Airlines risk unfair treatment on regional routes if they don’t carry us along, Nuhu warns
Nigerian airlines on regional and long haul international flight services to other countries have been advised to involve governmental authorities in the process of negotiations to avoid unfair treatment.
The Director-General of the Nigerian Civil Aviation Authority (NCAA), Captain Musa Nuhu, gave this advice during a gateway forum with the League of Airport and Aviation Correspondents (LAAC) in Lagos recently.
Speaking on why indigenous airlines face unfair treatment with regards to charges and restrictions to entry points in other countries, Nuhu said it was normal for every country to protect their airlines from foreign competitors.
According to him, the airlines were private operators, and should involve the NCAA, the Ministry for Aviation and the Nigerian embassies in other countries during negotiations for flight services.
By so doing, according to him, the doctrine of reciprocity as enshrined in the Bilateral Air Services Agreement between Nigeria and such countries would take the centre stage in the process of negotiations.
He said, “The advice I will give the airlines is that if you are going to another country to negotiate your services, you should involve the regulatory body, the ministry of aviation and also your embassy in that country.
If you, as a private organization, go and negotiate with a government entity that is trying to protect its own airlines, you are going to run into difficulties, but when you involve ministry of aviation, NCAA and embassy officials, the country knows that if they make things difficult for our airlines, we will apply the same reciprocity measures to their airlines, so it makes a big difference.
A lot of airlines go and do the deal themselves. They should involve us, carry us along, brief us, we are here to help our airlines grow both domestically, regionally and internationally.
I hear them talking about aeropolitics, yes, an airline from Nigeria want to go compete with an airline of another country on their route, of course they will make it difficult for you but when you carry NCAA officials along, it makes a difference, if you make unreasonable demands on my airlines, I will apply the same to your airlines coming into my country.”
On the financial health of airlines in the face of Covid-19, Nuhu said it was a global phenomenon in the airline industry but there were other issues affecting the financial health of indigenous airlines that were beyond the control of regulatory authority.
Among such issues, according to him, were provision for foreign exchange and the high cost of Jet A1and aircraft maintenance.
“In the airline industry, the profit margin is very minimal, if you make five percent profit margin in the business, you are considered to have done excellently well, but however, with the Covid-19 and the difficulties, airlines financial positions are not the best, it is a global phenomenon.
There are so many other issues that affect the financial health of airlines that are neither in the control of the ministry of aviation nor in the control of the civil aviation regulatory body.
For instance, the provision of foreign exchange, it doesn’t come from us. If a country’s foreign earning goes down, the central bank prioritizes, and you can understand due to the lack of maintenance organisations in Nigeria, pilot recurrent training institutions in Nigeria they have to go outside to do these and that entails a lot of foreign currencies, so it is not easy.
Also is Jet A1 that is a major factor that airlines have been having difficulties with, sometimes we see it induced scarcity and escalatory price, so there are factors that affect the health of the airlines that are not in our direct control,” said Nuhu.
He added that the NCAA in collaboration with the Aviation ministry has been into consultation with the Nigerian National Petroleum Corporation for a possible way to start local production of aviation fuel in the country in order to beat down the high cost usually imposed by importers.
He also advised that airlines should not be quick at taking loans with unusually high-interest rates, they should take into consideration their profit margin when contemplating a loan facility.
“Airlines go borrowing at a very high-interest rate which we know is very high in Nigeria. If my profit margin is 5%, explain to me if l takes a loan at 20%, how I can break even and pay them and make a profit. These are the micro and macro factors that affect the health of the airlines,” he said.
