BASA imbalances: We have no airline that can reciprocate that, says Demuren

Bullet points: Nigerian airlines should partner with foreign carriers to benefit from SAATM; No foreign airline will do business with Nigerian carriers without corporate governance; With high-interest rate, Nigerian airlines can’t make it; Not compulsory for NCAA to comply with all recommendations of AIB.

Dr. Harold Demuren is currently the president of Flight Safety Foundation (FSF) West Africa. He was the Director-General of the Nigerian Civil Aviation Authority (NCAA). In this interview with aviation correspondents, the aeronautical engineer bares his mind on aviation in Nigeria, the challenges and how to improve the industry. Excerpts:

Multiple designations, double-entry have been a burning issue in the Nigerian aviation industry and the complaint seem not to be going away any time soon. Where did we go wrong when we signed the agreements?

Well, multiple designations have pros and cons and when you look at it, a Bilateral Air Services Agreement (BASA) as the term bilateral implies, is between two nations; it is not meant to be one-sided. So when you sign and you cannot operate the route, we can create a lot of things to make money from it also, for instance, introduce a lot of charges to make sure you can get something out of it. But the most important part of it is that you tend to make your travel agencies industry very strong; they are the ones that sell the tickets, directly, online that is one. Number two is this, when you have multiple designations in one country, take, for instance, you can fly into Lagos, you can fly into Abuja, Kano, you can now fly into Kaduna, and you can fly Enugu, one airline, a foreign airline, it is virtually taking over your country .

We have no participation, we have no airline that can reciprocate that, we don’t have, it is one-sided and that is why it is affecting the airlines. And the airlines would panic because they are not flying international, they are only flying domestic. So, the people they should carry from Kaduna, Abuja and others they have lost those ones. It’s not that the foreign airlines are doing domestic operations but that’s the way it is.

But that is one side of the story. Let me tell you the other side. You know we have the Federal Republic of Nigeria; we are a federation and every place has to be served, not only Lagos. We are building Abuja, Lagos and we are building airports all over the country. The people from Enugu, they don’t want to come to Lagos to fly out; they want to be able to fly out from their own place. So when you allow them (foreign airlines) to have these flights, you may not be happy but they are happy. You have to look at it because sometimes it is not a sin per se, it affects domestic operations.  For the government, it is good politics, at the end of the day, bad economics for the airlines (domestic). But I think our airlines must learn to cooperate with these people. So, it doesn’t become irredeemable. Now in the whole world, it’s about cooperation, how can you compete with Emirates? It’s not possible but you can cooperate with them.

You don’t see them as competitors; you can do a lot of things with them. That’s where our ministry when they are doing it they need to carry our Nigerian carriers along. I think they have started to do it now, but they can translate that into some positive things for them, that’s what we can do. It’s already gone. Are we going to take the routes away from them? I think the only place being protected a bit is Port Harcourt. But don’t forget Nigeria is Lagos, Abuja, Port Harcourt, that’s the golden triangle. Lagos is gone 100 per cent. What made Lagos a hub, is we built a hub but we have not made Lagos a hub yet where you can have a floor where it stretches from cargo to the end of where British Airways used to park. You have a terminal building there just a long stretch like in Dubai and that floor just transits, no police, no customs, no immigration, anybody can come. They’ll love Nigeria, it will sell. Anybody can come, then people will like to transit. 

Are you aware that most of the passengers that fly with Ethiopian Airlines are Nigerians; do you know the amount of cash, tax, the revenue they make from Nigerians buying their tickets? So we have opportunities. Is it too late? Is it lost? The future is still very strong for this country; once you can establish these things gradually we might start getting it back.

Before Arik came, it was assumed that after Nigeria Airways we won’t have any airline. We had only dead airplanes and when Arik came the figures changed.

The other part of it that is not good is this. You know the fare structure is very bad when you don’t have a very strong airline that can compete because in IATA you must have an airline that can decide the fare base. When you don’t have one, other people decide for you and when they decide for you they will be reducing your price that is why they raise the price for too long. Before, it was very low when we had Nigeria Airways. About two months ago a friend was flying; we were both going to London and I asked ‘what flight are you going on?’ He said British Airways and I said ‘see you onboard’. He said, ‘no, I am going to Ghana to catch BA’ and I asked why if he had a meeting in Ghana and he said no, that our business class ticket in Nigeria is too much.  I said ‘I can’t believe it; that’s what I fought when I was there, so it’s still the same’? We call it regional imbalance. It’s not right, but if you have a strong airline, you can control those ones. But people say it is market forces. You and I believe a lot in market forces but again you need to protect your own people. BASA can address all those ones, fare structure, etc.

What do you think Nigeria should do to leverage on the Single African Air Transport Market (SAATM) for maximum dividends?

Let me confess to you, at the end of the day, it’s a very good idea if you are strong. You don’t go into a competition when you are weak. When you have the best team of footballers, you’d like to play. You can play many leagues but if you don’t have a good one, when they talk to you, you will find excuses. You have to defend your own. We don’t have a strong Nigerian airline today. Can we open up? Yes. When we open up is it going to affect us? Yes, because we don’t have a representative.

In fact, who is flying the international route now? So we don’t get anything out of that and so that’s why we need to think outside the box. We must have some alliances, some representation, some agreements and that is what everyone has done, it’s not wrong. Let me ask you, NNPC, that’s where we get 80 per cent of our dollars.  They are Nigerians but who are the people working for them? Don’t they have technical partners? They have Chevron, Shell, Total, Agip, and Exxon Mobil. Is it a sin? So we have to take up partnerships in aviation also; we must use them.

You want to compete with Lufthansa; they will give you the route to fly to Frankfurt but when you get to Frankfurt, where are you going next? They can connect all over the world but you have no place to go. Nigerian airlines have tried; Bellview first tried. They tried when they wanted to go to London; they blocked them, no direct flights, they had to go through Amsterdam. We must cooperate. Our airlines, that is my big advice to them, they must be able to cooperate.

This agitation, ‘this is our country, we can’t do this’, we have to allow it to go. They will go to their government; their government will say they want to sign an agreement with our government. That’s what they have, they know you. They will say they want daily frequency. We will say NO, NO, NO; we give them three and when they make it four, you will not know. Before you know it becomes daily and then twice daily.  Whereas instead of the agitations, we can say, we will be your general sales agents (GSA), the handling we will do for you. These are the things we have to do. We say we have Nigerian Aviation Handling Company Plc (NAHCO); we have Skyway Aviation Handling Company Plc (SAHCO); again we are too much fragmented. In Ethiopia, they control the airport authority; they spend a lot of money. All the foreign exchange they get it for their country, they are very strong and they are doing very well.

For SAATM, we need to work, think outside the box. Nigerians are very ingenious; they will look for ways to make money out of the situation. 

What do we need to continue doing to retain the FAA Cat 1 certification?

I told you that CAT 1 is like playing in the premier league and in the league there is relegation. You have to play and that’s why we do an audit. They put their ears to the ground and look at what you are writing and they say okay let’s go and check, that’s how it is. Oversight is big; they already have their embassy here and ICAO is there where you can pick up this information and when you do that they will come and look at what you are doing to be sure.

We thank God Nigeria has not been found wanting, but others have lost their own. They will keep coming and they must do that. Listen, the only check we have are the audits. You know we audit airlines; they (FAA) audit us. International Airlines Association (IATA) can audit our airlines but ICAO audits us and if you want to retain a Cat 1, FAA audits you. Those are the things they always do and you must make sure you pass those ones.

But you know there are eight critical elements and there are the ones you must establish. The ones that must be established, like the Nigeria Civil Aviation Act. No one can take that away from you. So when they come they are no longer looking at that again. The only area they didn’t like and late President Umar Yar’Adua assisted us that time they said there must be only one regulator in the industry. They didn’t like that there were two regulators; they didn’t like when one said FAAN is an authority. They see them as service providers, like airlines. There’s only one regulator in the industry. At that time, we told them we have applied. I remember the former chairman, House Committee on Aviation, late Bethel Amadi, outstanding individual, very knowledgeable, went with us. I remember he went with us twice when we were going to FAA for CAT 1. We went with him to the United States Congress.

These were the two areas they told us we will not pass. They came and said, “you’ve done everything but you must give us the assurance that you are the only authority.”

First of all, to pass the first ICAO audit in 2006, all we had to do was to tell FAAN and NAMA to write us a letter that they recognize NCAA as the sole authority and that they were service providers and would bear all the losses as per accidents and other.

ICAO accepted that America didn’t accept that. They said, the president of Nigeria must write to the president of the United States and President Yar’Adua did it. He wrote the letter, signed it by himself, to America and America responded. He said give us time, our national assembly will do it. Now, no one questions the authority of NCAA. There are other important areas where they do their oversight, like licensing. They want to know if your license is correct. Are you issuing wrong Air Operators Certificate (AOC), are you issuing wrong pilot, engineering licences? Are you up to date with your inspectors? Are you training them? Those are the things they are looking for and that is why they come. It’s like playing in the premier league if you win you are stronger, if you don’t win, you are relegated.

What advice would you give to the airlines as they struggle to stay afloat?

Let me say this first, I am going to talk on both sides. There must be corporate governance. If you don’t have corporate governance, it’s not going to work. The money that the airlines make is not their money, it’s meant to pay for aircraft, meant to pay for the crew, meant to pay for maintenance, meant to pay insurance, navigational charges, meant to pay for fuel! When you don’t pay that, you pocket the money saying it is your money, nobody will do business with you, nobody will lease an airplane with you.

Remember when I came in I grounded 40 airplanes. You asked why did you ground aircraft. And I said you don’t understand why we had to do it. The aircraft was over 30 years old, 31 and 32 years old. Then they said they had no money to buy new airplanes. And to be fair to our airlines when they want to buy aircraft they go to the banks and how much do they pay? Twenty per cent interest! That is the killer. What is the margin? They can never make it, it’s not possible!

At the Joint Intelligence Board meeting – the director-general of NCAA is a member of the Joint intelligence Board and I attended the meeting once a month -, the national security adviser (NSA) then, I think it was Serki Mukhtar each time he would say “Doctor listen, we are very afraid, I don’t know why your airlines are like this.” I said, “they are struggling.” He said, “what are they struggling, they make a lot of money.” I said: “Which money do they make? No sir, they don’t make any money; the money they make is to pay for this and that. I must support the airlines, they must progress, they are my airlines, you can’t do this to them. I asked, “how much is the ticket? How much is the price of fuel?  And you are charging all this.”

What I told the NSA you would not believe it. I said “don’t worry sir, all of you here, the president is from Jos, next time, you will drive from Jos to Abuja by road you won’t see airplane to fly. I told the other, you are from where? Maiduguri? You will drive from Maiduguri to Abuja for meeting as you don’t appreciate what we do for you in aviation. You come this morning on the flight and when we finish our meeting you take a flight and go back, you think it’s a joke, that’s what we provide for you.” Everybody started to laugh.

So, they agreed there needed an aviation intervention fund. But when it came out, they locked us out; we didn’t get anything but we didn’t care. I thought I did it for my industry.

Again, look at this area, I am being honest. Maintenance is done abroad. Do you know how much maintenance cost? When you go, they tell you “look the engine will cost you$1.2m.” When you get there you open up the engine…combustion is gone and by the time they are done its $3m and you have to take your naira and bring it back. But worst of all and I am not blaming the Nigerian government but the exchange rate.

The Accident Investigation Bureau held a stakeholders’ conference to review its proposed Civil Aviation Regulations of 2019. What would you like to see embedded in the review?

ICAO has standards; I think Annex 13. I think the biggest thing they should be asking for is independence, especially if there is interference in what they do. I think they are asking for power for enforcement but let me tell you my worry here. I have read in the papers where they said Accident investigations came out with 60 recommendations and that NCAA has not complied with all of them. Let me explain to you. NCAA does not need to comply with all their recommendations, it’s just a recommendation and that’s why NCAA and AIB need to work together. In Africa, they don’t work together we don’t know what happened. In other climes, they work together. NTSB and FAA work together. But in Nigeria, you see so much rivalry. It’s not necessary, they need to come together and do the right thing. When something happens, the NCAA will have more information than anybody else. They are the custodian of the information. So they won’t give you if there is rivalry and you spend a lot of time to find something which they already have the answer. So that is important. Another thing you have to be careful of is that accident investigation is centred on the entire thing. In most cases, you need to find out from the airline what is happening; they are the operator. They (AIB) have good leadership but what I see in the papers they are very active, I wish them well. Again, they need to apply technology; things have changed all over the world.