‘Poor corporate governance to blame for airlines failure’

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Sam Adurogboye is the General Manager, Public Relations, Nigerian Civil Aviation Authority (NCAA), the apex regulatory body overseeing airlines in the country. In this interview with Ibrahim Apekhade Yusuf he gives a bird’s eye view of the challenges besetting airlines and proffers the way forward. Excerpts:

What is the true state of the airlines in Nigeria?

Going by the records in the defunct Federal Civil Aviation Authority (FCAA), what we inherited was over 150 airlines. But by the time we went for audit in 2006, many had gone under. When we were clearing our register we discovered that all these 150 airlines said to be operating at one time or the other were no more there. Nobody blamed the FCAA for that. The question now is, for those airlines that went under the US did anybody blamed it on the FAA? No. Every business has free entry and free exit. As we speak, there are just about nine airlines that are functional and among the domestic operators, there are those that pick up bills that have never owed us. There are new airlines that are making profit despite the tcredit crunch in the economy. The fact is, if you do this business the way it should be run, you can break even. But if you do it by ‘Myself, Family and Nigeria Limited,’ without recourse to good corporate governance it’s a recipe for failure. For instance, there is a case of  an MD of an airline coming in and asking his staff how much did you make today and he goes away with the money even the one that ought to have been ploughed back for the business to pay insurance, for maintenance and all that is not being taken care of. There is no way such an airline can succeed. That has been the experience thus far.

What is the role of the NCAA in all of this?

Unfortunately, some stakeholders both within and outside the airline industry have been blaming the NCAA for the misfortune of some of these airlines. NCAA is a regulating agency for the industry and by law both within our domesticated statutes and universal law, it’s forbidden for a Civil Aviation Authority to run an airline or get involve in any commercial venture.  The only reason the NCAA exists is to ensure the safety of the aircraft and make sure it’s airworthy at all times. We oversight the operators, that is those who work on the aircraft including the pilots, the engineers and every other person that works with the aircraft. We use our certificates to regulate the industry. Now, the aircraft operates in an environment which is the airport, so we oversight the airport too. The aircraft flies through a space, which is a flight path, the airspace and that is being managed in Nigeria by the Nigerian Airspace Management Agency (NAMA). Then of course, people work in an aircraft and we try to find out where they are trained from. To do that we oversight the institution that trains the personnel as well. So the totality of everything we do revolves around the aircraft just for it to continue to be safe for air travellers. That’s the only reason why we exist.

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What are the requirements for setting up an airline?

Now, if somebody is going to set up an airline, there are requirements. If you go to our website, it’s all laid out there in black and white. There are categories of aircrafts you can buy whether as a corporate body or as an individual or for third party use. There is a requirement if you want to buy commercial airline different from the one you want to use for yourself and so on and so forth. Now aside that requirements, there is an aspect security will come in, which we equally need and it will get to us confidentially about the source of the money, your antecedent, in order to give us your profile. The idea is to make sure the money was not stolen and things like that.

Then we also ensure your capabilities in the area of safe operations. We have to see the aircrafts, your rented office, you must also have insured the aircraft, and you must have employed staff.  Of course, you must have done your own feasibility study and the business model you want to adopt.

What will you say of the multiple charges and levies being paid by the operators?

In aviation business whether in Nigeria, Ghana, Canada, Singapore, there are universal charges. So there is no question of multiple charges at all. It’s all part of statutory requirements. You can’t operate in an airport and you won’t pay for landing. Each time you bounce the aircraft on the runway, it is required to be maintained. You can’t operate an aircraft and refuse to have an office. You want to operate from one point and the other and you don’t want to pay navigational charges? Every plane that is flying follows a path. You don’t go to London and you find your way to Owerri. Why are you not on the way to Owerri? It’s because there is aid, the airspace is charted, and everybody follows a path. Navigational instruments are installed on routes to guide you. Somebody is in touch with you from the Tower, who hands you over to the next airspace manager if you move outside of their airspace and the other sides picks it up to guide you. Personnel and equipment being used cost money and this has to be catered for. It’s the same charges being paid here that is paid elsewhere. So it’s not any different. Insurance is dollarized. The cost of fuel is high. All these are not within the control of the NCAA. So you can’t blame this on the NCAA. We don’t joke with maintenance, aircraft must be 100% fit at all times. The maintenance is fixed.  If you move the aircraft from one point, you must carry out an A check and when you fly for some hours you go for a B check and another fix hours you go for C check, which is a little bit comprehensive and most C checks are not done in Nigeria, they’re done abroad and you don’t do it anywhere you like you have to do it at where we approve. Meaning that wherever you’re going to service your aircraft, we must be involved as long as you’re in our register. And when you’re even doing the servicing, we have to send our personnel there to monitor the process to ensure that things are done in line with the standard procedure. That’s how painstaking we’re.

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Can you clarify the issue of airline operators paying 5% surcharge to NCAA?

Our only source of revenue is 5% of ticket handling and it’s  in the Civil Aviation Act of 2006. NCAA is run and sustained by passengers because we exist for the safety of the passengers. When I fly now, I buy a ticket and become a passenger as well. The 5% is added to the airfare paid by the passengers to the airline for a one hour flight. The airline only collects this on behalf of the NCAA to remit to us later. So it’s not a surcharge to the airline in the first place. No. Even the idea of collecting on our behalf was a decision taken by the airlines at a Civil Aviation Committee Review because our officers use to collect it. But the Committee said rather than us  having our officers at the counters, let’s collect on your behalf and remit later. So how does it now become a surcharge? That is deliberate propaganda and lies against the NCAA by those out to deceive the uninformed publics. There is also hue and cry about NAMA charging navigational fees. All these are standard procedures done abroad nothing is arbitrary here.

Does this charges applies to foreign airlines operating in the country as well?

Of course, the foreign airlines operating in Nigeria are also paying and they pay it in dollars too. But the local operators who pay in naira just don’t want to pay. Are you saying the foreign airlines are not facing recession too? Nobody is immune from it,  not even the U.S. There are more mergers of airlines in America than anywhere else in the world. As we speak, bigger carriers are merging. There is  no airline that doesn’t belong to one alliance or the other. British Airways, for instance, belongs to Star Alliance, One World; etc. Everybody is pairing up because they know they can’t do it alone in view of the prevailing economic situation afflicting most countries. What I expect from local operators is to sit down and look at how to get over the worrying economic situation rather than resort to the blame game.

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