Stories by Louis Ibah
Global alliances
Alliances between airlines on international markets have become a dominant feature of the airline industry in contemporary times. It was therefore a thing of joy and pride to the Nigerian aviation industry when the International Air Transport Association (IATA) announced that Medview Airline Limited had successfully scaled through its rigorous safety audit requirement to be on the International Operational Safety Audit (IOSA) registry.
Managing Director/CEO of Medview Airline, Alhaji Muneer Bankole, who spoke while receiving the certification said the airline would first deploy it into interlining deals with international airlines. Bankole said hitherto, such a deal sought with Etihad Airline was turned down. IOSA he said was the foundation upon which airlines must first step onto before they can be allowed to join any of the major global airlines alliances with its numerous attendant benefits. At present, no Nigerian airline is a member of any of the global alliances.
Existing alliances
There are six major global alliances including Star Alliance, SkyTeam Alliance, Oneworld Alliance, Vanilla Alliance, U-FLY Alliance and Value Alliance. Star Alliance, founded in 1997 currently has 27 members, among them Turkish Airlines, United Airlines, South African Airways, Air India, Lufthansa, Egypt Air, and Ethiopian Airlines among others. On the other hand, SkyTeam Allliance, founded in 2000, currently has 20 members, among them, China Airlines, KLM, Air France, Korea Air, Alitalia, Delta Airlines, Saudi Airline and Kenya Airways. The Oneworld alliance founded in 1999, currently has 14 members, among them American Airlines, Cathay Pacific, Malaysia Airlines, Qatar Airways, Royal Jordanian, Iberia Airlines, and British Airways.In 2015, Star Alliance was the largest with 23 per cent of total scheduled traffic in Revenue Passenger kilometers (RPKs), followed by SkyTeam with 20.4 per cent and Oneworld with 17.8 per cent, leaving 38.8 per cent for other airlines.
The benefits
“We are not there yet there as we cannot play in the international market because you have to be IOSA compliant before you can play in that sector,” said Bankole.“And you ask how many Nigerian airlines have IOSA? The IOSA safety audit certification by IATA makes you to be seen in the global market as someone that has stepped up your quality to play in the big market.
“So let me explain this; when you get IOSA you can form alliance with any of the big players in the industry. What that means is that whatever you are allowing another airline to carry in your name, it is as good as you carrying it. That’s how the alliances work. So if Medview is a member of any of the alliance, what it means is that I must be in the same corridor with all the members of that alliance in terms of my safety standards. That’s what you need to be a member of any of the alliance,” Bankole added.
The national carrier of the following countries, Egypt, Ethiopia, Kenya, and South African are in various alliances which has enabled them to play in the global market and remain strong and financially viable. In order to enter an alliance, an airline must fulfill a series of parameters of quality. Smaller airlines must be invited by a bigger airline to join, and have to start a long process of adapting to the quality standards of an alliance. In these cases, there is an intensive exchange of know-how and experience from the bigger, more professional airlines. This is also a very important reason for airlines to join an alliance.
Nigerian carriers also stand to benefit immensely if they are able to step up their game to meet the requisite criteria that allows them be members of these global alliances.
The code share agreements are definitely the main reason for an airline to join an alliance. But, besides that, there are several other benefits both for the airlines and for the passengers. There is now substantial evidence that existing alliance relationships have led to significant consumer benefit for passengers on interlining trips, both in terms of improved service and lower fares.
The airlines share spaces in the airports. For example: let’s say United Airlines is stationed in Terminal 1 of the Frankfurt Airport, and Lufthansa (the German Airline) has the whole of Terminal 2. In the past, if you had a connecting flight from United to Lufthansa, you would have had to cross all of Terminal 1 to get to your next flight. Now that the airlines are both in Star Alliance, they all agree to use a common terminal in the Frankfurt Airport, so United flight will arrive in Terminal 2, Lufthansa’s “home”, making transfers quicker and easier. The same goes to the check-in counters, baggage handling, etc.
The alliances allow airlines to share marketing costs and have a unified presence. For example, SkyTeam has a service called “SkyTeam Global Meetings”, which means that if you are a big company and have a world meeting with people flying from different parts of the world, you can let them all fly with SkyTeam airlines and save money. This concept is marketed in trade fairs, websites, etc., and is paid for by all airlines together. This is much cheaper than having your own marketing effort separately.
Last but not least, in the last few years, air travel has gotten more and more risky (financially speaking) and several airlines have filed for chapter eleven or have merged with others. In this context, staying alone is pretty hard for an airline, if all your competitors are part of an alliance. This makes an alliance almost necessary for every bigger airline.
Interjet bemoans breach of aircraft supply contract
All appears not with the contract to supply 20 aircraft to the Nigerian College of Aviation Technology (NCAT) Zaria as Interjet Nigeria Limited is alleging that a breach of the payment terms for the contract has stalled the supply of the aircraft for the training of cadet pilots in the school.
Daily Sun learnt that in 2014, NCAT had sealed aircraft supply deal with an indigenous firm, Interject Nigeria Limited, for the supply of the 20 aircraft at a cost estimated at about $20million. Interjet is a registered Nigerian company and is the sole representative for the sales and maintenance of the Diamond Aircraft brands in West Africa. The 20 aircraft were to be built in line with NCAT specific needs at the Diamond Aircraft yard in Austria and supplied to NCAT in five tranches at a specific period.
It was also learnt that In April 2015, after getting the nod of the Bureau of Public Procurement (BPP) as well as a Presidential Approval, NCAT had released a part of the money (less than 15 per cent) to Interjet Limited to commence the execution of the first phase of the contract which entailed the manufacture and supply of three Diamond (DA) 40 as well as two DA 42 aircraft for NCAT.
Managing Director/CEO of Interject Nigeria Limited, Mr. Seun Peter, at a press conference in Lagos over the weekend lamented the collapse of the contract after an order to commence work had been issued to Diamond Aircraft in Austria with an initial deposit made.
According to him, five of the aircraft had been successfully manufactured to suit NCAT requirements, but with no further payments made by NCAT the aircraft could not be delivered.
He said it was based on trust, that Diamond Aircraft had gone ahead to invest its money in the manufacture of the five aircraft for NCAT.
Peters said the breach of the contract was not without some consequences on its business operations and its relationship with Diamond Aircraft given that under the terms of the deal there were some form of penalties stipulated to be paid by any defaulting party.
“We want specific performance of the contract that NCAT signed with us and Diamond Aircraft. In this particular deal, about 85 per cent of the total amount is what NCAT owes us. They were supposed to have even paid us an Advance Payment Guarantee of 15 per cent of the contract sum but they didn’t pay up to that amount,” said Peters.
“We are a legitimate company registered with the CAC and we supply aircraft to the Air Force. We are appealing to NCAT to release our money to us. But in the event that they fail to comply and honour the terms of the contract that they had with us, we might be forced to seek a redress in court,” added Peters.
Aviation industry sources however told Daily Sun that NCAT had defaulted in keeping to its contractual terms with Interjet because of the changes that took place in the leadership of the school, as well as those in the Federal Ministry of Aviation which saw the emergence of a new Permanent Secretary and Minister of State for Aviation. “Of the initial five aircraft ordered to be manufactured, we have learnt that four had been sold to other clients that had the money to pay and only one aircraft now remains in Austria with Diamond Aircraft,” said an industry official.
“It is not as if NCAT doesn’t want to pay for the aircraft, but the deal has suffered from a lot of transition; the school has been affected by some changes in its management and likewise there has also been changes in the Ministry of Aviation and all this had tended to stall the aircraft supply contract,” added the official who preferred to remain anonymous.
Peters during the briefing had also lamented the huge capital flight associated with taking aircraft offshore for maintenances due to the absence of a Maintenance Repair and Overhaul (MRO) facility in Nigeria. He said to stem the crisis, Interject had concluded plans to float an MRO in Abuja.
“Countries such as Brazil, Pakistan and India are already building aircraft and I see no reason why Nigeria cannot assemble and maintain aircraft in this age of ICT and universal science engineering,” said Peters. “Our company, in partnership with Diamond Aircraft of Austria is already finalizing plans to build a state-of-the-arts maintenance facility in Abuja to service Nigeria and other West Africa countries,’ said Peters.
Ethiopian Airlines to hire Nigerian pilots
Ethiopian Airlines says it has concluded plans to hire Nigerian pilots as part of its contributions to boost manpower development in Nigeria’s aviation sector.
Country Area Manager Nigeria for Ethopian Airlines, Mr. Solomon Begashaw, who disclosed this during a press briefing in Lagos to celebrate the airline’s 70th anniversary, said it had no plan to leave the country nor reduce its frequency despite the recent withdrawal by some airlines out of Lagos and Abuja routes because of its long operational history in Nigeria.
“To reinforce our support for Nigeria, Ethiopian Airlines is offering to hire Nigeria pilots for its ever growing fleet of Boeing 777,Boeing 787,Boeing 737 and Dash 8 Q-400 Aircraft. We will also train more Nigerians in our Aviation Academy which is the largest in Africa,” said Begashaw. “Our presence in Nigeria dates back to the 1960’s, the same time Nigeria got independence from foreign colonisation. Ethiopian Airline has been part of Nigeria’s historic growth and always considers itself as a partner in the history and growth of Nigeria as a country.
“Hence, the management of Ethiopian Airlines wishes to clarify its stance of pursuing its operation to Nigeria and keeping Nigerian travelers connected to five continents around the globe. As an indigenous Pan-African Carrier, Ethiopian airlines will remain with the Nigerian public in good and bad times like it has always done in the past 50 years. We have been in the highs and lows of Nigeria; all through the crisis periods of Nigeria and also during the last Economic crisis , providing the link between Nigeria and the outside world thereby showing our African solidarity,” Begashaw said.
Begashaw said that the airline is a four star airline that offers five star services that it was willing to enter into partnership with local Nigerian carriers. He said the success of Ethiopian Airlines is predicated on a well dedicated staff and management.
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