Prof. Obiora Okonkwo is the Chairman, United Nigeria Airlines, and the Spokesperson, Airline Operators of Nigeria.
In this interview with Arise TV monitored by MMS Plus, he set the agenda for the newly sworn-in Minister of Aviation and Aerospace Development, Festus Keyamo, he noted that the new Minister should understand that his achievements will open up new avenues for foreign exchange and another source for GDP.
What Would You Say Should Be The Agenda As Regards Bilateral Air Service Agreements, BASA Which Is A Very Big Issue On Ground As We Speak
Secondly, A Lot Of These Foreign Airlines Try To Muscle Out Our Local Airlines, We All Know The Episode We’ve Had With Dubai With Emirates Airlines And The Challenges They Have In Remitting Their Cash And The Business Environment Generally. What Would You Say Regards That As You Set Agenda For Honorable Minister Of Aviation?
The government has to recognize that this should be enlisted as one of the essential industries. We are looking at agriculture. We are looking at road transport. Aviation should be considered as one of them because it’s just another means of transport. If there is a day or two you cannot fly to any part of Nigeria, everything will come to a standstill. It’s come to a point they have to know that it is no more for only the rich.
It is a means of travel for everybody, even if all the roads are there, even all the railways are there, even if other means of transportation are well developed like water transportation or anything. Like in the developed world, aviation still plays a critical role in economic development. So as the new minister comes in, we want him to recognize this as such and then treat it with all the necessary attention.
We’ve just talked about volatile and then toxic business environments. Aviation is most affected because it’s one of the businesses where you earn all your money in Naira as a local operator, but you require about 90% of your earnings to be used to keep the aircraft flying in the air, and that means you need dollars. You and I know the issues going on with the dollar today. There are some members, to tell you how bad it is, maybe I should break it down a little bit.
There are some of our operators who have $10 million, $15 million in US dollars stuck in the bank, even us at Nigeria Airlines, we have a couple of millions of dollars, stuck in the bank since last year. We bided for foreign exchange; we had our Naira provided. We had our allocation and the forward process confirmed. Since August up to today, we don’t have Naira, we don’t have dollars. Nobody knows about it, nobody’s talking about it. Some people borrowed this money from the bank.
A friend of mine had just had about $40 million in US dollars stuck in the bank since 2016. He’s paid for the aircraft that he purchased. We’re going through a lot.
So talking about BASA, BASA for us operators locally here, we are ready to take advantage of our BASA agreements. United Nigeria Airlines, for one, has written to fly to New York, London, and other major cities of the world.
We need a minister who will now put his foot down and demand that when we write to the Civil Aviation Authority (CAA) of the UK and we don’t get a reply in one month, then, there is no need for British Airways to be in Nigeria.
If we want to fly to America and we don’t get a response from the CAA of America, there’s no need for United Airlines of America to be in Nigeria. But obviously for that to happen, we need to be supported. We need to be equipped with the necessary equipment and aircraft that will make that trip. I have always said that it is easier to fly internationally, to fly five, six, and 10-hour flights, than flying locally up and down within 45 minutes.
So, I think that the new minister that is coming in should pay attention to all this and should know the magnitude of what he’s going to achieve, that he’s going to open another area of foreign exchange earnings for the country, he’s going to open another area for the source of GDP.
So many countries where the aviation industry is vibrant, the aviation industry contributes between five to 10% of their GDP. Turkey is one of them. Ethiopia is almost 60% of its GDP.
We can do that. Before COVID, the statistics are there. The aviation sector was the third largest contributor to GDP. And we’re talking about a country of over 200 million, where we still have only 10% of that population flying today. Could you imagine if this is developed, and we have 10, about 20, 30% of the population flying in the next five, four years of this administration? That’s going to be huge.
And then we’ve talked about these foreign airlines arm twisting us and squeezing us. What you hear sometimes is just how much we owe them, which today may be about one billion US dollars. We don’t know how much they have been paid. If they are owed one billion, they probably have been paid five billion US dollars. And 95% of these funds are money spent by Nigerians living here or living overseas. It is not like this is for tourists.
This is not a tourist destination, as you know. So, if the Nigerian local operators are supported to be fully capitalized and the equipment is made available, oh, man, 50 to 60 percent of this money can be retained in Nigeria.
The foreign exchange component paid for can be in our accounts. We don’t have to put pressure to the government to give us money to buy our spare parts and maintain the aircraft. Actually, it could form a substantial part of the I&E window of foreign exchange. These things are very, very crucial.
Let’s Look At Some Other Operational Challenges, The High Cost Of Aviation Fuel, Multiple Taxation, Perhaps Give Recommendations Or Suggestions To The Ministry
And Then Safety Concerns, In The Last Administration, We Had Some Airlines Being Sanctioned Or Even Grounded At Some Point Because Of Safety Concerns. How Can The Minister Help To Make This Better, To Improve The Conditions In The Industry?
Well, for the minister, like you have said in the intro, the minister should not look into the regulatory agency. I think the team we have now headed by the DG and they are doing excellent work. It is normal in industry that an airline is kind of stopped to look into any concern, you know, this may not necessarily be that there is any concern, any real concern for safety, but at any slightest suspicion that’s the procedure and then if it’s clear they have to fly.
I am very proud to let you know that air is safe. The regulatory system and the people involved are tight. The current minister should not interfere with regulation. We had a very terrible past where even regulatory employees and NCAA staff in recent development were given employment letters from the Federal Minister of Aviation. That’s absurd. That’s unacceptable.
So let the regulatory system remain. Look into the latest appointments that were made before the end of the last administration and ensure that they were not done for any other ulterior motives.
Yes, traveling locally here, the tickets, if you think tickets are expensive, then, you are probably one of those who do not appreciate the patriotic sacrifices made by local operators. If we have to charge the fares the way the costs are changing every day, you should be paying nothing less than N250,000 to fly from Lagos to Abuja. I can tell you, that from December last year up to March, or May of this year. There is no airline that may be losing less than two million US dollars every month.
We’re doing that because you know how the economy works. The Naira swap, the election, the uncertainties, the poor economic activities, well, the only option we had would have been to shut down the air. And when you do that, you could be accused of economic sabotage or even accused of cooking the data because it was an election year. We absorb those things, and we wish Nigerians sometimes would know about this.
That’s why I’m saying that sometimes when you are going to the airport to fly, go with roses. It could be red, it could be white, it doesn’t matter. And give it to any one from the ground crew to the operators, the cabin crew, who have absorbed the whole lot.
Cuts In…. I Totally Understand Where You’re Coming From Because We Also Speak With Other Airline Operators And We Know The Sacrifices You Have To Make To Ensure That Prices Are Down. So That’s Why I’m Asking You That What Can The Ministry, What Can The Minister Do To Make Running Business In The Aviation Industry Better So That It Can Translate To Better Fares For Nigerians?
They have to work with other agencies of government to rid the sector of speculators. Could you imagine that we were planning a new fleet that is supposed to be coming in from next month. At the point we started making our financials, fuel was about N600, N650. We said worst case scenario, make it N700. Naira was about N600, N700. Worst case scenario, N800. One month later, with N950, you are chasing $1.
If you need $1m, you might not even see it in one month. Fuel from N650 to N850 within two months. So, we believe that this is artificial. I’ve said it and I continue to say it. There’s no reason, no matter the international price of crude oil, that fuel should be delivered, aviation fuel should be delivered to the pump, the aircraft, for more than N500. Everything you see on top of it are speculators. And I’m calling out on NNPC staff to set this country free.
Even the Naira, yes, maybe, but I don’t want to challenge any government intention and their decision.
Today we have one window for the foreign exchange. There is no reason why Naira should be N950/$1. Even within this one window, we should be getting Naira at N600 Naira. There are speculators. It may not be entirely the responsibility of the minister, but he has to look and work with other government agencies and government ministries to fish out the bad eggs within the system because these people are, these people doing all this harm are not my village people or your village people. They are people who are in the system.
We talk with the marketers. The marketers are worried. They spend a whole lot of money before they can access this product and that money is unnecessary. The money that is built in, we pay, and the passengers bear the brunt. If we don’t have a better pricing system where we should have a better rate for the dollar, better rate for aviation fuel– and the operators – if we have to continue surviving in Nigerian airspace, there should be no tickets at least. You should pay for less than 150,000 Naira. We don’t want that to happen because it will add to the economic burden of the people. It will slow down the aviation business and then it will have a multiplier effect on the whole, our own ecosystem.
So, we really think that the minister should buckle up, roll his sleeves, and go to war with those bad eggs that are polluting the system. We still believe in the viability of this industry and we’re ready to go on the hog, like I said. We call ourselves the new breed of operators who are extremely patriotic and ready to give a fight to those who are obstacles here.
I Think We Should Give A Round Of Applause To All The Airline Operators For The Incredible Work That You’re Doing, Especially In An Economy Like Ours. Just Recently A Hundred Young People Were Taken To A Conference That Is Called Young Political Leadership School Africa To Develop Young Nigerians And Young Africans To Take Up Political Power. They’re In Liberia, But Flying From Lagos, They Had To Go Through Ghana To Get To Liberia. This Is Within The Same Continent, Now, The Journey That Should Have Been Direct Flight Within An Hour Or Two, They Are Having To Spend Like Six Hours To Go From Lagos To Liberia, What Can The Minister Do To Make It Impossible For This Kind Of Waste Of Human Time Or Productive Time Being Wasted?
Also, What Suggestion Do You Have For The Minister From Airline Operator’s Perspective That Air Peace Or United Airline That The Government Will Support To Make Sure That You Can Fly Anywhere In The World, And We Can Pay In Naira, And Reduce The Spend To United, To Delta, To British Air, And All The Other International Airline That We Pay Dollars To, So That We Conserve Our Dollars.
Thank you very much. Your observations are very, very practical. This is not about the minister performing magic, but it’s about working with the local operators who have met all the requirements to fly internationally and the key major requirement is being IOSA certified.
If you have IOSA certification, that means you have been found fit to fly to any part of the world maintaining all the safety rules. What next do you need? You need the right equipment. Most of this equipment that we’re supposed to have is supposed to be made available in very, very good condition.
Even we, the operators, within our own expansion plans, we’re able to fit into this without even any government headache if there is consistent policy. Air Peace has over 35 aircraft. Today, 50% of them are not flying, not because they don’t have money, but because their money is stuck in the bank.
They can’t get foreign exchange to service these aircraft. Maintenance is very, very important for safety. All those rules you talked about; you are right. My daughter studies in one of the schools here in Abuja. They have to go to Ghana for some UN event sometime, not long. Forty-five minutes flight, she had to leave the airport here by 7 o’clock, to pass through Togo. They didn’t get to Ghana until seven in the evening. That’s crazy. We can do that. We need equipment. We, you cannot provide this equipment. You know, there are three ways you can own equipment before you fly. Either you do what they call ACMI, that you lease the aircraft with the crew, maintenance and everything is available, and you pay for certain hours every month.
You need to have access to foreign exchange to pay as at when due, or you own this aircraft fully. Even if you own it by yourself, you are supposed to be setting aside a certain amount of foreign exchange on every hour of flight you make to be able to maintain it and keep it safe in the air. Or the other way could be dry lease. The dry lease is a situation where you hold the aircraft, you maintain it, you put the crew, and all that.
Each and every one of them requires timely remittances of a certain amount of money. We’ve lost all our credibility. Our lessors and partners and vendors overseas will tell you, look, we know you’re a great guy, we know you’re passionate, we know you want to pay, but you don’t have the money, your credit rating in this country is not good enough.
So, not many people are ready to give you ACMI, because once you’ve had it, and you are not meeting your obligations. You have Naira, but you can’t convert it to the dollar. You are converting it to the dollar, you can’t have dollar, and you can’t have Naira.
So, the solution to this is about the Minister understanding that we need a special window with the CBN to assess foreign exchange. There is no way anybody should be worried that they are round-tripping in the aviation industry because you either go there with your Form M or your Form A. The vendors, the beneficiaries of the money we are getting are there. They could be MROs or maintenance Organizations, they could be vendors, and the humans are coming in and enjoying and seeing them.
The lease agreements are signed. They are registered with the NCAA. They are registered with government agencies. They are paid as at when due windows. So, let them start by saying, what are your monthly obligations? We can put it on the table, and most of the operators, make it available to us. If they can, it will be easier for us if they have to make available special capital we can assess on a single digit. I repeat this is a private business. We don’t need government grants. We don’t need free money from the government. We can run our business. We know we have the experience and as soon as that is done, we will have aircraft all over. And this problem in the region can only be solved by Nigeria, no other country in the region can do that, it is not a ministry affair but a support with the operators.