16 February 2018

Nigeria: Under This Regime, No Airline Will Go to the Villa for Debt Waiver - Sirika

interview

Lagos — Minister of State for Aviation, Senator Hadi Sirika, in this interview speaks on raging issues in the sector especially the effort to establish a national carrier which he said would be realised within the first tenure of President Muhammadu Buhari's administration. He also stresses the importance of an open African sky and why Nigeria is pushing the programme. Excerpt:

The Federal Government recently dropped Lufthansa Consortium as a transaction advisor for a national carrier. Can you expatiate on what transpired?

It was impossible for us to continue the procurement with Lufthansa Consortium. What we did, since there were many others, was get another company that is even, fair; one that has no appendage to another company that might be interested. So more of neutral companies took over the place of Lufthansa.

Where are we now? I think in the next couple of months, maximum by March, we should be able to have our outlined business case for the transaction. Then the full business case will follow because they are going on simultaneously and after that we begin the process of establishment.

I will say that we are very close to having the national carrier established. Certainly it would be within the first term of this administration.

What about the issue of pensioners of the defunct Nigeria Airways?

We have dealt with the issue of pensioners. The money is being provided by government. The Ministry of Finance is handling it and the National Assembly is also playing its role. I want to plead with the Nigeria Airways ex-staff that since this thing happened to them, nobody cared, nobody did anything for decades. We came in and felt that this is unfair for people who have put in their entire life to serve this country. So we thought that we should compassionately deal with the matter which we did and we provided the funding for N45 billion. They should exercise patience; everybody will get his entitlement very soon.

What about the plan to concession airports?

The transaction advisors for the concession have brought in their outlined business case. We are studying it and we are going to do our full business case and it will happen soon.

Talking about Lufthansa Consortium, there was a time government exempted them from paying tax, is this exemption still in force?

On the issue of Lufthansa Consortium, part of what they required from us for the national carrier was that they wouldn't be charged any tax which is against our law. As for the other issue, I have not reviewed it, I cannot comment on it for now.

On the Open Sky Treaty, how operational is it now?

Nigeria is among the first 11 countries that went to Yamoussoukro and took a decision to liberalize the sector and open the sky for Africa and this means growth. This means development; this means more jobs; more security and more connectivity; it means more passenger experience and comfort. Now arising from that, and Nigeria being a signatory, the Single African Air Transport Market (SAATM) became the issue and Nigeria also joined to be among the first 23 countries to make that solemn declaration and I think Nigeria, with a population of 173 million people, half the size of West Africa, would be the greatest beneficiary to this.

At the time Nigeria was pushing for it, you and I know we had Nigeria Airways and we thought we would take advantage of it. Now we don't and our airlines for one reason or the another have not grown to that capacity. This is why the government felt we should set in a motion measures to create a robust carrier that will take advantage of the SAATM for the benefit of the Nigerian people.

So I believe that we are on the right course. I believe that this private sector-led and driven airline, once established, would become the dominant carrier in Africa because the market is Nigeria. Its centrality to Africa, by its geography is god-given. And with the market of 173 million people, this is a large population. So if you talk of advantage, Nigeria is at a very vantage position to take advantage of the SAATM.

Is it being implemented here?

As soon as it is signed the implementation begins but you know that it would take between one to two years before it is fully functional and operatable.

Recently, the Federal Government signed BASA with five countries. What are the benefits for Nigeria and generally, BASAs seem to be skewed against the interest of Nigeria since we don't have a national carrier and the commercial negotiations don't seem to favour us since it is done by the ministry?

BASAs are good. You need to understand that air transportation connects markets, businesses, cultures, countries, people. This brings tons and tons of benefits. To be able to crisscross the world and go to other countries, other markets, other peoples, other trading partners and come back, the benefits are unquantifiable. For me, the way to go is to continue to sign these BASAs up to a point that Nigeria would take full advantage of them.

We cannot sign a BASA that would be skewed against Nigeria. It cannot happen. Mind you, it is not only the Ministry of Aviation or Transportation that does the signing. It involves the airlines themselves, they participate in the process and the office of Attorney-General will vet it and the Federal Executive Council will sit on it and I don't think the FEC led by Mr. President, the Attorney-General of the Federation, the airlines operating within the country and other stakeholders and the Federal Ministry of Transportation/Aviation including the regulator, the NCAA, will all get together and sign something skewed against Nigeria. I don't think it is correct.

We will continue to sign these BASAs up to a time that Nigeria will take full advantage of them. We cannot sign a BASA that will be skewed against Nigeria. It cannot happen.

But the airline operators kicked against the African Single Open market yet government went ahead to sign it. What is the Federal Government doing for the local carriers to improve their competitiveness?

The Nigerian carriers were at the forefront of the campaign to implement the Yamoussoukro decision at a time they felt they were at a vantage position. Today they are singing another song. These carriers are owing all over the place. I am not sure if all of them are financially healthy.

NCAA to my knowledge is conducting audit of all the airlines at the moment and I am sure the result will not be something they all want to go to press. They refused to grow and the challenges were not caused by government. It is their own making. I am bold to say that they should please kindly come. Very soon there would be stakeholders' meeting where the airlines themselves would be present, where we would dialogue on the situation they found themselves.

If I will advise them, they should get their acts together; focus to reorganise, to re-engineer and take advantage; be futuristic, look at the bigger picture, organise themselves and take advantage of the SAATM rather than sit there while the train is moving and begin to whine.

They talk about multiple charges and taxation...?

Look, there is an airline that is owing one of the agencies N13 billion. There is an airline owing a total of N500 billion to various creditors. That airline crashed or at least it has been taken over.

Let's take the example of Aero Contractors, they have suddenly changed their business model. They conducted a C-check on a 737 and it is now flying and they are making money. I think it is getting their priority right and doing the business model that would bring money for them. Everybody wants to run into scheduled passenger flights. There is a lot they can do in aviation.

On our part, a committee on the review of aviation charges has submitted its report and we are studying it. And part of what we are looking at is the possibility of waiving VAT for the airlines.

But how did we allow the debts to pile that much, it appears the agencies are also culpable?

Under this administration, it is not going to happen again to allow them to continue to pile up debt and go to the Villa and the debts are either waived off or post-dated. The Villa will not call any airline. There is no door that is open for airline operators at the villa. The only door that is open is the Office of the Minister of State for Aviation and the regulatory authority, the NCAA.

Recently Med-View Airline, the only Nigerian carrier on the international route, accused Gatwick authorities and its ground handlers in the UK of sabotaging its London flights, what is your reaction to that?

Let me assure you that whatever is within the law and signed in the BASA would be followed to the letter. We have intervened on behalf of airlines. Ask them. And I don't want to believe that Gatwick will discriminate against a Nigerian carrier because one of the major shareholders and owners of Gatwick is a Nigerian.

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