| Private sector should run the airports
– Richard Akerele, CEO, Airline Services and Logistics
Plc
By UCHE USIM
Monday,
September 10, 2007
|
•Richard
Akerele
Photo: Sun News Publishing |
|
Mr Richard Tokunbo Akerele is one of those who aim high,
such that if at all they fall, they are sure to rest on the
stars. The Chief Executive Officer of Airline Services and
Logistics Plc, apart from having a monumental dream of hoisting
his company’s banner on the global scene, is also a
crusader of the public/private partnership who believes that
government should be saddled with the responsibility of providing
the enabling environment for the private sector to build the
structures needed for urgent economic emancipation.
With that belief, he says the private sector should be allowed
to run the airports in the country, offering no apologies
to those who may not share this position.
Citing major airports like those in Sydney, India and Schipol
which he says are run by big private companies, Akerele expressed
confidence that the fortunes of Abuja Airport will experience
a big leap following government’s decision to concession
it to private firms.
Hear him: "Without being bias I’ll say yes, it’s
good to allow the private sector run airports. It’s
not a personal matter. World over, the trend is for airports
to be privatized because the private sector manages them better
and ensures high return on investment. Most major airports
are run by private companies. Some of these companies are
offshoot of former government agencies. BAA in Heathrow is
a private company or Plc I should say. Same goes for the Schipol
Airport in Amsterdam. New York Airport is run by Schipol and
also Sydney Airport is run by a private company too. The trend
is same in South America, India and so on."
Akerele urged the government to provide the enabling environment
to ensure that the private sector does what is expected of
them.
Currently, his company, ASL Plc is enjoying a monopoly, whose
standards, he emphasizes, have been raised very high in order
to wade off any unserious persons or groups from coming into
the sector to mess around.
While enjoying the monopoly, he encourages competition in
order to keep any company in the monopoly business on its
toes as the likelihood of getting complacent is high in the
absence of competition.
He chronicles his foray into the glamorous aviation industry.
He tells how he began from a duty free shop operator into
a leading on-board catering services and logistics provider.
He also speaks on his challenges, his view of the nation’s
aviation sector and vision for the company.
Excerpts:
Background
From the name Richard Akerele, you’ll deduce that I’m
a Yoruba man from, if you like, Lagos. But our roots are in
Oyo though everybody claims Lagos. We’re originally
from Oyo I’m 52 years old and I’m married. I went
to school in Ibadan until I was nine years old and then I
was sent to a boarding school in England where I spent a greater
part of my youth till I went to University in America. I studied
Business Administration and also got a Masters Degree in Business
Administration and later on emphasised in International Marketing.
I returned to Nigeria in 1981 and worked for John Holts for
seven years as a marketer and an executive.
Later on, I branched off on my own. I started Duty Free shops
at the airport. We actually opened Duty Free Shop in Murtala
Muhammed International Airport, Lagos in 1990. I realized
whilst I opened the shop at MMIA that there were lots of requirements
for services in our airports and I set off trying to provide
these services.
So, from the Duty Free shops, we moved into lounges and today,
we run British Airways’ and Air France’s lounges.
We also have a dedicated lounge which services other international
airlines like Lufthansa, KLM, Emirates and so on. From there,
we ended up in in-flight catering. From there, we’re
looking at the next stage.
About ASL
ASL started in December of 1996. We were 10 years old last
December. We’ve grown substantially over the last few
years and we’ve grown from a fledgling company with
a turnover of about N45 million in our first year and we’re
now getting close to over N3 billion turnover annually. You
can see that we’ve grown phenomenally. We’re in
a monopoly position at the moment. We’ve set the bar
very high and the standards are high as well in what we do.
And you could say that is a deterrent to other entrants into
the market. Of course, we’re in an industry that requires
high standards and high level of performance. This is because,
we’re part of a sophisticated profession in terms of
aviation.
Foreign/technical partners
Yes, we have a technical partner called First Catering in
Zurich. I met with him several years ago and put it to him
that it was a great idea if he would be interested in coming
into partnership with us, so that we can get very good international
standards. We went into that partnership because he was a
small service provider in in-flight catering and therefore
we did not want to be swamped by the larger companies like
the LSG and the likes. We wanted to be part and parcel of
the development of in-flight catering business in Nigeria
and later in the world. It’s worthy to note that when
we did go into collaboration with First Catering, the owner
was already established in Ghana. He is the only in-flight
catering service provider in Ghana. We took a percentage of
his company in Ghana and he took a percentage of our company
in Nigeria. So, we’re enjoying the partnership.
When we went Plc and why
We went Plc on July 25, 2007. Prior to that, in April, we
did the private placement. We went Plc by way of introduction
to the Stock Exchange. We’re yet to do our Initial Public
Offer (IPO). What informed our wish to go was the fact that
we’ve grown substantially over the past few years and
we feel that Airlines Services is a frontline service company
within the aviation industry and as such, we felt that it
would be a good idea to involve more Nigerians across the
board in what we’re doing and what we’re trying
to do.
As you know, we’re primarily in the in-flight catering
business. We also provide lounge services at the airport and
bar services at the international airport too. However, as
an airline servicing company, we’re looking to broaden
the base of our operations and to assist the government’s
plans for making Nigeria and in particular, Lagos, Abuja and
Port Harcourt airports hubs in central and western Africa.
In order to create these hubs, you do need ancillary services
such as in-flight catering services as we do. You also need
things like hotels and other services we intend to provide
as we go forward.
Our target at the capital market
Now that we’re in the market, the money we’ll
rake in will depend on the next phase of our development.
But above all, it depends on what the government is able to
allow us get on with. We raised the capital not just because
of what we’re doing presently but because of our future
development. Our future development as a company that works
in the airport is also dependent to a large extent, the permission
the government gives us to do what we want to do. We cannot
do anything without getting the government’s nod. We’ve
applied for additional land to build a five-star hotel at
MMIA which we believe is very much needed.
That hotel will cost 65 million dollars approximately. So,
we want to use some of the money we raise for that. We’re
part of the consortium that bid for the Abuja Airport and
we’re waiting for the government to sign up on that.
We need money to do all what we want to do there. Airport
projects will be the first phase of our developmental plans
and it’s expected to cost 70 million dollars. So, obviously,
we cannot raise money for all these projects ourselves. But
in a nutshell, I can say we intend to raise 20 to 30 million
dollars in our Initial Public Offer (IPO).
Additional manpower
That’s a very good point. As you know, government is
looking for ways to increase employment so that graduates
coming out of our schools can get jobs. From my calculations,
there must be up to 3 million new jobs every year if Nigeria
is to sustain the youths properly. Today, we’re just
700 people in ASL. So, if we’re to do lets say the hotel
for instance, I’ll imagine that an additional 500 jobs
will be created. From there, it’ll go to thousands as
we expand. We must recognize the importance of airports and
the development of these is what we’re part of as a
private sector. So, job creation is no longer the reserve
of the government.
Take Heathrow Airport in London for instance, which employs
100,000 people. You can see the importance of having a sound
airport.
Expansion
We’re looking at expanding our business beyond the level
it is now. We’re looking at cross other borders, at
going into Ethiopia. I’ve had a discussion with the
CEO of Ethiopian Airlines on that. We’re looking at
going into South Africa, where First Catering is, we’re
also looking at Zambia, Liberia . Our dream is to become African
continental player.
Bid for Nnamdi Azikiwe International Airport, Abuja
Oh yes! We’re part of the consortium that bidded for
the Abuja International Airport otherwise known as Nnamdi
Azikiwe International Airport. The government has concession
it out for 25 years to us and another group. So, we’re
looking forward to signing that with the government so that
we can move in and develop the airport.
Being in monopoly
Truthfully, we all like to be the only player in the field
because it’s so easy to score goals. It’s really
good for us. It allows and affords us the rewards of going
into the in-flight catering industry in the first place.
Despite the fact that we’re the only player in that
type of business, we do expect competition someday. We anticipate
and look forward to competition coming in because without
competition really, one tends to get a little complacent over
ones position and of course, this will affect standards going
down the road. Also, if there’s competition and people
are coming in, it implies that the market has grown which
will be good, not only for us, but for the Nigerian economy
and that of Africa as a whole. We’re well placed to
deal with competition. We’ve the experience. We’ve
been on ground more than any one else and we would obviously
rise through the challenge when the time comes.
Challenges
They’re in various folds. The biggest challenge for
me is to grow and also for me to interact with the government
and for the government to see that we’re an integral
part of the plans and desires for Nigeria to become a major
player in the aviation industry across Africa and indeed in
the world as a whole. There is a need for us to sit with the
government and the Ministry of Aviation or Transport and have
dialogue and plan together the way forward. Like I said, we’re
an integral part of the government on the way forward. And
we’re all interdependent. So, one of my biggest challenges
is getting the government to allow us and give us the necessary
cooperation and assistance to be able to develop in the way
that we think we should. Government agencies understanding
what we require and what we need to do so that they can support
us is the major issues I deal with.
The problems could be viewed from operational stand point.
We deal with the government at every level, but if I’ve
to speak specifically on operations, then the challenges are
ban on imported items which we have managed to raise the issue
with the government and get around it.
But the day-to-day thing such as supplies is still a problem
because there is no downstream industry of any consequence
in Nigeria at the moment. And we could be seen as a pioneer
and as a catalyst for this downstream industry to take place.
For instance, in other countries like South Africa, Kenya
and Europe, a caterer such as myself can get deliveries of
fruits and vegetables that we use in our cooking for the airlines
every other day. The beautiful thing about such supplies is
that the fruits and vegetables have already been processed
before they get to us.
One of the major challenges we face in this regard is that
we have to process everything we use in the cooking ourselves
and this is not really our business. So opportunity exists
for people and companies in the downstream of the airline
services to process whatever it may be like vegetables, potatoes,
carrots, yams and all of that. So they can peel, cut, dice,
slice and prepare them in the manner that we require so that
we just cook them.
The other area is for instance meat and chicken. At the moment,
we’re importing chicken and at the same time, we’re
buying chicken locally. But the local chicken we use is tremendous
wastage because the requirement for chicken on board of any
aircraft is that you don’t have any bones in the chicken
because obviously we won’t want anyone to choke on board
so far up in the air. So the international standards require
that chickens have no bones. So, we have to de-bone the chicken
and more so we only use two parts of a chicken which is the
breast and leg. Now, the issue is that there is no de-boning
equipment in Nigeria. Nobody is de-boning chicken in Nigeria
today and we use large amount of chicken and you can imagine
what we go through trying to de-bone chicken in house and
worse still, we do it manually.
At the end of the day, there is a tremendous amount of wastage.
So, it’s obviously cheaper to import chicken ready to
use from South Africa or Brazil than for us to buy the chicken
locally and start de-boning. It takes time to do that and
costs a lot of money and adds up to the cost of our day-to-day
operation. These are areas we have problems. So, we look forward
to a time when downstream operations will begin and we can
get people to supply us chicken already de-boned. With that,
they will be operating in consonance with international standards
and that will also boost our operations as well by way of
reducing our operational costs and becoming more competitive
on the international stage.
Debtor airlines
We don’t have airlines that enjoy our services and yet
don’t pay for them as at when due. For the international
airlines and the blue chip companies who are our major customers,
they pay pretty much on time. They know the value of our services
and know that if you don’t pay, then obviously, we cannot
operate properly. On the local scene, we work with Virgin
Nigeria, Arik Air and Bellview airlines on the local basis.
We do tend to find that our local customers are little slower
in paying. However, I’ll say that Bellview and Virgin
Nigeria are not too bad. Arik tends to be the slowest, but
I think as they mature in their youth and attuned with the
requirements of the international standards, they’ll
adjust accordingly.
Assessment of the Nigerian aviation industry
I think the Nigerian aviation industry as it is today is at
its infancy. I think the government needs to focus on aviation
because it is under-utilized and it’s not given the
position it deserves. We do talk a lot about our aviation
sector and what we want to do, but we seem not to get to where
we want to go. I’m not aware, for instance, if we have
an aviation policy guideline or plan for aviation over the
next 20-30 years.
So, the government needs to know where it wants to go or where
it wants to get to at any point in time.
We need to assess the sort of airports we have now and project
what we need in the short, medium and long term. So, for the
ones we have now, we need to map out how we’ll re-develop
them to meet current needs. Also we need to really know the
volume of traffic going through our airports and the sort
of infrastructure needed to boost cargo and passenger traffic
because at the end of it, the economy is best for it. Good
airports contributes immensely to the Gross Domestic Products
(GDP). Same goes for good airlines and good sector as a whole.
Allowing private sector to run airports
Without being bias, I’ll say that yes, it’s good
to allow the private sector run airports. It’s not a
personal matter. World over, the trend is for airports to
be privatized. Most major airports are run by private companies.
Some of these companies are offshoot of the government. BAA
in Heathrow is a private company or Plc I should say. Same
goes for the Schipol Airport in Amsterdam. New York Airport
is run by Schipol and also Sydney Airport is run by a private
company too.
The trend is same in South America, India and so on. India
Bombay Airport is being run by LSG arm of Lufthansa. Same
is happening in Nigeria where the government has concessioned
out Abuja Airport to start with. I think the government needs
to think of infrastructure in a different way. We need to
build and manage airports in the private sector. The government
only needs to ensure cooperation by making sure people can
get to and from the airports by means of good highways, rails.
Furore over concession
We haven’t signed the agreement on the concession yet.
We just won the bid. We’re waiting for the government
to perhaps to get aggrieved parties to sit down and address
all the issues raised. Some quarters are objecting to the
concession. So, once that is done, government will be able
to address this issue.
Management heroes/books
Oh yes! I read management books. In fact, I just finished
reading a book by a man called L. Coker. He is probably one
of the most distinguished businessmen of the last century
and also this century in America. He’s alive and is
showing us the way. He was the man that turned Chrysler around.
He’s one of the most astute captains of industry if
you’d like to say. People like him are inspiring. I’m
reading right now the diaries of Tony Blair’s years
as British Prime Minister.
Vision for ASL
Right now, we’re a country player. My first move is
to see the company become a regional player, especially in
West Africa. From there, I’ll like to see the company
grow into a continental player. I see us getting listed not
just in Nigeria but on the European Stock Market. This will
ensure deeper pockets, broader operations and stronger management.
That is very important. In the longer term, I’d like
to see ASL to a major player worldwide.
Success secret
Democracy came into Nigeria just about the time we got into
business. Nigeria has since then become a much more interesting
place to do business and attract foreign investment. There
are many airlines coming to Nigeria at the moment and that
trend is continuing and we are at the right place at the right
time.
Management style
Basically, I love professionalism. As a CEO, I ensure we operate
within the ambits of international standards. We adhere strictly
to international stipulation like the ISO 9000 and the rest.
I like hardwork, focus and dedication. You have to have these
before success can come in. I must also add that I love training
and for that reason, we ensure our staff are well trained.
We try to get the best hands we can find.
Hobbies
My hobbies are running and training. I like good music and
I like to read books like biographies and the likes. |
