Multiple charges killing domestic airlines

Air Peace is a new entrant into the nation’s aviation industry, having only last Monday got its Air Operator’s Certificate, AOC, from the regulatory agency, the Nigerian Civil Aviation Authority, NCAA.
 

Coming at a time some existing airlines in the country are closing shops due to harsh operating environment, chairman of the airlines, Barrister Allen Onyema, said Air Peace would get it right where others failed by adopting the right model for scheduled operations.

He, however, appealed to the Federal Government to prevail on aviation agencies to cut down on the multiple charges imposed on operators, saying that was partly responsible for the high mortality rate of airlines in Nigeria.

He also dismissed insinuations that he was fronting for the First Lady, Dame Patience Jonathan. In this interview, Onyema spoke on these and other issues in the sector.

Excerpts:

You will soon start flight operations, having just secured your AOC. How do you intend to cope with the challenge of multiple charges by aviation agencies that operators have been contending with over the years?

Government and the people of Nigeria should start asking questions: Why do Nigerian airlines go extinct? Airlines go into extinction very easily in Nigeria. And there are so many factors. Above all, the current administration should be commended for giving the airports a facelift.

Credit must also go to government for the waiver on import duties and charges it granted domestic airlines for their aircraft and spare parts. That has assisted airlines to save huge sums of money that would now be deployed into maintenance of their aircraft.

But, a lot more could be done by government to assist domestic operators. Government should not only support start-up airlines, but the existing carriers because airport and air navigation charges are too many; five per cent to this agency, five per cent to the other.

The bulk of the revenue accruing from ticket sales goes back to aviation agencies as payment for charges. Under this kind of arrangement, no airline can break even, let alone run profitably or recover their operating costs.

If the airlines cannot recover their costs, that means they are incurring losses and ultimately they close shop. The negative side of an airline closing up is that there will be job losses which give rise to insecurity.

I am calling on President Goodluck Jonathan to direct aviation agencies to reduce airport and other air navigation charges for domestic carriers to enable them keep their business afloat. The current administration has done well for aviation, but government should remove the double and high airport charges that have become prohibitive.

If an airline is paying out over 10 to 15 per cent of its revenue as airport charges, where will the operator get money for aircraft insurance and maintenance, aviation fuel and other issues it must attend to? Where will the airline get money to pay its overhead costs? So, the prohibitive charges should be far away, they belong to the past.

What is your reaction to insinuations that Air Peace is being funded by some people in government, including President Goodluck Jonathan and his Special Adviser on Niger-Delta Matters and Chairman of Presidential Amnesty Programme, Kingsley Kuku ?

These insinuations are unfounded. Neither President Goodluck Jonathan nor members of his cabinet or my friend, Hon. Kingsley Kuku, has anything to do with the funding of Air Peace. The insinuations in the public domain are unfortunate and misleading.

It is being peddled by people who either have political scores to settle or undertone to massage or operators who are afraid of our entrance into the aviation sector. I get very angry when people throw up such insinuations that even Mr Timi Alaibe or anybody they know is my friend that is in or was in government is giving me funds to run an airline.

They even throw up names of people I have never met before. They even mention the name of the President’s wife, Mrs Patience Jonathan. I have never met her. I have also never met President Jonathan in person. I am very sure people doing all these are doing it for political reasons.

I am sure too that some competitors are scared of Air Peace, so they could do anything to bring me down. We are prepared for those who are poised to malign our reputation in print or any permanent form; very soon, they will make my day in court.

How are your banks reacting to this allegation on your source of funding?

The banks are there to explain to the world the source of funding for Air Peace. The record will speak for me. The banks have my details on the business I undertake and the cash flow accruing from them to start an airline.

I am involved in many businesses having to do with conflict resolution with the major oil and gas companies, in community engagement with firms such as Shell Petroleum Development Company. Shell for instance was bankrolling me in millions of naira before the amnesty programme started in 2009. Shell has done a huge job by sponsoring me to train youths, militants and elders of impacted communities in the Niger-Delta.

That was a huge window of funds for me before the amnesty programme started. It was the involvement of Shell in the amnesty programme that gave rise to what people in the region are enjoying today.

Chevron also engaged me to be part of the training for youths in the region and paid me a lot of money.

It is my firm, FEHN that handles the community outreach programme for all the oil and gas companies in the Niger-Delta. So, the millions of naira made in 2004 till date in my conflict resolution business with the oil and gas companies is sufficient to invest in the aviation industry.

Besides, I have other businesses. So, Air Peace is owned 100 per cent by me. If I were fronting for anybody, will such a person allow me, my wife and children to become directors and members of the board of the airline?

It does not happen anywhere. It is not true that I am a front. Don’t such people have brothers and sisters to use as directors in the airline? Who will allow you to become owner of his business?

So, people spreading such malicious information are vicious. I think I deserve an award in this country for my many selfless contributions in pursuing peace, my integrity is intact. I am not a politician and I am not planning to be one. I own Air Peace 100 per cent with my children and other members of my family.

Our seven aircraft are named after my wife, children, my father, my late mother and other family members. If anybody was providing funding for the airline would they allow me to do this? The answer is definitely no.

How do you feel with the issuance of air operators’ certificate to Air Peace by NCAA?

First , I want to thank God for this achievement. It came after one and a half years of hard work and diligence, working with the NCAA team. I feel on top of the world, I cannot even express the joy.

But, it is the beginning to another step in delivering a world class airline that will change the face of air travel in Nigeria. We will not rest on our oars; we will continue to work hard to ensure that the aircraft hit the skies flying. Our plans are huge, but we will take them step by step.

What are your plans for commencement of flight operations?

We have just been awarded the air operators certificate by NCAA, we will meet as a company and roll out our plans. That will come very soon. We are working very hard to ensure that we deliver on our promise to deliver quality service.

What is the motivation for you to invest in the fragile aviation sector where return on investment is low?

My interest in the aviation sector has been driven by an unsavoury experience. In 1998, a group of people met and we had a robust discussion to consider investment in aviation. The people talked me into buying a cargo plane, and the potentials of making money in such line of business.

They packaged it as a cargo airline. I sold some of my property in Lagos Island to enable me raise sufficient capital to get into such huge capital outlay venture. Having sold my property, I brought the money to the table, in the next nine months I did not see any aircraft as they promised me.

It took me another nine months to get my money back from the people. After that bad experience, the urge to get into aviation at that time died.

However, in 2007, I started thinking of going into aviation again. My interest this time around was fuelled by what someone told me, that investing money in the purchase of one aircraft could create job for about 100 people directly and that indirectly, it could create up to 200 jobs.

In that case, I was inspired to get back to invest in aviation so that I could create jobs for Nigerians.

What is this motivation to create jobs?

My interest in creating jobs for Nigerians is purely spiritual. It was one of the promises I made to Almighty God in 2003, when I sought God’s face to bless me in all my endeavours and chosen career, and I made a promise to God to give back a good per cent of my gross earnings, not profit, back for evangelism and touching the lives of people that are less privileged than me.

Since then, I have gone ahead to deploy the money into building churches, assisting indigent people and touching lives around the country quietly, supporting organisations that mean well for the country.

These include supporting the Arewa Transformation Empowerment and Initiative, for which I got an office and bought a bus for them in Kaduna, in addition to giving them over N10 million and other things. All of this because I believe in peace and doing the work of God.

In the last two years, I decided to come back into aviation by setting up Air Peace. The primary motive is because I could use Air Peace as an airline to create massive jobs for Nigerians. I am investing in aviation because it could generate revenue for me. This is very clear because of the low returns on investment.

If I leave all the money I have invested in aviation in the banks, it could fetch me much money because Nigerian banks are offering double digit interest, which is a good way to make money sitting down at home.

But, I have gone ahead to invest in aviation despite the unfriendly business environment, huge capital outlay required and financial turbulence; I am motivated that investment in aviation would create jobs. As I moved with the investment, thankfully two Nigerian banks came to my rescue.

The two Nigerian banks are supporting me because of my integrity. I did not know it will be like this. But, there was a rescue plan. What you see in Air Peace today is the power of God and integrity. God has been our pillar at Air Peace.

How are the two Nigerian banks supporting Air Peace?

The two Nigerian banks are supporting Air Peace with credit to acquire our operating aircraft and running capital. The banks have provided money for aircraft acquisition. Apart from my personal funds, the banks have assisted with funds for the many aircraft acquisition we have made. The banks have a hand in all the airplanes I have bought. I am really interested in creating jobs and there is no going back.

How many aircraft have you acquired for Air Peace?

For now, Air Peace has purchased seven aircraft ahead of it commencement of scheduled domestic flight operations. We have three DORNIER jets and two Boeing 737- 500 series aircraft that have arrived. They are parked at the apron of the domestic wing of the Murtala Muhammed Airport, Lagos.

The banks have assisted with funds for these aircraft purchased in addition to my personal funds. We are expecting other aircraft. The mission to create jobs is irreversible.

What is your business plan for Air Peace? What operational model are you utilising?

We are bringing a whole world of difference with Air Peace. One of the driving modules for Air Peace will be safety. This is a key ingredient for running a successful airline anywhere in the world.

One of the motivating factors that pushed me into investing in aviation in Nigeria is to change the face of air travel, with priority on safety, which has become imperative, in view of the spate of air crashes that occurred many years ago. Going further, we are going to model Air Peace after the operational model used by South West Airlines in the US. We want to do something unique in air travel.

We want to fly from Warri to Port Harcourt, from Abuja to the smaller airports. We are using very strong Boeing jets to see flight from Benin to Port Harcourt, Kebbi to Abuja . The whole idea is to bring peace to the country.

In Air Peace, we are not driven by profit, but to create jobs for Nigerians by ensuring qualified indigenous professionals are engaged. That is what we want to do. Air Peace wants to open up the entire country’s air link by going beyond the traditional point of flying from Lagos to Abuja, Port Harcourt and a few other routes.

We want to have good operations that would be profitable, we would not cut corners, we would get it right, we do not want to cut lives, we intend to run an airline that passengers would feel safe and secured and have peace. We intend to run a ‘ lean ‘ operation that would be profitable. South West Airlines in America that we are copying their model is very profitable.

We are planning to bring in a new style of doing the business. We hear that aviation business is very turbulent but with a lean operation, we would survive and open up the entire country to bring peace and link up all the airports. We want to access the smaller airports with our Dornier jets that could land at smaller airports with shorter runways. Our plan is to revolutionise the air travel business; employ all Nigerians from all persuasions to create jobs for indigent people.

Our plan for Air Peace is to run a nationwide carrier that would fly passengers into smaller airports including Benin, Kebbi, Makurdi, Gombe, Port Harcourt, Lagos, Abuja, Kano, Kaduna Sokoto, Yola, Warri and many other airports.

I have already sent messages to the president of Arewa Transformation and Empowerment Initiative, Mohammed Danjuma, to send the names of qualified northerners we want to employ in our airline. The whole idea is to promote peace and unity in the country. There could only be economic prosperity if there is peace in the country.

What does Air Peace have in place for the maintenance of its aircraft, in terms of any agreement signed with foreign technical partners?

We are driven by safety and the security of our operations. That is the reason we have signed a deal with BCT Aviation, a British aircraft maintenance organisation, to carry out hundred per cent maintenance of our aircraft.

This because we believe in safety and security and we have spent a lot if money to achieve this. To reassure passengers that we are driven by safety . It is to ensure the best service by our airline.

What kind of services should passengers expect from Air Peace ?

We are set to revolutionise the air travel business. For the first time in this country, people are going to sit in our airplanes and enjoy wifi facility anytime they are on board . The whole idea is to improve on service.

We are going to entrench a culture of on time departure, anybody on board out aircraft or carrying our boarding passes or tickets would not miss any business. We are going to have zero tolerance for unsafe practices, zero tolerance for late departures. What we are going to give Nigerians is on time departure.

While passengers are seated on board our aircraft before departure, they will have access to wifi facility to enable them do their businesses, so no moment would be lost .

Even, when the aircraft lands at any airport, passengers would have access to wifi facility before they disembark from the aircraft. That is the level of service we are bringing to the industry.

How do you intend to navigate the challenge of inadequate supply and oscillating price of aviation fuel, which could affect your plans to achieve on time departures?

I have discovered to my greatest surprise in my short foray in the aviation industry, a very disturbing trend that fuel vendors are owed a lot of money by domestic airlines.

This is due to lack of integrity on the part of airlines.

Airlines are not paying fuel marketers as at when due.

They are owed huge sums of money by many airlines. Because of lack of integrity by some airlines, the vendors may not want to make aviation fuel available at the time the operators need it.

But, for Air Peace, I have signed contract with about four aviation fuel marketers to ensure availability of fuel at all times.

Not only that, the marketers suggested monthly reconciliation of account and  clearing of the bills for supply to us but I insisted and so no, in Air Peace , I want to do cash and carry. We want to do 24-hour payment after supply. At the end of the day, we want to have their invoices to prepare payment.

We want to pay immediately. In Air a Peace, we do not want to accumulate bills, they may become heavy on us. When you accumulate bills, fraud would go in too. So as we are buying the aviation fuel, we are paying you. This has to do with integrity. With this arrangement, the fuel marketers will run after us. They will get their money.

What structures do you have in place at the airline?

Everything is in place, our staff are highly trained, we went for the best pilots in the industry. Unfortunately, our foray into aviation may affect some existing airlines, because we are recruiting the best pilots and other crew members.

We are not poaching staff, but offering good remuneration that will attract many professionals. With the support of Nigerians, this airline is going to change the air transport landscape. So far, we are bridging the gap in manpower requirements in the industry, we are addressing unemployment issues concerning Nigerian aviation professionals.

So far, we have sent 40 Nigerian pilots to the CAE Academy in the UK for further training in type rating and other courses. We sent these 40 pilots to CAE Academy for training assessment before employing them.

These are the kinds of capacity development we are bringing to the industry. This is our contribution to the development of the aviation industry. If we did not employ these pilots, nobody will employ them. Not even foreigners will employ them.

What is the motivation for training and exposing these Nigerian pilots?

The reason is simple, if they do not fly airplanes how will they acquire the mandatory flying hours required as experience to get jobs as qualified pilots? It is not a bad idea to employ foreign pilots, because they are equally proficient, but they should not be the mainstay of our manpower in Nigerian aviation sector.

If you give Nigerian aviation professionals equal opportunity, they deliver better services. Air Peace is the only airline that pays Nigerian pilots more than expatriate pilots.

The reason we are doing this is to promote the development of Nigerian expertise. Any foreign pilot that does not like this should take the next flight and go to his country?

In what ways could government further assist Nigerian airlines?

There are many ways government can assist domestic airlines. If government cannot build an aircraft maintenance hangar in Nigeria, it should assist any operator willing to invest on that area. This would be important for many reasons.

If any operator shows interest in building a hangar, government should support such an individual or operator to secure a large parcel of land around any airport in the country. Such a project will create more jobs for Nigerians. Civil servants should change their ways and stop frustrating private enterprise through unnecessary bureaucracy.

For over one year, Air Peace has applied to FAAN to allocate it land to build an aircraft maintenance facility, but the authority has not granted the allocation. If FAAN has allocated Air Peace land at any airport, the project since the past one year would have been completed before we start our flight operations.

If they have allocated land to Air Peace, many banks given my integrity and track record, would have funded the project because they know that I am credit worthy. If we build an aircraft maintenance centre in Nigeria, our country would become a hub where other African countries would fly in their aircraft for repairs.

That would generate huge money for Nigeria and Nigerians. People say aviation does not generate enough money; that is not correct, Ethiopia as a country is generating huge foreign exchange from its airline, Ethiopian Airlines, which is the mainstay of its economy. Why can’t we replicate the Ethiopian model in Nigeria? That would create massive jobs. FAAN should be told to give us land.

Having an aircraft maintenance hangar in Nigeria will assure safety. It will bring investment into the country. FAAN should help this country; I am tired of begging for land. The airport authority should serve the people of Nigeria, not to lord it over the people. You pay FAAN for offices, you cannot get the offices you have paid for or the offices are not allocated to you when they should.

The airports authority should create facilities for people. This country belongs to all of us. Some people do not own the country. There is sufficient land around the airports, they do not want to give it to serious people who can invest to develop the industry. Instead FAAN is giving land to people who are not ready to develop the industry.

What is your take on cooperation among domestic carriers, in terms of economies of scale?

I have discovered that there is so much enmity among operators in the Nigerian airline industry. There is a lot of devilish competition among airlines. A lot of people are scared when they see a new entrant coming into the sector.

That should not be the case. The more airlines we have, the better it is to serve the entire industry. Imagine Nigeria, a country of over 170 million people should have as many airlines as possible. Less than five per cent of this population travel by air.

This is not good enough, because the awareness has not been created. With more airlines on board, if the competition is healthy, we should encourage more people to fly so that everybody has a hand on the pie.

What airlines are doing now is trying to cut corners, running competitors down and other forms of de-marketing. It is devilish. It does not help any operator, because what comes round goes round. In Air Peace, what we want to bring to the industry is peace and love.

We started that already. I have always been excited anytime I see a new operator coming on stream.

I was happy and congratulated AZMAN Air when they started operations even Discovery Air, I was happy when they started. I am not happy to see any airline go down.

We need to support one another. Air Peace is open for partnership, for any constructive advice that would help the airline to do well. Domestic airlines should cooperate, nothing wrong in doing codeshare, cooperate with one another. That is the way to go. If your airplane has a problem, you can ask another airline to help fly your passengers. The bane of airline growth in Nigeria is the devilish competition among operators.

How can banks assist domestic airlines?

If airlines are properly run, they could become money spinning businesses and the banks would be in a good position to gain from that through huge cash inflow that would be generated. The truth is that integrity is in short supply in Nigerian business environment.

That is the main reason why many Nigerian banks are skeptical to give out money to fund aviation projects, because they see it as turbulent. The banks should look inwards and see how they could protect themselves.

In the case of my airline, I signed off my planes as collateral with other collateral as guarantee if I am unable to pay back the money I took from the bank. Before any bank could give money to any airline operator, they have to look at the background of the person deeply.

Where is he coming from, can we trust him? The banks that gave Air Peace considered all these seriously. The bank gave me a moratorium. The banks can extend this to other airlines to restore confidence.

The problem with Nigerian airline operators is they borrow money and run away. They divert the money. Banks should come in to assist Nigerian airline operators, after they have carefully studied them that they have integrity to pay back the money. Assurance that the money would not be diverted into any other venture is very important. The banks should lower their interest rates.

At the same time, we also have to consider the rate at which banks are getting their deposit. In this respect, the Central Bank of Nigeria has a role to play. This implies that the CBN must lower their withholding deposit with the commercial banks to enable them achieve the interest rate to benefitting airlines.

What about the intervention fund the Central Bank gave to some domestic airlines in the past, what happened to the billions of Naira ?

The government introduced intervention funds for domestic airlines in the past but it did not make much impact. It was a good initiative, but many airlines mismanaged the funds meant to assist their dying airlines.

So, where do we go from here? The problem is that integrity is in short supply in this country. So, it is affecting the way banks and other institutions deal with businesses including airlines in this country.

The challenge of inadequate facilities at the airport is in the front burner, which sometimes restrict domestic airline operations at some airports because of lack of air field lighting, what should do in this regard?

The challenge of lack of air field lighting system has also been a bane affecting the growth of domestic airlines in Nigeria. This is affecting the growth of aviation. A situation in which only three airports are accessible at night is not good enough. It does not augur well for the development of aviation.

]Government should try as much as possible to provide night landing facilities in all the airports. This is important because of safety and security, in the event that an aircraft is flying and there is a technical problem, there should be alternate airport with night landing facilities everywhere.

When people talk about safety in America, the safety and security people are referring to is hinged on availability of airports anywhere, even private airports where aircraft could land anytime under any circumstance. Nigeria needs them all over the place working 24 hours with the required landing facilities. It would boost the development of the nation’s economy.

This would not only create additional jobs, but earn revenue for government. People are limiting many sources of generating revenue in this country. A bigger Nigeria with airports fitted with night landing facilities is better for business. That is the reason this country should not disintegrate.

Where are your aircraft maintained?

We have a partnership with BCT Aviation Maintenance Company in the UK, they are the people carrying out repairs on our aircraft. Any aircraft the engineers do not sign off, it would not fly into the skies. All our aircraft are fixed regularly. We are not applying to NCAA to defer maintenance.

What about motivation of your staff ?

We are not owing our staff salaries, this is important to motivate workers. That is why we get the best professionals. We will urge our partners and competitors not to see us as enemies.

Arik Air has opened up all the airports, Aero has done well, they are the forerunners, with good maintenance facilities at a huge cost. Our prayer is that the industry will grow. Nobody should de-market.

The NCAA is doing enough to ensure Nigerian airlines are safe.

What is your agenda for the new minister of aviation?

The new minister should get good advisers. That would help him, his consultation with operators should be wide and he should undertake to educate himself. The minister has to be wary of dishonest people.

He should surround himself with credible people, work very well with NCAA, ensure that airlines wanting to build hangars are allocated land with dispatch and he should take a critical look at the agencies and ensure they do the right things.


- Culled from: http://www.vanguardngr.com