Stories by Louis Iba
Regulatory agencies and service providers in Nigeria’s aviation industry recently commenced a debt recovery exercise to collect monies owed by domestic airlines. About N47billion debt are currently owed the various agencies like the Federal Airports Authority of Nigeria (FAAN), Nigeria Airspace Management Agency (NAMA), Nigerian Civil Aviation Authority (NCAA), and other industry service providers.
In the last one month for instance, the agencies have intensified efforts at recovering these debts, and had at different times, attempted to suspend the supply of critical services to the airlines, an action that has drawn the criticisms of airline owners.
Operators want the Federal Government and relevant aviation agencies to be cautious in the quest to recover debts owed by the local airlines.
According to a statement by the Airline Operators of Nigeria (AON), there is the need for the agencies and service providers to tread cautiously in its recent debt recovery move. “Some of the debts they want to recover can be described as phantom debts from domestic airlines and they should tread cautiously in order not to run them out of business as they ran many airlines out of business in the past with ridiculous billing,” AON said. “We strongly decry the ongoing action by the various government agencies in the aviation sector whereby they threaten to deny airlines services providers of their operations or completely ground them as this is likely to force airlines out of business,” AON added in a statement signed by its Chairman, Capt. Nogie Meggison.
AON noted further that; “Because of today’s economic hard times, airlines have become a soft target and are seen as a cash cow for everyone else to prey on. However, the agencies need to realise that air transport is the engine of the economy and if they disturb Nigerian airlines, they will damage the efforts of President Muhammadu Buhari to restructure the economy.”
No aviation without airlines.
Local operators say caution needs to be observed in the debt recovery drive so as to ensure the survival of the airlines.
“Without the airlines there is no aviation in the first place and It is because of the airlines that airports are built and managed by FAAN,” AON said.
“It is because of the airlines that an agency like NAMA exists to provide navigational services and the airlines also are the reason why we have catering companies, ground services providers, fuel marketers and other ancillary service providers in and around the airport,” it added.
Importance of airlines’ to economy
Airlines work tirelessly to airlift Nigerians safely around the country.They are the bedrock of the oil and gas sector on which Nigeria depends a great deal, as they promote the smooth, expeditious and efficient delivery of goods and services daily thereby facilitating businesses that are critical to the economic recovery of Nigeria.
The airlines therefore provide jobs for all and sundry. And this means everybody else in the industry is making profit and surviving out of the airlines that are perpetually being undermined and milked dry on daily basis. Above all, airlines still have to pay multiple charges and double taxation of all kinds to various government organs and are forced to pay for several inefficiencies and in some cases for services that are not provided without value for money and with no one coming to their aid.
Airlines crippled by debts
Airline operators have noted that past efforts to recover debts by some agencies had led to the demise of some airlines. “Cruel hostility has stifled airlines in the past and is one of the issues responsible for many Nigerian airlines going out of business in the past twenty years including the likes of Triax, Sosoliso, Air Nigeria,Premium Air Shuttle, Gas, Okada, Sahara, Oriental, Chanchangi, Savanah, Harco, Harka, Holtrade, Intercontinental, Skyline, Easylink, Chrome Air, Fresh Air, ADC, EAS, Virgin Nigeria etc,” the AON said.
“Majority of these phantom debts are owed by airlines that are dead. Only airlines that are in operations can pay debts. If you deny services to the airlines how do you expect them to operate and make money to pay up their bills in the first place? There are better ways of doing things.
Instead of forcing the airlines out of business by denying them access to fly or employing crude arm-twisting tactics,the agencies should be working closely with the airlines to reduce costs and make their operations more efficient,” the AON added.
Incentives not death knell
According to the domestic operators, what most critical needs are incentives that would allow the growth of the industry and not policies that would stifle and kill the airlines.
Said AON, “For instance, in its bid to make Accra a hub for aviation in the world, the Ghanaian government recently announced a cut in the price of aviation fuel by 20 per centselling today at N110 equivalent.
“Even if both countries are importing aviation fuel, why is Nigeria selling at N200 per litre as against Ghana at N110 per litre?
“But in Nigeria the opposite is the case. Rather than assist domestic airlines to bring down the price of Jet A1 and make it more available, the price has skyrocketed consistently from N105 in March to over N200 today thereby significantly raising the cost of operations to unbearable levels in spite of our constant calls over the years for action in this regard.
“Everyone knows that fuel alone accounts for about 40 per cent of the operational cost of most airlines. And with the continuous increase in the price of Jet A1 amidst the scarcity and epileptic supply of the product,the operational costs of domestic airlines have further grown astronomically thereby leading to about 50 per cent flight delays and cancellations of scheduled flights for a day,” the AON stated.
Inefficient aviation agencies .
Local operators insist that it is because of the inefficiencies of the agencies, they have killed several airlines and are trying to stifle the few surviving ones to pay for their inefficiencies. Said the AON, “for example, the purported N30 billion NAMA bills are two separate debts namely; that before the Supreme Court judgment and that after the Supreme Court judgment.
“Moreover, most airlines that existed before the Supreme Court judgment are no longer in operation.
“There is also the need for a consideration of the fact that a former Minister, Mrs. Fidelia Njeze, had intervened and canceled the pre judgment bills with respect to navigational and enroute charges which is on record both with The Federal Ministry of Aviation and NAMA that it should be written off because the services were not provided.
“Furthermore, domestic airlines worldwide do not pay enroute charges; so, why Nigeria? Also, the total radar coverage and enroute navigation were not in operation in 2001 and airlines were mandated by the NCAA to use GPS for navigation which was independent of NAMA.
“The current economic downturn being experienced in the country will cripple any airline that is expected to pay the already cancelled debts. However, the few surviving AON members are ready to pay their currently existing bills,” the AON said.
AON also said it was “also not surprising, there have been several allegations of financial impropriety involving some staff of the agency to the tune of huge sums of monies in billions of Nairathat are currently being arrested and investigated by the EFCC.
“It must be stressed that NAMA’s primary/Sole duty is to provide air navigation services. Sadly, as of today, NAMA has about 300 Air Traffic Controllers with a staff strength of over 4, 807 Staff.
“The airlines therefore cannot continue to pay for their inefficiency and exuberant lifestyle.
Airlines operators of Nigeria are responsible citizens that believe in Nigeria and we have taken loans to invest into our beloved country. We believe in the principles of fairness and accountability. To this end, we therefore call on the agencies to forge a fair and realistic approach to address the matter,” the domestic operators concluded.
Perishable exports: Goldmine awaiting investor incentives
Exporters of perishable goods through Nigeria’s aviation sector are seeking fresh government incentives and protection to grow their businesses and assist in the ongoing efforts to diversify the economy.
The inherent potentials.
The perishable cargo export industry has been likened to an untapped goldmine given the financial benefits it could offer to investors. Nigeria is richly endowed with lots of fresh goods currently in demand in Europe which investors in the business can easily export and make money from. Products like pumpkin leave, fresh ginger and garlic, white and red sweet potatoes, washed bitter leaf, water leaf, plantain, okra are in demand outside Nigeria.
Experts say Nigeria could be raking in an estimated $52billion annually from the United Kingdom (UK) alone if the full potentials of the perishable cargo export industry is harnessed. “Assuming one million out of over three million Nigerians living in the United Kingdom alone make purchases of food items exported from Nigeria at the cost of $100 weekly even with the current exchange rate, Nigeria cannot make less than $52 billion from this sub-sector annually.
That’s the projection,” said Managing Director and Chief Executive Officer of ABX World Nigeria, Captain John Okakpu.
“Exports of foods out of Nigeria is like a revolutionary project that will leapfrog Nigeria’s agricultural sector while also boosting its supply chain industry, involving transportation, logistics, aviation and packaging, creating jobs in the process for thousands of unemployed youths,”Okakpu added.
Prospective exports have no need to fear if they are dealing with the right freight forwarding organisations and airlines. In Nigeria, both Arik Air and SAHCOL are firms with ACC3 and RA3 certifications respectively from the European Union; the certification confers a high level of acceptability and trust of the EU countries on the quality of goods that would be exported out of Nigeria. It also means that such goods freighted through Arik Air and Sahcol have passed through global standards and that all laws governing such deals were adhered to.
Recent setbacks for investors.
The Nigerian Customs Service (NIS) recently shut down export warehouses of the Nigerian Aviation Handling Company (NAHCO) and the Skyway Aviation Handling Company (SAHCOL) over alleged housing of stolen and prohibited items meant for export.
Some of the investors in Nigeria’s perishable cargo/vegetable exporter business have expressed worry that the activities of overzealous government officials like the Customs officers who shut down export sheds at the Lagos airport, without recourse to the inherent losses, portends grave danger for their businesses as well as ongoing efforts to lure more Nigerians into the industry.
“Shutting down the warehouses was actually an indictment on customs, as they (Customs officials) ought to have carried out surveillance before shutting down all export businesses at the Lagos Airport,” said President, Nigeria Vegetable Exporters Association, Mrs. Oluwatoyin Temitope.
“My company alone lost over N1million worth of cargo within 24-hours of the export shed closure And over 20 of our members were affected.
It was a devastating day for us. I have been on this business exporting vegetables to South Africa and London almost every week. We work at night so that as early as 6:00am our partner airline Arik Air would ship the vegetables offshore. So, when the news got to us that customs have shut down both NAHCO and SAHCOL export shed I felt terribly bad,” she lamented.
Captain John Okakpu of ABX World, an exporter said although Customs later reopened the warehouses, about 100 exporters lost over N100million worth of goods within 48-hours that the export warehouses were shut. International off-takers had expressed their worry over the incident as it created an air of uncertainty in dealing with Nigerian exporters.
The Nigerian Export Promotion Council was also particularly outraged because they understood the bad image the incident created at the international market when Customs have to shut down the whole export unit of an airport because some people are suspected to be engaged in illegal business.
Veronica Ezigbo, managing director of Kiverlin Foods said that the incident should be thoroughly investigated. “Most of us do take bank facilities, so when occasions like this occur you can imagine how difficult it becomes for us to meet up with the demands,” she said.
“Aside that, there are other markets offering more conducive environment; the principal reason most perishable goods exporters now prefer Ghana to Nigeria,” she added. M.S New incentives needed.
Stressing the need for President Muhammadu Buhari’s government to jettison his interest on the oil and gas sector, which is already facing a bleak future globally, Okakpu said government must take urgent steps to establish purpose-driven cargo facilities, strategically built around passenger airports to attract and sustain airlines’ interest in agro-allied export business. Investors feel the government should pay more attention to challenges they are facing and partner more with them to grow the volume of perishable goods, at least from the Lagos international airport.
“We have made fundamental mistakes in the past as a nation by becoming a mono-economy. With the Federal Government’s focus on agriculture as one of the panaceas to the rising inflation, restrictions in capital flows and depleting forex reserves, agro-allied exporters deserve protection as partners with the government in its economic diversification project,” he added.