the airline starts, the five percent shares would be sold to the private sector. In December 2016, we began the process. We appointed a transaction adviser. Everywhere I went they called me Mr. National carrier because they believed it would never happen. It is something that would stand the test of time. We called for bids and all that, we went through the process with ICRC and they developed a business case. This business was uploaded to the website of ICRC and it is there for people to access. For those that bothered to ask, we have given them. We distributed them at many conferences and published the document and there is a freedom of information Act that we expected them to have gone for if they found issues with it and to give them the information that they want. All information concerning it, they can always get it. That business case said there should be a Nigerian company christened Nigeria Air known to Nigerian law. It is not a case of Virgin Nigeria and the equipment does not belong to the airline. That is not the way. I have spoken in Lagos, spoken in Abuja, I have spoken in London, spoken everywhere. We had held six stakeholders’ conferences aside from zoom meetings aside from meeting with the Airline Operators of Nigeria which had happened more than 20 times. In these meetings, we dwelt on the roadmap and national carrier. They asked all the questions and we answered them. During this process, I as a person appealed to them including Air Peace, Azman, and the rest of them, and said the government is establishing a national carrier, a Nigerian company that they should please come on board to participate, come and own part of it.

Only last week, one of them claimed that the invitation was informal. I told him that, I met you, and spoke with you. Even the market woman knows about the plan to set up the airline. I told him that the advertisement we did in the papers meant what? I invited them but they were not interested. We invited strategic equity partners to come with all they have with their consortium to own 49 percent of the venture. There is also 46 percent for Nigerian entrepreneurs whether airlines or individuals. I said the government would retain five percent. For people who are asking, the business case says three aircraft; $350 million is 100% of the airline for a start. We went through the process. The process is not our process. We went through the process of ICRC. The legal team for this airline is the Office of the Attorney-General of the Federation, the Office of the National Budget and Planning, ICRC, the Aviation Ministry, and the rest of them. They formed a team to deliver the airline. The Outline Business Case as it is now that is well circulated is not the full business case because the preferred bidders need to arrive at a meeting point to establish the airline. Some entrepreneurs from outside the country had come and asked us to give them another chance because they are asking a lot of questions. They gave us a promise and asked us to give them another four weeks. After two weeks, we put a deadline of 11 o clock. Two came at 11.20 and we said they are late. The time had been drawn on the register. What we had at that time was the Ethiopian Airlines consortium. We have SAHCO, we have MRS with a consortium that has been evaluated. AON has dragged me to the House of Representatives, and Senate with all meetings held. Their concern is that if this airline is established, there would be a price war, they will under-price everybody, drive away all of them, and jerk up the price six months along the line and remain the only player. Well, I think this is laughable and this is not the case. AON also knows so because our laws provided that any fare increase or decrease must be with consultation with stakeholders which is the airline and everybody else, and the Nigerian Civil Aviation Authority (NCAA) and the NCAA won’t allow that to happen. To tinker with the price of tickets, it has to be with the stakeholders, airlines, and the rest of them including the NCAA. Their fear is unfounded.

If we have an ulterior motive, we would not have been approving airline requests day in, and day out during my tenure as Minister. I have always approved their requests. Just three weeks ago, the United Arab Emirates approved some of our airlines, and Ethiopian Airlines also approved for them to operate. Most of the airlines came in during my tenure as Minister. There is no single request by any airline that I turned down to Banjul, Dubai, to London. Even the fear of Air Peace with Emirates was a case in point. We have never stopped any airline from wherever they want to go. Our reason for doing this is to help to nurture, sustain, to support airlines and other businesses in aviation, and by so doing, they will employ Nigerians. None of them ever asked anything that was turned down. There is no airline down to taxi driver that ever gave me tickets for free or I asked for anything from them. We are more than ready to support entrepreneurs in the aviation industry, to push them abroad to go and do business. I have given them the London route which is lucrative. I have given them Dubai. I have given them anywhere they want to operate. We will continue to support them to ensure they are profitable.

Wole Shadare