11 January 2019

Nigeria's Aviation Industry Is Shrinking - Sanusi

Photo: Premium Times
Lagos airport.
interview

Chief Executive Officer of Aero Contractors, Captain Ado Sanusi, in this interview gives an insight into the state of the Nigerian aviation industry. He holds the view that despite seeming passenger growth, the sector is shrinking and insists that concession of nation's airports will make them more efficient. Chinedu Eze presents the excerpts:

I heard that Aero Contractors is the first airline in Nigeria to appoint a woman as the Chief Pilot?

Yes, this is the first time Nigeria is having a female chief pilot in a mainstream airline. We appointed her not because she is female but because she has earned it as a hard working pilot and has shown good leadership in managing the pilots. So Aero Contractors has given Captain Imoleayo Adebunle the elevation as Chief Pilot totally on merit. And she is the first female chief pilot for Aero contractors for fixed wing. And this is for Aero Contractors and Nigeria as it is the first of its kind.

How do you see the industry in 2019?

I just heard that the Nigerian Civil Aviation Authority (NCAA) recently sanctioned four airlines (for various infractions). We welcome that because that gives you the feeling that the actual regulator is doing what is supposed to be done. So it is something that we really, really love to see happening most of the time. So the regulator coming out to say that we have done this, we have sanctioned these airlines gives us confidence. It is not only about saying the regulator is there but actually doing the job. It is a welcome development. I think it is a positive thing.

But what do I think about the industry as a whole? I think the industry needs a kind of re-organisation. It needs a kind of jolt because if you look at it this year a lot of airlines have gone under. Medview has gone to one aircraft operation and a lot of other airlines have gone to one aircraft operation. Despite the fact that the passenger growth has increased, but the amount of aircraft operating in the country has reduced. Now what does that goes to tell you? It tells you that the aviation industry is not growing. The aviation industry actually is shrinking. Despite the fact that the passenger demand is high but the growth in the airlines are going down.

The passenger growth is increasing; the market is expanding, but unfortunately the aircraft are reducing in numbers. And the reason is basically no investment coming in. Of course, the only airline that is bringing in more airplanes is Air Peace. But I think in 2019 the government must affect deliberate policy not only on the infrastructure but also in the airlines. This means that the federal government should look at the airport, runways and also look at the health of the airlines and try and see how they can encourage mergers, encourage new entrant and encourage bringing back to life those that have gone under. So, my look at 2019 is for the federal government not only to invest in infrastructure but also to look at the airlines. This is because you can have a very good infrastructure if you don't have airlines you don't have the aviation industry.

Over the years government seems to be detached from the problems affecting the airlines; they just regulate them and the industry. Do you think this will change?

That is their attitude. That is then and us attitude. That is what we should remove. Government should be worried when airlines are not doing well. We should look at it as other economies have looked at airlines in their country. United States of America looks after American airlines, supporting and also making sure they grow. It is not that we are always supporting but we want you to grow, we want to be a dominant player in the market globally. But in Nigeria it is not like that; it is not let us make sure you are a dominant player in the market. Rather, government seem to put impediments that tend to suffocate the growth an airline through inimical policies. They don't allow the airline to grow; they don't give them the necessary impetus or the necessary support for them to grow.

How do you see federal government supporting airlines through the Bank of Industry (BOI)?

The best thing that they can do to the airlines is to give them money at affordable rates. And they can do that with BOI, they can do that with even the pension funds. We have so much money in pension funds, why can't you give the airlines a dollar denominated loan and the interest rate should be in single digit, two per cent or three per cent as what other airlines in other countries get and at long term; let's say 15 to 20 years.

First, you create the criteria for them to access the fund. You tell them what they need to do to access the fund. And you ensure that they plough the money into aviation. And you don't need to even give them money directly you can actually go and get equipment. You can decide to partner with Boeing, Airbus or any of these manufacturers and say, okay we are giving $500 million but we want it in equipment. So let's say 30 aircraft and we are giving it to airline A, B and C, they will pay us over a period of 10 or 15 years. And they can use Afreximbank; they use any of these banks to finance it. That is how I see the aviation industry being transformed like the banking industry as well. But if we decide that people should bring their money from their pocket to buy new airplanes and invest in the industry, I think it will not be the best.

Do you see aviation fuel being adequately supplied and at a good price in 2019?

No. This is because up till now we are still deficient in the infrastructure. If you look at the interview that I gave the last time, I said till the time they have done the pipelines from Apapa directly to the airport the fuel will always be insufficient and very expensive especially to Lagos. And almost 60 per cent to 80 per cent of fuel consumption is in Lagos. So you can imagine when 33,000 litre tankers are trucking such consumption. So when you go to the airport road you will see probably up to 300 or 400 tankers there.

But do you think our hope for efficient fuel supply at low prices will come after Dangote's refinery?

That is our dream and we are looking forward to the refinery coming to fruition. And I hope Dangote will also go ahead and pipe the product all the way to airport and forget this piping project that we have being waiting for in years. If he could pipe the product directly to the airport that will bring the cost down and also bring the safety and the product itself. The availability of the product will be always assured. The reason why the product is not available is because the tankers are slowed down on the road or the road is no longer motorable and these break the chain of the 400 or 500 tankers that keep coming to the airport. So the moment the chain is broken, if it is an hour it affects us here. So if we have that pipeline it will be continuous supply.

What ways would you want the airports to be given out in concession to private investors?

When they are going to do a concession, they should look at the entire country. If you look at the best airports and you pick them out, then the rest what happens to them? So what I think we should do, like they do outside the country everywhere in the world, you have an airport authority that caters for a couple of airports; maybe even three or four airports grouped and run together.

This will guarantee so that the airport that is very viable; that everybody wants to buy, like the Lagos airport has some group of airports not very viable, around it and they will be managed together. Government has to know that they are concessioning these airports not only for them to be viable but they should be concessioned for strategic reasons. When you want to close one major airport, these other airports around it are your alternate airports that you can use. So they are also for strategic reasons, Ibadan airport could be strategic as an alternate for Lagos. And if you look at Abuja, Minna airport is strategic for Abuja or Kaduna airport is strategic for Abuja. And if you look at Port Harcourt, Owerri airport is strategic for it. Then you can now develop those small airports to what you the concessionaire want. If you want a cargo airport you can develop a cargo airport. If you want agro airport then you develop it to that level. Whatever you want to do at the airport you do because you know your business plan.

You have opened aviation training school. What are your plans for the school?

We got Aviation Training Organisation (ATO) license. We have been on this for a long time because we wanted to get it right; we wanted to make sure we have a training organisation that is based on a solid foundation, which can be grown into a centre of excellence.

Now, we are starting with two approvals on our ATO, which are flight dispatcher and cabin crew. We intend to grow that into a bigger school and eventually into a research centre.

We want to build Aero Contractors to be a one-stop shop in aviation. After the training organisation approved by NCAA, we have maintenance organisation that is also approved by NCAA; we have maintenance facility, charter business and scheduled flight service. These are four strategic business units that we would like to grow separately so that they can feed the market. The market is under served in all these aspects that I have mentioned. We intend to build all these strategic business units into full business organisations that can sustain themselves and be profitable."

We want to use the training school to support the industry. What we want to do is to partner with all the training centres in Nigeria and run programmes. We have also plans to extend to the West and Central African sub-region.

Aero as a company has been existence since 1959, so we are deeply rooted and to have a training school is unparalleled. And I think that when we start fully, hopefully in January, the industry will see what I would want to call, quality.

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