Leadership (Abuja)

17 December 2012

Nigeria: 'Airport Infrastructure Getting Old'

interview

British Airways chief executive officer, African Region, Mr. Ian Petrie, at the airline's headquarters in London, spoke with NKEM OSUAGWU on pertinent issues that have been in the front burner in the nation's aviation industry, including the issues of air fare disparity in the region, airport infrastructure among others.

Some time last year, the federal government accused British Airways of airfare disparity in the region whereby Nigerian travellers pay higher fares than their West African counterparts; is the airline really exploiting its Nigerian clients?

Nigeria is a very important market for BA just like any other markets in the continent and in the world. Our biggest market in Africa is Nigeria and South Africa. So, Nigeria is extremely important for us. On the issue of pricing, I can tell you that we give competitive rates between London and the two Nigerian cities and we charge rates that the market would take, and we believe at BA that it is value for money.

It is not more expensive than any other airline. In actual fact, fares out of the UK to Nigeria is more expensive than the fares out of Nigeria to UK. If you took a fare from London to New York, it would be more expensive than fares from Lagos to New York.

Still on the over-pricing, at the thick of the crisis, both Nigerian and UK governments set up a panel to review the issue, the report of which was supposed to be ready last May; what are the findings of the panel?

The report was made available and they found out that there was no colluding in the fares. The Civil Aviation in UK said they would do a study and they did, but they found out that all the fares were in order. That was point one. On the second one, when the allegation was made against BA, court hearing was held in Lagos and BA was found innocent of colluding on airfares.

Then, why is there so much fare disparity between Nigeria and its neighbouring African countries, when in actual fact travelling from some of the these countries are farther than travels from Nigeria to UK?

In actual fact, the economy airfare out of Lagos is cheaper than the economy airfare out of Ghana. For the business class fare, it is simply an issue of supply and demand. We have a far higher demand in Lagos than we do in Accra. Having said that, airfares have gone up also in Ghana by another five or 10 per cent.

Some foreign carriers that operate flies into the continent are investing in the aviation industries in Africa; why has British Airways refused to invest in the Nigerian aviation industry despite the fact that its operations in the country has spanned over 75 years?

Well, I think the only way to answer that question is that whenever our aeroplane lands, it is an investment in itself because we take catering on board, there is ground handling from Lagos and as well as from other countries. Through that, they are creating employment and the passengers travel in taxis from the airports, and book for hotel accommodation, too.

A lot of questions have been asked on this. Should we be building hospitals and so on? That is not part of our portfolios. We employ indigenous engineers to work with us and they are trained by the airline. Also, all our staff are trained in the UK.

There may be plans by the Nigerian government to review the age of aircraft allowed to operate in Nigeria from 22 to 15 years; what are the age ranges of British Airways aircraft to Africa?

The question can be answered in two ways. It is not the age of an aircraft that makes it unsafe; it is the maintenance of the aeroplane that makes it safe or not, and British Airways' maintenances are top class. Our aeroplanes are maintained to the highest standards. We have the checks of different categories coming up all the time to the D-Check, which comes out as new.

The problem with ageing aircraft is that they become more expensive to maintain as they get older. So, all our aircraft pass all safety standards. The civil aviation authorities of all countries, including that of the UK, oversee our aircraft.

On the other side, the Boeing 777 that we operate to Nigeria (Abuja) is relatively new, but I do emphasize that it is not the age that determines its safety level. You can have a year- old aircraft that is in worse condition if not properly maintained. So, it is the maintenance of the facility that matters. I don't see that as an issue at all.

In view of the soaring cost of aviation fuel, what percentage of your revenue goes into the purchase of aviation fuel?

I do not have the exact percent with me now, but it must be around 35 to 40 per cent of our cost. This is huge and the high cost of fuel is a concern to everybody. Some airlines have closed shop due to the skyrocketing aviation fuel.

With the increase in fuel cost, you will find out that a lot of the weaker carriers will unfortunately find it difficult to operate in this condition. This goes back to why you have seen more mergers and acquisitions in recent time.

Unfortunately, we can't collude or talk to other people about fuel in this country because of the rules and regulations of this country and that of the United States. We can try to put pressure on the oil companies, but again, it goes to supply and demand, and that is why we are introducing more fuel efficient aeroplanes in our fleet.

Towards the end of this year or the beginning of next year, we will start to take the delivery of the Airbus 380, which is more efficient on fuel. Also Boeing 787 and others that are fuel efficient and burn less than the jumbo are being acquired by the company. It is not only the Nigerian carriers that are affected by the high price of fuel, it is all airlines in the globe, but it is really a thing of concern to us.

What is your impression on airport infrastructure in Nigeria?

I think the Lagos Airport infrastructure is getting old; the Abuja airport's own is still better. So many investments is required in the area of infrastructure in the country generally. On facilities, we don't have any issues from the safety point, but on the building and the customs and immigration areas, they need to be updated.

Some other countries, like Kenya, are building new airports. South Africa spent a lot of money on updating the terminal buildings in Cape Town, Johannesburg, Durban and the rest of it. It is time I believed Nigeria improved its facilities.

Why is BA finding it so difficult to partner with indigenous carriers in Nigeria?

The truth is that we do partner with African airlines. For instance, in South Africa, we partner with one of their indigenous carriers and lots of interlining agreements with lots of airlines in Africa. When the opportunities are opened, we will look at them, but there should be a transparent dealing.

A couple of years ago, we were also close to Aero on interlining agreement, but Aero had to stop with us because in their own economics; they thought they could do better without us. In the real sense of it, we are looking for partners in Nigeria because we can't serve all the points in Nigeria; we can only serve Abuja and Lagos, and a lot of our passengers are flying into Port Harcourt and Kano airports.

BA recently cancelled its crew's stay in Abuja; what led to that decision?

The reason that the crews are no longer in Abuja is because of insecurity in the city. A few airlines have left Abuja based on that issue, but it is a thing we are reviewing all the time. If we are able to review our crew staying there and it is positive, then they will be sleeping there, but currently, they sleep in Lagos.

How has that affected your operations in the city?

It has affected us badly. The aircraft comes from London to Abuja, return to Lagos, back to Abuja and return to London. We are doing extra two hours flight within the country because of the security challenge. Financially, it doesn't affect us - to be honest with you. The extra landing cost is good for Nigeria, two ground handlings and some other benefits for Nigeria; but, as I said, we are reviewing it all the time.

BA has been flying into Nigeria for over 75 years; what extra things are you adding to your clients in the country?

What we have done recently is that we have put special fares for our first and business-class clients; the fares are about 20 to 25 per cent off the actual cost. It is a promotional fare and we know that people will travel and we really want to encourage them to fly with us. So, we encourage our clients to book early so that they can have value for money and benefit from the promotional fares.

What is your impression of the Nigerian team managing British Airways in the country?

I think they are doing extremely well. We did not appoint Mr. Kola Olayinka as the Head of British Airways in Nigeria because he was a Nigerian, but he was appointed because he was the best man for the job and he had experience with British Airways in Kenya, Nigeria and London.

He later worked with one of our competitors, and we later recruited him as the commercial manager for Nigeria and he has since been doing the job well. So, we are very pleased with him. Also, the other managers are doing fantastically well for the airline in Nigeria.

What is your assessment of BA's commercial activities in Africa, especially Nigeria?

We are constantly monitoring our performance in the continent. Everybody has a target they have to reach, and if they reach the target, we are all happy; and if they don't reach the target, we know we have to find ways to help them to reach it.

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