Leadership (Abuja)

26 June 2012

Nigeria: Airlines Are in Trouble When Debts Pile, Remittances Are Not Made - Ore

interview

That an airline would soon run into troubled waters may be difficult to determine based on the normally accepted criteria in Nigeria. In this interview with Blessing Anaro and Nkem Osuagwu, Captain Dele Ore, Director, Business Development and Strategy, Aero Consult Limited, said that an airline which would soon be in trouble can be determined by how many months it is owing staff, how much it is owing fuel marketers and remittances owed aviation authorities. Excerpts

What in your view are the causes of aircraft accidents?

Recall that in 2006 we had an aircraft accident involving an ADC Airline in which prominent Nigerians died.

Then, Prof. Babalola Borishade was the Aviation Minister and he got to the scene and said that the pilot was at fault, that the ATC told him not to takeoff and he took off. The minister was wrong; he had no right to say that. This is because the preliminary investigation had not been carried out and yet he was already forming an opinion on the possible cause of the accident. Nobody can tell the cause of an accident until a thorough probe.

It was too early, we cannot hastily conclude that this was what caused the accident because there are thousands of reasons that could have been adduced. An accident waiting to happen could have been caused a year before that event because it is the final straw that people now call an accident. You could find out that the remote cause of the accident might have started some years back, that is when we talk about probable cause and all the other things that surround it. Until a preliminary investigation is carried out, it would be irresponsible and unprofessional for anyone to say what caused the accident.

How long does an investigation last?

It depends on the complexity of that accident. You remember the Air France accident that happened in the Atlantic Ocean? It took nearly 18 months before they even found the Flight Data Recorder. If they didn't find that, then for the next ten years they would still be battling to find out what happened. Now, you can be lucky to find the exact cause but you must look at the remote causes, the contributing factors, also. It could be something that is connected to it but too far away that you are not seeing it, it may be so related that you cannot even see it but that may actually be the one that caused it. For example, an aircraft can disintegrate on landing and that could have been caused six years earlier, maybe there had been a heavy landing that had caused a slight crack that had degenerated under the period of the subsequent six years. Then someone else comes and makes a landing and the aircraft disintegrates. It is not the landing that caused the accident, remotely it started six years earlier. So let's wait for the readings of the blackbox. I believe it would be wrong of me to say that it could take one to three years.

It would depend on the kind of evidence put forward and what kind of cooperation they had from the members of the public. If somebody had taken a piece of the wreckage as souvenir and disappeared, this may delay the findings because that piece could be what they are hoping to use to do the stress test in order to determine the stress level of the aircraft. It also depends on the kind of manpower they have on hand. So it would be difficult for me to determine how long the investigation could take.

How long does it take to decode the Black Box?

This also depends on the facility you are taking it to. They have facilities in the US, UK, Canada and Australia. If they take it there, the people will not tell you they are busy, because they need customers. If they are working on several accidents they need to conclude work on, they may not give priority to your own.

Can passengers demand to see the airworthiness of aircraft?

It is completely against international practice that you would show passengers a certificate or a guarantee that an aircraft is airworthy. The mere fact that the airline has a current certificate for operating, that he has a valid Air Operator Certificate (AOC) is enough. But such are displayed at the airlines' Headquarters so they can go there to see it.

Criteria for issuing AOC

There are standards and recommended practices. We also have what is called industry best practices. We now have practices according to the national culture. The last one is what we are trying to discourage and it has been jettisoned out of the system. It is the International Civil Aviation Organisation (ICAO) that insisted that all member states must maintain a minimum standard. In Abuja, about five weeks ago during the launching of the Roadmap on Aviation, an operator stood up and complained that the standard stipulated by NCAA was too stringent, that they make it impossible for operators to get an AOC to commence operations with as it took more than two years for operators to get an AOC.

It takes a five-stage process, the application stage, the evaluation stage, the documentation stage (it is at this stage that some applicants fizzle out), the demonstration stage (where the airline has to fly a minimum of 40 hours without passenger), and then the approval stage. This process should take 90 days or longer.

Share capitals for airlines

For domestic operations, the minimum share capital is N500 million, if it is regional, it is N1 billion, if it is international or intercontinental it is N2 billion.

For the N500 million share capital, you will put down N10 million, and about N28 million for stamp duty for N1 billion share capital, and for the N2 billion you are talking about N48 million. All these you have to pay to the Corporate Affairs Commission (CAC). This is the kind of money an airline needs for training. Having provided these minimum share capitals as stipulated for each category of operation you want to do, it is no guarantee. For me, that is just a paper clearance. The next day, all those instruments could be withdrawn and taken back to where you borrowed them from. But the best is where there is a financial audit that is carried out on each operator by the Nigerian Civil Aviation Authority (NCAA) because if you cannot pay for the maintenance of an aircraft - an aircraft has been taken out for maintenance and instead of being there for one month, it is still there six months after the maintenance has been done, it means that the operator does not have the money to go and collect it.

When you start hearing staff of airlines complain that for two to four months they have not been paid their salaries, that is a signal that something is wrong. Again, when the fuel company suddenly comes in and gives the lists of its debtors and all these airlines owe for fuel that has been supplied and used, that is a signal.

When the passenger service charge collected by airlines on behalf of the authorities are not remitted to the right authorities after one month, to four years, doesn't that tell you that something is wrong? These are signals. If these airlines are flying, are they not making money? Why are they not making money? The answer is simple.

First, the acquisition of the aircraft, maybe based on borrowed money which is at an interest rate way beyond what anyone can repay. Secondly, their revenue is based on naira, and all the expenses are in dollars and euro, etc. So it means that the rate of exchange would affect their being able to pay back what they owe.

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